South Korea has experienced one of the largest economic transformations of the past 60 years. It started as an agriculture-based economy in the 1960s,1 and it became the 11th largest economy in the world in terms of gross domestic product (GDP) in 2016.2 How did the industrialization miracle take place? Show
Factors in South Korea’s Economic SuccessMany studies attribute South Korea’s structural transformation to policy reforms aimed at opening the country to foreign markets. Indeed, the export-oriented policies of South Korea are one of the most important factors of its success: South Korea is now one of the top 10 exporters in the world, and its exports as a percentage of GDP increased from 25.9 percent in 1995 to 56.3 percent in 2012.3 Two additional factors have contributed to the increase in international trade and industrialization in South Korea:
Environment and InnovationFirst, a strong business environment fosters growth in the domestic market and attracts foreign investors. According to the World Bank, South Korea is ranked No. 4 in terms of the overall Ease of Doing Business (DB) index in 2018, while the U.S. is ranked No. 6, as seen in the table below.4 2018 World Bank Doing Business Rankings
Among the list of criteria, South Korea dominates in the ease to start a business and enforcing contracts. All of them play a significant role in encouraging investment, production, communication and, eventually, economic growth. Second, South Korea has devoted extra attention to technology development and innovation to promote growth. Innovation and technology are the key factors that have underpinned South Korean export competitiveness and fueled the country's remarkable economic rise over the past decades.5 In fact, South Korea is now spending the largest share of its GDP on research and development (R&D), even larger than the U.S. and Japan, two of the global leaders in innovation based on R&D intensity. Between 1996 and 2015, South Korea’s R&D intensity grew 88.5 percent (from 2.24 percent in 1996 to 4.23 percent in 2015), while the U.S.’s only grew 14.4 percent (from 2.44 percent in 1996 to 2.79 percent in 2015).  Challenges for South KoreaEven though South Korea has been successful at promoting exports, its business environment and innovation, challenges still remain, including many from China. Chinese competition is one challenge. Policymakers in China have also been emphasizing the importance of high-skill manufacturing and exports. This could have a negative impact on South Korea as China has traditionally been a large importer of South Korean goods. China is also catching up fast in innovation. Its R&D intensity has been approaching the levels of the U.S. and Japan.6 Furthermore, given South Korea’s relatively limited geographical size, natural resources and population size, an aging population aggravates the threat that South Korea’s economy might fall behind its fellow developed countries.7 To maintain sustainable economic growth, South Korea needs to continue its support in innovation and a favorable business environment. Notes and References:1 Kim, Kwan S. “The Korean Miracle (1962-1980) Revisited: Myths and Realities in Strategy and Development (PDF).” Kellogg Institute Working Paper #166, November 1991. 2 World Bank GDP ranking (PDF). 3 Iwulska, Aleksandra. Golden Growth: Restoring the lustre of the European economic model: Country Benchmarks (PDF), World Bank, 2012. 4 “Doing Business 2018: Reforming to Create Jobs (PDF).” World Bank Group, 2018. 5 Domínguez, Gabriel; and Mazumdaru, Srinivas. “Why innovation is king in South Korea.” Deutsche Welle, Feb. 10, 2016. 6 Santacreu, Ana Maria; and Zhu, Heting. “Has China Overtaken the U.S. in Terms of Innovation?” St. Louis Fed On the Economy, March 12, 2018. 7 Domínguez and Mazumdaru. Additional Resources
About the Authors Ana Maria Santacreu Ana Maria Santacreu is an economist and research officer at the Federal Reserve Bank of St. Louis. She joined the St. Louis Fed in 2013. Read more about the author's work. Ana Maria Santacreu Ana Maria Santacreu is an economist and research officer at the Federal Reserve Bank of St. Louis. She joined the St. Louis Fed in 2013. Read more about the author's work. Heting Zhu Heting Zhu is a senior research associate at the Federal Reserve Bank of St. Louis. Heting Zhu Heting Zhu is a senior research associate at the Federal Reserve Bank of St. Louis. How does the Federal Reserve achieve these goals quizlet?The Fed can use three tools to achieve its monetary policy goals: the discount rate, reserve requirements, and open market operations. All three affect the amount of funds in the banking system.
When expansionary monetary policy pushes interest rates to?An expansionary monetary policy will reduce interest rates and stimulate investment and consumption spending, causing the original aggregate demand curve (AD0) to shift right to AD1, so that the new equilibrium (E1) occurs at the potential GDP level of 700.
Are jobs the key to economic progress and the achievement of high income levels?Anything that widely serves as a medium of exchange, unit of account, and store of value. Are jobs the key to economic progress and the achievement of high income levels? A. Yes, as long as people are working, income levels will be high.
When the money supply is expanding rapidly and the general level of prices increasing sharply?Hyperinflation is a term to describe rapid, excessive, and out-of-control general price increases in an economy. While inflation measures the pace of rising prices for goods and services, hyperinflation is rapidly rising inflation, typically measuring more than 50% per month.
|
If the Fed is going to create an environment for economic progress it should focus on
zusammenhängende Posts
Urheberrechte © © 2024 ketiadaan Inc.
