International Business / Executive Travel : SPOTLIGHT ON SOUTH KOREA : A Look at the Nation’s Economy

Since 1963, when 63% of the labor force worked in agriculture, the Republic of Korea has shown steady and impressive economic growth, largely because of a sustained program of export-oriented policies. Now the nation is the United States’ seventh-largest trading partner and the world’s 12th-largest economy. During his two years as president, Kim Young Sam has undertaken major economic reforms aimed at eliminating corruption (the underground economy equals an estimated 20% of gross national product) and restricting the power of large conglomerates. But his popularity has dwindled in recent months, plunging from more than 90% to less than 50%, creating an unstable political environment that could threaten the nation’s financial future.

TECHNOLOGY

Increased research and development and the import of technology through licensing and joint ventures have played key roles in developing the country’s economy. South Korean electronics firms such as Samsung, Goldstar and Hyundai rank among the globe’s top producers of memory chips: In 1994, they supplied about 10% of the world’s semiconductors.

TRADE

The country’s chief trading partners are Japan and the United States. After several years of surpluses, South Korea’s global trade and bilateral surplus with the United States dropped dramatically in 1989 with the appreciation of the won, South Korea’s currency; labor disputes; cumulative wage increases, and strong domestic demand. But long-term growth prospects remain bright. With the restoration of diplomatic relations in 1992, North Korea has become a significant market.

AGRICULTURE

About 22% of South Korea’s land is arable, and almost all of that is under cultivation. To maximize use, the country relies strongly on multiple cropping; in some areas, as many as four crops are grown during a single year. Rice, the principal crop, accounts for a third of planted acreage and 60% of all farm production. Other important crops are corn, barley, potatoes and fruit.

MINERALS AND ENERGY

The division of the Korean peninsula in 1945 left North Korea with most of the area’s mineral resources. Mining and quarrying make up South Korea’s smallest economic sector, contributing only 0.3% of gross domestic product and employing less than 1% of the work force in 1992. Petroleum must be imported. The country’s meager reresources include coal, tungsten, limestone and iron ore. Offshore reserves of natural gas have been discovered.

MANUFACTURING

Manufacturing is concentrated in the Seoul area. Measured by value of output, the country’s most important manufactured products are electrical machinery and transport equipment, mainly motor vehicles and ships. Textiles, electronics and footwear are significant industries, but South Korea’s wage rates have risen in recent years. Jobs in labor-intensive trades have been moving to Asian nations with lower labor costs.

LABOR

The most striking trend has been the decline in agriculture employment. In 1993, only 14.8% of the labor force worked in agriculture, down 48.2% percentage points from 30 years ago. Furthermore, since the 1963 establishment of an overseas work program, the government has encouraged its citizens to work abroad. Overseas construction work, particularly in the Middle East, has become an important source of foreign exchange.

Sources: Bank of America World Information Services, Encyclopedia of the Third World, Countries of the World

Researched by LAURA B. BENKO and DAVID NEIMAN / Los Angeles Times