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General
Information on
Korean Business
& Economy
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Korean
Economy
South Korea's economy was traditionally based on agriculture and has,
since the early 1960s, undergone an extraordinarily rapid
industrialization. The gross domestic product expanded by more
than 9 percent yearly between the mid-1960s and the early 1990s.
A series of five-year economic plans begun in 1962 and each has
concentrated on the development of manufacturing. Economic aid,
especially from the United States and Japan, has been important
to the economic growth of the country.
Adopting a government minded model similar to Japan, the five year plans
involved borrowing large amounts of cash (usually from the USA)
and paying low salaries at home to sell abroad. South Korea's
economic indicators went through the roof and the country joined
Hong Kong, Singapore, and Taiwan as one of the Asian
economic hot spots.
Unfortunately, the government minded model bred bureaucracy and
a mammoth civil service evolved to direct the inevitable red
tape controls involved. Recent times have seen efforts to reduce
the red tape, but this is a slow process.
A key feature of the Korean economy has been the emergence of 'Chaebol'
or large family-run business. Famous Chaebol names include Hyundai,
Samsung, Daewoo and LG (Lucky Goldstar), all of whom have
developed in to global companies. Unfortunately, a close
relationship grew between the Chaebol and government and the
country suffered more than a few cases of corruption cases. This
led to a stigma that the country continues to battle against.
In 1997, Asia suffered a large economic crisis and South Korea
was badly affected. The government introduced a number of
reforms aimed at reducing the power and influence of the Chaebol.
This is still ongoing, but the South Korean economy is slowing
seeing the benefits of greater transparency.
Since the early 1990's,
Korean wages have continued to rise sharply. Whilst the Asian
crisis in 1997 caused a halt in this process, the years since
the crisis have witnessed annual wage rises of more than 10% in
some sectors. Nowadays, South Korea is not considered a
low wage country and some of the previous industrials growth
sectors have diminished and in some cases disappeared as
investors and companies have moved their focus to other
countries, such as China. This situation is not unlike that
witnessed previously in other Western countries. For sure South
Korea face an increasingly difficult economic climate in which
to sustain the 'home' economy in the years to come.
Labour
Work Force
In the late 1980s the total labour work force was estimated at
some 17.3
million, with; ~17% engaged in
agriculture, forestry, and fishing; ~36% in industry; and
47% in the service sector. In 2003 the workforce had grown to
around 22,9 million with a large proportion of women involved in
sectors not common in the west. An example is construction where
women commonly undertake decorating and general building site
labouring work.
The steady increase in wages for Korean workers led to an influx
of foreign and illegal immigrants during the 1990's. To some
extent this was encouraged by many Korean companies as they
sought ways to combat rising wage bills. The government has
recently reformed this area of employment imposing stricter
controls on company employment performance, but also making it
easier for bona-fide individuals seeking to make an honest
living here in Korea and with relevant skills or to match a
suitable job openings where the Korean labour market cannot
provide suitable resource.
The principal labour organisation is the
Federation of Korean Trade Unions, which has a growing
membership. Once again government reforms are being implemented
to provide greater flexibilty to the workforce. Labour Unions
are now active within some of the Chaebol companies and workers
are generally much better represented across the full range of
Korean industry and business.
Agriculture
Land distribution programs were carried out after World War II
(1939-1945). Landholdings average only 0.89 hectares (2.2
acres), and agricultural methods remain largely traditional and
un-mechanised. About 22% of the land is arable, of which
nearly all is under cultivation. The main crops in the late
1980s were rice (6.3 million tonnes per year) and the
principal foods were; potatoes (600,000 tonnes); sweet potatoes
(500,000 tonnes); barley (600,000 tonnes); maize (120,000 tonnes); and other
vegetables and fruits (3 million tonnes). An important development has
been the great expansion in the output of fruit, notably apples,
melons, peaches, and pears. Crops include wheat, soybeans,
cotton, hemp, and silk. The estimated livestock population in
the late 1980s was 4.3 million pigs, 2.4 million cattle, and
166,000 goats.
Forestry
& Fishing
The forestry industry is relatively small with removals in the late
1980s at some 6.8 million cu m (about 240.1 million cu ft)
per year. Since the late 1960's, South Korea has become one of the
world's leading fishing nations, with a modern fleet of more
than 650 vessels. The ports of Ulsan and Masan have been
developed as deep-sea fishing bases with fish-processing plants.
The annual catch (including Pollack, other fish and
oysters) is typically around 2.8 million tonnes annually.
Mining
South Korea does not have extensive mineral resources. Annual
output of anthracite coal was 14 million tonnes in the
early 1990s; zinc ore output was about 45,000 metric tons. Other
minerals exploited were graphite, iron ore, lead, tungsten,
copper, gold, silver, and kaolin (a fine clay).
Manufacturing
Formerly, industrial development concentrated on light
manufacturing, especially in labor-intensive industries such as
textiles, footwear and foodstuffs. However, since 1970 more emphasis has been given to heavy industry in an
effort to decrease imports. Investment initially focused on the
production of chemicals and fertilizers. Other major
manufacturing investment includes automobiles, electric and electronic
equipment, non-electric machinery, shipbuilding, iron and steel,
textiles, food products, copper, tungsten, plywood, and cement.
The annual output of industrial products in the late 1980s
included cement, 29.5 million tonnes; pig iron, 12.6
million; crude steel, 19.2 million; passenger cars, 867,600; and
television sets, 14.8 million |
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