South Korea is currently officially known as the Republic of Korea. It is geographically located on the eastern part of Asia to the east of china, west of Japan and south of North Korea. It lies mainly on the southern half of Peninsula. Its capital is in Seoul. Most of its terrain is mountainous and covers an area of 100,032squre kilometers. The population of Korea is estimated to be over 50 million people.
By 1950-53 the Korean economy was very poor due to the effects of wars. In the period between 1953-60 the economy was characterized by a slow recovery with assistance from the U.S. government. The economic growth focused mainly on import incentives policy and investment in the education sector. Investing in education later gave rise to educated Koreans working in various sectors of the economy. The economic per capita in early 1960s was only U.S.$ 79 comparatively low to that of neighboring countries.
In 1962-71 a strategy dubbed growth and development strategy transformed the Korean economy into the status of an industrialized nation by1970.This period was characterized by light manufacturing export sector(Harvie and lee2003).The process was facilitated by government owned banks by providing credit to such firms. The average annual growth rate was 8.8 % by then but it improved tremendously to 39 % by 1971 due to rapid increase in exports. Also revenue per capita improved from 82 U.S dollars to 286 dollars in 1971.Increase in exports from 41 million U.S. dollars to 1.1 billion U.S. dollars was also realized.
Long run economic growth
1980s and 1990s is a period characterized by major economic shifts compared to other previous periods. The new government policy aimed at stabilizing the economy through liberalization of trade, market opening, liberalization of the financial sector, promoting medium and small scale enterprises, opening of foreign investment, structural change of technology industries, and reduction of certain specific industries. Economic stabilization objectives had been achieved by mid 1980s.The economy was boosted the weakening of the dollar, low oil prices as well as drop in global interest rates. In 1986 for the first time in Koreas history, the exports exceeded imports, domestic savings exceeded local investments, surplus in balance of payments for the fist time in five year strategy (Harvey and Lee b,2003).The average economic rate improved to 12%.GNP also improved from 29.7% in 1980 to 32.3% in 1987.The after effects of 1988 Olympic games, high land prices, abnormally high wages and presidential elections slowed down the economic growth and it remained at 8.8%(Lee,1996).In 1990s there was increase in economic growth rate amid economic crisis of 1997.This was achieved trough further liberalization of 1980s.Sgnificant increase in capital inflows of short term nature came as a result of financial liberalization of 1990s.
Trade in South Korea;
Currently the country's major exports include machinery, electronic equipment and transport equipment. This export has earned the country revenue that has enabled other sectors like agriculture to thrive well. Major trading partners of Korea are Japan and the U.S.. Recently, South Korea has entered into trade relationship with India through a deal that came into effect in January 1 2010.Initially South Korea depended on earnings from phosphate exports. Also tourism is earning the country a significant amount of revenue. Other exports include; food stuff, iron and steel, chemicals, textiles, office machines, ships, passenger cars etc.South Korea imports raw materials and industrial supplies mainly from developing countries while capital and consumer goods are imported from advanced countries like Japan.
The labor force in 2007 was about 24 million people with an annual growth rate of 1% ,activity rate of 60% and unemployment rate of 3.2 % representing a drop compared to the year 2006.The working conditions include working 40-44 hours per week with no specific retirement age.Retirement age in most of the major is 54 or56 years. In the labor market, Korean employees retire at the age of 68 and 69 years of age. Working contracts determines regular and par time staff. The regular staff comprises of the permanent employees. On regular staff is further divided into, temporary, part time, dispatched, fixed term and entrusted employees. The minimum wage in 2008 was 3,000 won per hour and 30,000 per day. The average gross wage per month was U.S$2,800 in the year2007.Social contributions like national pension, health insurance, employment insurance and accident insurance are taxed in such away that the employers are highly taxed compared to their employees. Social partners negotiate at industrial sector or at the company level. Unions include Korean Confederation of Trade Unions (KCTU).The Federation of Korean Trade Unions (FKTU) which represented 1143 trade unions in the year2006 with a unionization rate of 10.3%.Labor regulations are mainly undertaken by the ministry of labor. The labor force comes from almost half the population because it is estimated that the total population is over 50 million people.
Exchange rates and monetary policies in Korea.
The south Korean currency is referred to as the won .One south Korean won currently trades at U.S$0.000903(1 WON=0.000903 U.S DOLLARS).The bank of Korea plays the role like that of most central banks across the world. It was established in 1960s with an intention stabilizing the price. It operates and manages the payment systems and exercise supervision roles as stipulated by the banks act. Executives comprise of governors and five assistant governors. The monetary policy committee is involved in formulation of credit and monetary policies. It also resolves and deliberates on matters pertaining operation of the bank. it comprises of seven members representing various groups in national economy and include;governers, acting governors, representative of the minister of finance and strategy, a representative of chamber of commerce and industry of Korea and a representative of chairman of Korean federal of banks.
The currency is distributed by the Bank of Korea only with no other bank allowed to do so. Also the bank distributes bank notes and coins only to the members of the public through commercial banks. Printing of notes and minting of coins and phasing out worn-out notes are the sole duty of the bank of Korea.
The bank sends brand new notes to commercial banks from time to time. During the greatest South Korean holidays, the bank sends huge amounts to be circulated around the country.
It would be wise if Koreans to invest heavily in sectors like manufacturing technology, agriculture, food sector, electronics and even research. What made Korea to be what it is today is the agricultural sector since other sectors like manufacturing emerged from it. Korea will be ignoring the agricultural sector at its own peril. The earnings to the country through exports of ship to India earn the country a lot of revenue in the first quarter of these year alone and if this is projected, it is likely to have a tremendous positive effect on the countries Gross National Product (GNP) as well as Gross Domestic Product(GDP).Also the Korean government should persist in laying down policies that will help in promoting trade liberalization like those which were laid down in 1980s.
The government of Korea should focus in empowering its citizens by addressing issues that do not go in line with various employeesUse of bank lending rates should be a factor in considering the welfare of the citizens for instance lowering of bank rates so as to enable them has access to loans
Chai,W.,1994,Republic of Korea,Kenda pub co.
Marenic.G.,1981,Economy of Korea,Dfood stuff,iron and steel,chemicals,textiles,office machines,ships,passenger carsetc.
efense technical information centre.
Amsden.H.A.1992,Banking in Korea,Oxford University Press