South Korea Economy in focus

The South Korean economy has grown remarkably since the early 1960s. In that time, South Korea transformed itself from a poor agrarian society to one of the world’s most highly industrialized nations. This growth was driven primarily by the development of export-oriented industries and the abundance of highly skilled and educated labour, fostered by strong government support. Government and business leaders together fashioned a strategy of targeting specific industries for development, and beginning in 1962 this strategy was implemented in a series of economic development plans. The first targeted industries were textiles and light manufacturing, followed in the 1970s by such heavy industries as iron and steel and chemicals. Still later, the focus shifted to such high-technology industries as automobiles, electronics, and information technology.

The government exercised strong controls on industrial development, giving most support to the large-scale projects of the emerging giant corporate conglomerates called chaebŏl. As a result, small and medium-size industries that were privately managed became increasingly difficult to finance, and many of these became, in essence, dependent subcontractors of the chaebŏl.

Korea joined the Organisation for Economic Co-operation and Development (OECD) in 1996 and took a step closer to becoming an economically advanced country. In the early 21st century, Korea’s per capita gross national income far exceeded those of most of its neighbours, other than Japan and Taiwan. These notable accomplishments, however, have at times been overshadowed by economic difficulties caused by both external and domestic factors..

Agriculture

Less than one-fourth of the republic’s area is cultivated. Along with the decrease in farm population, the proportion of national income derived from agriculture has decreased to a fraction of what it was in the early 1950s. Improvements in farm productivity were long hampered because fields typically are divided into tiny plots that are cultivated largely by manual labour and animal power. In addition, the decrease and aging of the rural population has caused a serious farm-labour shortage. However, more recently productivity has been improving as greater emphasis has been given to mechanization, specialization, and commercialization.

Rice is the most important crop. Cultivation of a wide variety of fruits including tangerines and other citrus fruits, pears, persimmons, and strawberries, along with vegetables (especially cabbages) and flowers, has become increasingly important. Although it constitutes only a small portion of Korea’s agricultural production, the country’s ginseng is valued for its superior quality and is exported. Barley, wheat, soybeans, and potatoes are also cultivated, but most of the country’s needs for these commodities must be imported.

Livestock and dairying are also important. The top three agricultural products after rice are pork, beef, and milk. The number of livestock farms fell from 1990 through the early 21st century even as production of dairy products and meat, especially pork, increased. Consumption of meat and dairy products also grew during the same period.

From the 1970s successful reforestation efforts were mounted in areas previously denuded. Domestic timber production, however, supplies only a negligible fraction of demand. Logging, mainly of coniferous trees, is limited to the mountain areas of Kangwŏn and North Kyŏngsang provinces. A large plywood and veneer industry has been developed, based on imported wood.

Fishing has long been important for supplying protein-rich foods and has emerged as a significant export source. South Korea has become one of the world’s major deep-sea fishing nations. Coastal fisheries and inland aquaculture are also well developed.

Manufacturing

Textiles and other labour-intensive industries have declined from their former preeminence in the national economy, although they remain important, especially in export trade. Heavy industries, including chemicals, metals, machinery, and petroleum refining, are highly developed. Industries that are even more capital- and technology-intensive grew to importance in the late 20th century—notably shipbuilding, motor vehicles, and electronic equipment. Emphasis was given to such high-technology industries as electronics, bioengineering, and aerospace, and the service industry grew markedly. Increasing focus has been placed on the rise of information technology and the promotion of venture-capital investment. Much of the country’s manufacturing is centred on Seoul and its surrounding region, while heavy industry is largely based in the southeast; notable among the latter enterprises is the concentration of steel manufacturers at P’ohang and Kwangyang, in the southeast.

Trade 

The country generally has maintained a positive balance in annual trade. The major imports are machinery, mineral fuels, manufactured goods, and such crude materials as textile fibres and metal ores and scrap. Principal exports include machinery, electronics, textiles, transportation equipment (notably, automobiles), and clothing and footwear. South Korea’s principal trading partners are the United States, Japan, and Middle Eastern, East Asian, and Southeast Asian countries.

Services

Some one-fifth of the labour force is employed in the service sector, which contributes roughly one-tenth of the gross domestic product. Tourism alone constitutes a significant portion of this amount annually. The majority of visitors come from other Asian countries—mostly from Japan and, to a lesser extent, from China—although the number of tourists from the United States also has been appreciable. Tourists are drawn by South Korea’s many palaces and other historical attractions, religious sites, including Buddhist temples, and natural beauty. The increasing international recognition of South Korea’s popular culture, such as music, films, and television dramas, also has generated tourist interest.