Business Environment in South Korea
Ranking fifteenth in the list of the world's largest economic powers, South Korea has shown a spectacular growth over the past thirty years. However, due to its strong incorporation into international trade and finance, South Korea was one of the most affected countries in Asia by the international financial crisis. Therefore, its GDP growth fell from 5.1% obtained in 2007 to 0.2% in 2009. South Korea was, nevertheless, one of the first economies to get out of the crisis, its recovery was strengthened by the dynamic growth in exports and an important budgetary and currency stimulus plan. Displaying a remarkable force, the country's growth attained 6.1% in 2010, according to the estimations, and it should remain at a high level.
Once the economy started to grow again, the government has started to withdraw progressively all the exceptional measures adopted during the crisis. In order to reinforce the activity, the country must succeed in controlling the increment of public expenditures to be able to balance the budget, following the fiscal reform which intends to establish a system more favorable to the country’s growth. The authorities must also supervise that this negative impact of restructuring the enterprises in the financial sector remains limited, continuing at the same time the structural reform that aims to maintain the growth during an average period. The government’s fixed objective is to bring the budget deficit to 0.5% in 2013. In the long term, the country has to deal with the structural problems which are: an underdeveloped financial market, the rising of household's debts and the ageing of the population.
The revenue per capita in South Korea increased from USD 100 in 1963 to almost USD 20,000 today. Nevertheless, the unemployment rate has noticeably increased during the crisis and the number of irregular workers is very high.
|GDP (billions USD)||832.51||1,007.08e||1,126.50||1,201.54e||1,282.43|
|GDP (Constant Prices, Annual % Change)||0.2||6.1||4.5||4.2||4.2|
|GDP per Capita (USD)||17,074||20,591||22,961e||24,415||25,978|
|General Government Balance (in % of GDP)||0.8||2.5||2.5||2.8||3.0|
|Inflation Rate (%)||2.8||3.0||4.5||3.0e||3.0e|
|Unemployment Rate (% of the Labor Force)||3.7||3.7e||3.3e||3.3e||3.3e|
|Current Account (billions USD)||42.67||15.93e||24.02||25.66e||-|
|Current Account (in % of GDP)||5.1e||1.6e||2.2||2.3||-|
Source: IMF - World Economic Outlook Database
Note: (e) Estimated Data
Main Sectors of Industry
The primary sector in South Korea is weak, counting only with a negligible contribution to the country's GNP. Rice is the main agricultural crop. However, barley, wheat, corn, soybeans, and sorghum are also extensively cultivated. Likewise, livestock farming is done on a large scale. South Korea's mineral resources are limited to gold and silver.
The country's main sectors of activity are textile, the steel industry, car manufacturing, shipbuilding and electronics. South Korea is the largest producer of semiconductors in the world. The manufacturing sector represents about 35% of the GNP, while the tertiary sector accounts for more than 60%.
|Breakdown of Economic Activity By Sector||Agriculture||Industry||Services|
|Employment By Sector (in % of Total Employment)||7.4||25.9||66.6|
|Value Added (in % of GDP)||2.6||36.5||60.9|
|Value Added (Annual % Change)||1.6||-0.9||1.1|
Source: World Bank - Last Available Data.
|South Korean Won (KRW) - Average Annual Exchange Rate For 1 USD||1,024.12||954.79||929.26||1,102.05||1,276.87|
Source: World Bank
Indicator of Economic Freedom
- Moderately free
- World Rank:
- Regional Rank:
Foreign Trade in Figures
South Korea is the world's 15th trading nation, trade represents about 100% of the country's GDP. The trade balance of the country is on a high surplus and should remain so in the coming years. Despite the effects of the financial crisis, which have greatly reduced this surplus, the weakness of the won (Korean currency) encourages exports.
The main trade partners of the country are China, Japan, the European Union and the United States.
|Foreign Trade Indicators||2005||2006||2007||2008||2009|
|Imports of Goods (million USD)||261,238||309,383||356,846||435,275||323,085|
|Exports of Goods (million USD)||284,419||325,465||371,489||422,007||363,534|
|Imports of Services (million USD)||58,055||68,023||82,108||92,915||74,978|
|Exports of Services (million USD)||43,711||48,382||61,729||75,973||57,304|
|Imports of Goods and Services (Annual % Change)||7.6||11.3||11.7||4.4||-8.2|
|Exports of Goods and Services (Annual % Change)||7.8||11.4||12.6||6.6||-0.8|
|Imports of Goods and Services (in % of GDP)||36.6||38.3||40.4||54.2||46.0|
|Exports of Goods and Services (in % of GDP)||39.3||39.7||41.9||53.0||49.9|
|Trade Balance (million USD)||32,683||27,905||28,168||5,669||56,128|
|Trade Balance (Including Service) (million USD)||19,025||8,945||8,400||-10,740||-|
|Foreign Trade (in % of GDP)||75.8||78.0||82.3||107.2||95.9|
Source: WTO - World Trade Organization ; World Bank
Main Partner Countries
|Main Customers |
(% of Exports)
|United Arab Emirates||1.4%|
|Other partnersClose extended list||50.6%|
|Main Suppliers |
(% of Imports)
|United Arab Emirates||2.9%|
|Other partnersClose extended list||48.2%|
Sources of General Economic Information
- Ministry of Commerce, Industry and Energy (MOCIE)
Ministry of Finance and Economy (MOFE)
Ministry of information and Communication (MIC)
Ministry of Foreign Affairs and Trade(MOFAT)
Ministry of Environment (MOE)
Ministry of Construction & Transportation (MOCT)
Ministry of Health & Welfare (MOHW)
Ministry of Agriculture & Forestry (MAF)
- Statistical Office
- Korea National Statistical Office
- Central Bank
- Bank of Korea (BOK)
- Stock Exchange
- Koea Exchange
- Search Engines
- Economic Portals
- Government Website
- Executive Power
- The President is the chief of the state as well as head of the government. He's elected by a popular vote for a single five-year term. President is the commander-in-chief of the armed forces and enjoys executive powers. He appoints the Prime Minister and the State Council (cabinet) with consent of the parliament.
Prime Minister is not required to be a member of parliament and his main role is to assist the President.
- Legislative Power
- The legislature in South Korea is unicameral. The parliament called National Assembly has 299 seats distributed between parties in proportion to their share of the vote to serve four-year terms.
The executive branch of the government is directly or indirectly dependent on the support of the parliament, often expressed through a vote of confidence.
- Main Political Parties
- South Korea has a multi-party system, but parties have little chance of gaining power alone. The major parties in the country are:
- GNP (Grand National Party): a conservative party which won the presidential election in Dec 2007. It is strong in the Gyeongsang region;
- United New Democratic Party (UNDP): a liberal party which is strong in the Jeolla region.
- DLP (Democratic Labor Party): a democratic socialist party with its support base in farmers, industrial workers, and progressive intellectuals;
- MDP (Millennium Democratic Party): a party with its support base in provinces of Jeolla.
- Current Political Leaders
- LEE Myung-bak: President (since 25 February 2008) L1- GNP (Grand National Party)
- KIM Hwang-sik: Prime Minister since October 2010;
- SOHN Hak-kyu: Leader of United New Democratic Party (UNDP).
- Next Election Dates
- Presidential: December 2012
National Assembly: April 2012
Indicator of Freedom of the Press
- World Rank:
- 22 places down compared to 2008
Indicator of Political Freedom
- Political Freedom:
- Civil Liberties:
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