grp8 korea final

8/2/2019 Grp8 Korea Final

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Asian tigers South Koreadevelopment experience

Presented By:

Chitra S (012)Karthik (040)Gaurav (101)

Shruti (119)Elizabeth (139)

Harish (157)


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Facts about economy of South Korea

GDP of $1.164 trillion, 15 th in world by nominal and12th by PPP-G 20 economy

Growth rate of 3.9% YoY , Inflation-4.2%

Percapita income of $23,313 , Unemployment rate of 3.2%

Export oriented economy with a surplus balance of trade

Ranks 8th

in world in ease of doing business


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3

1. Transformation of the Korean Economy(1945-2003)

Growth Trend

Liberationfrom JapaneseColonial Rule

6 Five-Year-Economic-Development Plans

FinancialCrisis

2003 P19801962 1970 1995

5,000

10,000

67 87

11,432

7,355

1953

Per Capita(US$)GNI

19901945

12,646

OECDMember100(1964)

1,000(1977)

1998


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4

Changes in Industrial Structure

Changes in Employment Structure

Manufacturing

63.07.9

28.3

1960

ServiceSector

19.2

71.5

9.3

ServiceSector

Agriculture / Fisheries

Manufacturing


2002 32.563.2

4.3

ServiceSector


Manufacturing

36.8

15.9

47.3

Manufacturing

Agriculture / FisheriesService Sector

Changes in GDP Structure


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5

Economic Take-off with Outward-lookingDevelopment Strategy (1960-80)

Economic Conditions of the early 1960s

CapitalShortage

WeakTechnology Base

UnderdevelopedPrivate Sector

AbundantLabor

StrongEconomic will

High Level of Education

?


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6

Working Mechanism of the Outward-looking Development Strategy

Economic Growth

S

ExportPromotionManufacturing

Processing

PrivateEnterprises

Government

TechnologyDevelopment

Financial Tax Support

Well-educated Labor force

Foreign TechnologyImports

Capital Good Imports

Raw Material Imports

Foreign Capital Inducement(Economic Aids External Debt)

S


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7

Change in Industrial Policies during the 1970s:from Light Industry to Heavy and Chemical

Industry Mobilizing FinancialResources

Selecting National

Champions(Chaebol)

Accelerating Competition

Iron and steel

Electronics

Petro-chemical productsAutomobile

Ship-building

Machinery


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8

Changing Industrial Structure:from Agriculture to Manufacturing /

from Light Industry to Heavy and Chemical Industry

1960 1970 1990 19991980

HCI Product

AgriculturalProduct

LightIndustryProduct

50%

Wig Automobile SemiconductorTextile

2003

Semiconductor, Mobile Phone,DTV, Display, Automobile,Ship-building, etc.

84.8%

12.4%

2.8%

(ICT, 27.6%)

Changes in Export Commodity Profile


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Koreas Economic Takeoff Annual economic growth rate of 9.2% (1961-79)

year per capita GDP (US$) export (US$)1962 87 56.7 million1980 1,503 17,500.0 million2001 8,918 150,440.0 million

savings and investment over consumptionsavings 36.2% of GDP

Japan 31.4%, US 16.2%


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1997 financial crisis and negativegrowth

Development in South Korea took a major blow in the 1997financial crisisKorean Won weakened to more than 1,700 per U.S. dollarfrom around 800Banking sector was burdened with NPL as its largecorporations were funding aggressive expansions.In December 1998 the IMF approved $21 bn of the $58.4 bn

bailout plan4By January 1998 the government shut down a third of

merchant banks in Korea as part of austerity along with adynamic and productive labour market with flexible wage ratesand alternative funding sourcesKorean economy shrunk at an average rate of 6.65% during1998


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11

5. Swift Crisis Resolution and EconomicRecovery

Cleaning upNon-performing Loans

AcceleratingLiberalization

ImprovingCorporate Governance

ExpandingSocial Safety Net

- Early Graduation fromthe IMF Program

- Foreign Reserves of more thanUSD 200bn in 2004

ImprovedExternalPositions

- GDP Growth: -6.7% (1998)10.7% (1999)

- Unemployment: 6.8% (1998)3.5% (2004)

RapidEconomicRecovery

- Debt-equity Ratio: 396% (1997)182 (2002)

- No. of Banks: 33 (1997)20 (2001)

StrongerCorporate andFinancial Sector


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Recent Developments

South Korea adopted numerous economic reforms followingthe Asian crisis, including restructuring of Chaebols andgreater openness to foreign investment and imports.Growth moderated to about 4-5% annually between 2003 and

2007. In 2004, South Korea joined the trillion dollar club of world economies, and currently is among the world's 20largest economies (Currently 1.554 trillion USD).But due to the global economic downturn in late 2008, SouthKorean GDP growth slowed to 0.2% in 2009.

However, export growth, low interest rates, and anexpansionary fiscal policy, have helped in the recovery andgrowth was estimated to be 3.9% in 2011.Since 2007 the tourism industry is flourishing as well.


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Current Economic Challenges

Rapidly aging population

Inflexible labor market

Heavy reliance on exports (which comprise half of GDP)

Hostile relations with North Korea


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THANK YOU

grp8 korea final

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