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Requirement
For this assignment, we're told to focus on one country, in which I chose South Korea and to focus on it's economic, culture, government, and why the country is where it is today. I've started the basic draft of the paper and I'd want you to continue it from there. I want the 1750 words to be focused on its economy and social problems. Their economic strength, What they're economic problems are, and how to solve them. I'll attach a paper of a previous colleague, please use it for reference if it helps. This is my final paper so it's going to be worth 20% of my grade, please handle it with care. Thank you!
P.S. I made my paper with pages, if you can't open that, I uploaded a pdf and word. (But the word doc might not turn up good.
Solution
The economy of South Korea
The government and culture of South Korea
Since the partition in 1948, the Country South Korea has developed as one of the most affluent states in Asia. After World War II, this country came into existence with the agreement in 1945 by the Allies. It has a republican constitution. There are three main branches of Government of South Korea: executive, judicial and legislative. At the national level, the executive and legislative branches operate and there are various ministries that carry out the local functions from the executive branch (Davidson Frame, 2013). The current president of the country is Park Geun-hye. In the culture of South Korea, a family has been given very much importance. They follow a Confucian tradition and believe in the teachings of Confucianism. More importance is given to the welfare of the family, rather than individual needs (Davidson Frame, 2013).
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Current Economic situation of South Korea
The country South Korea is technologically advanced and rich. The democracy of the country is matured, and the record for its innovation is impressive. The country has gone through an economic reform, and the leadership of the country is also sound. Despite all this, the market of this country cannot be considered as developed. The imports and exports of the country are more than the national income of South Korea. The openness of the economy and the protection given by EU makes the market of this country more volatile as compared to other countries that are much more industrialized and pose some challenges too. The corporate sector of the country is highly concentrated; the population is aging, and there is the threat from the politics of neighborhood countries. Though the economy of this country is attractive for people to invest but it is also risky (Noland, 2014).
The economy of this country is largely driven by the exports. The economic policy of the country is outward facing, and the credit for the rapid expansion of this country goes to this policy. During the global recession of 2008, the economy of South Korea contracted, but timely stimulus measures were taken that avoided the deep recession. The losses in the exports were offset by the strong domestic consumption of the products. The country is known for its manufacture of cars and electronics, and it is also strong in shipbuilding (Economywatch.com, 2016).
Economic and social problems faced by South Korea
There are some issues related to the economy of this country that is mentioned earlier like poor resource, low fertility, and big economic gap and degraded environment. Apart from these the other major economic problems are as follows-
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Inflation in the neighboring countries: The economy of this country depends heavily on the international trade and exports are a major part of this economy. So it has to look at the exchange rates of other countries. The closest trading partners of South Korea are China and Japan, and if the currency of these countries depreciates, the impact on South Korea could be deflationary. This impact makes the goods that are imported cheaper and exports become expensive. Since the inflation in these countries raises, so South Korea is at a disadvantage to its competitors in neighboring countries. Then these countries compete with South Korea in global market too, and when inflation happens in these countries, the price competitiveness of South Korea gets eroded. This has serious ramifications for the potential of growth for the country (Li, Liu, and Song, 2010).
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Exposure to China: China is the biggest importer of the goods of South Korea. So one of the factors that drive the economic growth of this country is the aggregate demand for South Korean products in the market of China (Li, Liu and Song, 2010). But due to the deceleration in the GDP growth of China, the Korean’s export growth has stagnated. The companies in China are trying hard to maintain the operating profits and the number of Chinese bonds that reach maturity create the issues of liquidity. Thus, when trade surplus narrows down, the Korean economy gets dragged, and the exchange rates get destabilized. So it makes tough for the South Korean economy to stroke the demand for imports in China (Kim, 2008).
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Navigation in the U.S. rate hikes: The economy of US has reversed the expansionary monetary policy by raising the rate of interests. This has an impact on the other economies including South Korean, who are planning to or are currently engaged in the expansionary monetary policy. The flow of capital will become disproportionate to the US as investors start seeking greater returns on the debt (Kim, 2008). It is required by the finance ministers of South Korea that they have to continuously monitor the flows of capital relative to the US in order to make sure that the companies in Korea can access the global capital markets comfortably.
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Structural issues: The South Korean categories of goods including automobiles, petroleum product, semi-conductors, etc. have faced pricing pressure from all over the world. Thus, there has been many issues in the industry of South Korea. Due to the pricing pressures, the total revenue reduces as per the volume of production. This, in turn, leads to cost-cutting and consolidation hence people lose jobs and wages are pushed downwards (Shin, 2013).
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The weakness of service industry: The current account balance worsens due to the service sector. The residents of Korea spend more money on the foreign countries for leisure, education, medicine, etc. because in Korea, these services have failed to satisfy people and they are also not available at affordable prices in South Korea. This industry is less competitive than other because there are a number of small scale businesses here, and they don't give services of high quality at reasonable prices.
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Lower debt of the government: As a share of GDP of the country, the debt of the government is modest. The budget of the country is also nearly balanced so ample room is provided if the most fiscal stimulus is required. The amount of external debt for the country is less, and it runs a surplus in the current account. Since the current account has a surplus so the economy of South Korea is less vulnerable to the capital flows that are volatile. Also, the economy can absorb the effects due to rising debt if the government gets engaged in more amount of fiscal stimulus (Kim and Huang, 2008).
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Ease of monetary policy: The economy of this country has shown a relatively easy monetary policy for many years. The central bank of South Korea has cut the rate of interest many times. Then the inflation is also controlled for this economy. The value of the currency has remained low relatively (Stern, 2008).
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Improvement in the economic momentum: With the increase in consumption and government spending, there has been an improvement in the economic momentum of South Korea. Then the government also increased its spending for the people of South Korea that further boosted the economy (Kim and Huang, 2008).
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Disbandment of the political party: The political party of UPP violated the basic principles of democracy, so it was disbanded. The utilities of South Korea were saved as it prevented the war between nations and the nationals (Stern, 2008).
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Other strengths: The government of South Korea has significantly supported the research and development and has spent a huge amount of money on this activity. This has developed new ways of doing things and hence the economy is boosted as resources and money get saved when new technology and new ways of doing things comes up (Stern, 2008). Then there have been patents that are provided to some products and industries due to which the exclusivity of things get maintained. The government has also put fewer rates of tariffs on the import of wheat and sugar which has brought the country more amount of money (Young, 1997).
Solution to the economic problems of South Korea
For building the economic potential, the country committed to its reforms and strengthened them. This was done to enhance the economic freedom of the country and increasing the competitiveness of the economic system. Then for further enhancing the economic growth and prosperity of the country, South Korea improved and maintained its entrepreneurial activities and made the innovation flourish (Peng, 2011). For attracting the investment capital and entrepreneurial talent towards the economy, the taxes were reduced, property rights were secured, sound money was floated, the regulatory policies were made sensible and the transparency increased. The free exchange of commerce was introduced by making the economy more open and flexible. Thus, the country enjoyed a sustainable economic growth, and it prospered. The government of South Korea built an infrastructure that included many schools and colleges. Also, the communications network got enhanced so a well-educated workforce got developed in the country and the economy of the country grew further. Then the investments of government in the R&D sector led to advancements in technology, and the economy became more competitive. The educated and motivated people of this country produced goods that were low cost and high in quality, so they became popular in the markets of foreign countries including the US. Thus, more profits got generated from the sale and exports which were used to expand the capital, generated new jobs and the loans became easier to pay off (Han, 1974). Then the banks got nationalized, and the government gained direct control over the institutional credit that further extended the command in hands of a community of business. Then the policy of import substitution was combined with the approach led by export. The strategic industries were backed, and new ones were nurtured by making the importation of some goods tough. When the new industry got established, the government created suitable conditions for the export of these goods. Incentives were introduced for the exports including a reduction in the taxes of corporate and private incomes, and then tariff exemptions were given (Peng, 2011).
Conclusion
It can be concluded that the economy of South Korea is far better than the economy of other countries. It is majorly blooming with its exports and the GDP also enhances with the exports of this country. Currently, the country South Korea is technologically advanced and rich. The democracy of the country is matured, and the record for its innovation is impressive. The country has gone through an economic reform, and the leadership of the country is also sound. Though it faces some challenges in terms of its exports but the government has taken appropriate measures to deal with the economic issues.
References:
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Ramírez, L. and Rubio, J. (2010). Culture, Government and Development in South Korea. ACH, 2(1).
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Economywatch.com. (2016). South Korea Economy | Economy Watch. [online] Available at: http://www.economywatch.com/world_economy/south-korea [Accessed 1 Jun. 2016].
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Watson, I. and Jeong, H. (2010). Culture and Democratic Identity in South Korea: Contemporary Trends. Pacific Focus, 25(3), pp.376-395.
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Noland, M. (2014). Six Markets to Watch: South Korea. Foreign Affairs. [online] Available at: http://www.foreignaffairs.com [Accessed 1 Jun. 2016].
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Shin, J. (2013). The Modernity of Korea and the Economic Democratization: Some Issues in the Social Thought. st, 23, p.253.
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Kim, B. (2008). Future of Economic Growth for South Korea*. Asian Economic Journal, 22(4), pp.397-410.
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Lie, J. (1991). The Prospect for Economic Democracy in South Korea. Economic and Industrial Democracy, 12(4), pp.501-513.
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Li, M., Liu, W. and Song, S. (2010). Export Relationships among China, Japan, and South Korea. Review of Development Economics, 14(3), pp.547-562.
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Kim, J. and Huang, C. (2008). Dynamics of State Strength and Policy Choices: A Case Study of South Korea and Taiwan. Pacific Focus, 6(2), pp.83-108.
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Young, J. (1997). The Development Performance of the South Korean Economy. The International Economy, 1997(48), pp.140-141.
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Stern, J. (2008). The South Korean Economy: Towards a New Explanation of an Economic Miracle (review). Korean Studies, 31(1), pp.104-107.
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Han, S. (1974). South Korea: The Political Economy of Dependency. Asian Survey, 14(1), pp.43-51.
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Peng, I. (2011). The Good, the Bad and the Confusing: The Political Economy of Social Care Expansion in South Korea. Development and Change, 42(4), pp.905-923.
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