The Success of Korean Economy

Transcription

1 The Success of Korean Economy H.E. SHIN Boonam Ambassador of the Republic of Korea

2 Table of Contents 1.Korea at a Glance 2.Relations between the Republic of Korea and the Republic of Bulgaria 3.Growth of Korea s Economy 4.Causes of Korean Success 5.Challenges

3 1. Korea at a Glance Area Population Population growth rate GDP(nominal/PPP) GDP- per capita (nominal/ PPP) GDP - real growth rate Gross national saving 99,720 sq km th 50,924,172 (2016) -28 th /SEOUL million 0.53% (2016)- 156 th $1.4 trillion(2016) - 11 th / $1.93 trillion(2016)- 14 th $27,632 (2016) -28 th /$37,900 (2016)- 45 th 2.7%(2016 ) 110 th 36.1% of GDP (2016) -10 th GDP Composition by sector Agriculture: 2.3%/ Industry: 37.6%/ Services: 60.2%(2016) Source: CIA The World Fact book(area, Population, Gross national saving, real growth rate, GDP PPP), IMF(GDP Nominal)

4 The Republic of Korea Korea at a Glance World War II, Two Koreas

5 2. Korea-Bulgaria Relations - How everything began Minister of Foreign Affairs - Choi Ho-joong (March 23, 1990) Joint Declaration on the Establishment of Diplomatic Relations (March 23, 1990)

6 Korea-Bulgaria Relations High Level Visits 1 Prime Minister -Han Myeong-sook ( June, 2006) Speaker of the National Assembly - Kim Hyong-o (May, 2009) President - Georgi Parvanov (October, 2010) President - Rosen Plevneliev (May, 2015)

7 Korea-Bulgaria Relations High Level Visits 2 Joint Declaration on the Comprehensive and Future-Oriented Partnership between the Republic of Korea and the Republic of Bulgaria (May, 2015) Three MOUs on Cooperation in the Field of Defense, Science and Technology, and Sports Arrangement on Cooperation in the Field of Education and Culture

8 Korea-Bulgaria Relations -Follow-up Actions 1 st session of Intergovernmental Joint Commission on Economic Cooperation (October, 2015) Minister of Foreign Affairs - Yun Byung-se (June,2016) The 2 nd session of the Joint Commission on Economic Cooperation will be held this year in Seoul Science and technology, IT and industrial cooperation are under discussion

9 Korea-Bulgaria Relations -Political Relations 1 : North Korean Provocations ( ) 4 th and 5 th Nuclear Tests - January 2016, September 2016 Missile tests 24 times in 2016 and 7 times in 2017 The only country to conduct nuclear test in the 21st century, threat to international community

10 Korea-Bulgaria Relations -Political Relations 2 Both side reaffirmed shared commitment to the denuclearization of North Korea (May,2015) The Ministry of Foreign Affairs of the Republic of Bulgaria issued 5 statements in 2016 and 3 so far in 2017, condemning North Korean nuclear tests and missile launches In accordance with Resolution 2321, two North Korean Embassy officials left Bulgaria in February 2017 and the Republic of Bulgaria has asked North Korea to take measure to cease the commercial use of their real estate property in Bulgaria The Republic of Bulgaria supports Peaceful Unification on the Korean Peninsula and welcomes North Asia Peace and Cooperation Initiative of the Republic of Korea

11 Korea-Bulgaria Relations -Educational & Cultural Relations 1 Education Field Sofia University, Center for Korean Studies, Korean Department 18 th School William Gladstone, Korean language classes Sofia Sejong Institute Learning Korean Culture and Languages Korean Government Scholarship Program Bulgarian Government Scholarship Cultural Field Korea Corner in the Sofia City Library Intergovernmental Youth Exchange Program Korean Ambassador s Cup Taekwondo Tournament Annual Korean-Bulgarian Friendship Concert Korean Cinema Week

12 Korea-Bulgaria Relations -Educational & Cultural Relations 2 Sofia University, Center for Korean Studies 18 th School William Gladstone, Korean language classes Sofia Sejong Institute Korea Corner in the Sofia City Library

13 Korea-Bulgaria Relations -Educational & Cultural Relations 3 The 3 rd Korean Ambassador s Cup Taekwondo Tournament (June, 2016) The 4 th Korean-Bulgarian Friendship Concert (October, 2016) KGSP Korean Government Scholarship Program Intergovernmental Youth Exchange Program

14 Korea-Bulgaria Relations -Economic Relations 1 Bulgaria exported $102 million to Korea in Feed(Corn, wheat), Clothes, Heavy Electricals, Top shell, Industrial Electronics Bulgaria Imported $134 million from Korea in Petrochemicals, Transporting machine, Industrial Electronics, Nonferrous metal products, Electronic component Korea is 2 nd largest trading partner among East Asia after China and it has 3 rd largest trade volume among non-eu OECD countries after Turkey and USA - $ 210 million (2015)/ $ 236 million (2016) Source: Korea Customs Service, Bulgaria NSI

15 Korea-Bulgaria Relations -Economic Relations 2 Korea is the largest investor among Asia $ 519 million: Photovoltaic plants, transformer manufacturing, agriculture 103MW, 1/10 of Bulgarian solar power generation Korean companies in Bulgaria Photovoltaic plant : KOSEP, SDN, Samsung C&T, EU Sunday, PNH Manufacturing : Hyundai Heavy Industry Agriculture : Asia Invest Cars: Hyundai(IND Commerce), KIA Subsidiary : Samsung Electronics, LG Electronics, Alpha Display(Monitor), River(used car) Bulgarian Companies with business in Korea Agria Group Holding(corn, wheat), Aurubis(waste of precious metals), LB Bularicum(Bacteria), Sever Export(top shell), Deniva(rose oil), Vikitex(textile) etc.

16 3.Growth of Korea s Economy Established Korea Development Institute (KDI) Source: KDI

17 Leading exporters and importers in world merchandise trade, 2015 (USD billion) Trade Volume Trade volume between 1957 and 2012 (Unit: USD) Trade Volume (2014) $1.098 trillion ( times compared to 1957) (2008) $857 billion $280 billion $0.46 billion (1957) (1996) Source: WTO, KITA

18 Cheong-Gye-Cheon Stream in Seoul With no natural resources, capital and technology 1950s 2000s However, Korea achieved the Miracle of Han River.

19 Korea's Economic and Social Development Indicators GDP per capita Economic Development $87 (101st) $7,714 $11,505 $23,103 $25,998 $27,989 $27,221 Investment (/GDP) Export (/GDP) Import (/GDP) Trade * (/GDP) Social Development Life Expectancy Infant Mortality Rate (/1,000) (under the age of 5) *Trade volume exceeded $1 trillion in 2011, 9th largest trading nation. Source: KDI ( data), WB(GDP, Export, Import, Trade ), Economywatch(Investment ), OECD(Life Expectancy, Infant Mortality Rate )

20 The leader in innovation Korea ranked first in the 2016 Bloomberg Innovation Index, with a top score of points This is the third year in a row that Korea topped the innovation index, having scored first place in 2014 and Bloomberg Rankings Most Innovative in the world 2014: Countries Gross R&D investment as a percentage of GDP Source: OECD

21 Global Manufacturing Competitiveness Index th

22 15 Korean Companies in FORTUNE Global 500 in 2016 (13) (84) (172) (180) (173) (237) (208) (294) (277) (310) (414) (429) (431) (439) (464)

23 Market Share of Mobile Phones 36.2% 8th 5.9% 1st Source: Strategy Analytics (2013)

24 Market Share of Displays 1st 22.9% 2nd 22.1% Source: Displaysearch 2013 Currently Korea is the leader in display manufacturing, with Taiwan and China on its heels and Japan a distant fourth. Source: HS Displaysearch and Linde Internal(2016)

25 Market Share of Lithium Batteries 1 st Market share of Small-sized Battery from 5 Major Suppliers 21.7% 14.2% 3 rd Source: SNE Researcher2013 Source: SNE Researche 2015

26 Source: World Steel Association(2015) Production of Steel

27 Automobiles 5 th Motor vehicle producing country in 2015

28 Semiconductors Memory semiconductor:66.5% Source: MOTIE, HIS technology (2013) Leading Semiconductor companies from 2014 to 2016 (in billion U.S. dollars) Source:

29 Shipbuilding Global Shipbuilding Share (CGT Contracting 2013) China 34% Other 9.6% Japan 11% Korea 45.4% Source: World Shipyard Monitor 2013 Source: (March,2016)

30 Petrochemicals 27.1 Ethylene Production Capacity (2012) (Mn. Tons / Year) World s 4th REFINING CAPACITY USA China Saudi Arabia Korea Japan Germany Source: Korean Petrochemical Industry Association

31 4.Causes of Korean Success Economic Policy Education Policy Leadership/ Willingness of People

32 Trend of Economic Policies Economic policies have been different from period to period. Industrialization through import substitution under protection Export Promotion Heavy and Chemical Industry Drive Trade Liberalization Institutional Reforms 1950s 1960s 1970s 1980s Extensive government involvement

33 Economic Take-Off with Outward-looking Development Strategy Mechanism of Outward-looking Development Strategy Foreign Capital Inducement (Economic Aids External Debt) S Economic Growth S Imports Capital Good Imports Raw Material Manufacturing Processing Private Enterprises Financial Tax Support Export Promotion Government Imports Foreign Technology Technology Development Well-educated Labor force

34 Economic Take-Off with Outward-looking Development Strategy The Role of Each Sector for Export Promotion Export Growth of 40% Per annum in Strong export promotion supports high growth

35 Trend of Education Policy Stages for Econ. Development Economic Development Policy Education Policy Phase 1 ( ) Agricultural Society, Rehabilitation, Seek for export-oriented growth policy Establishment of elementary education system and universal primary education Phase s 1970s Development of labor-intense industry (Esp. light industry-oriented) Birth of conglomerates, Promote policies of heavy chemical industry Expansion of secondary education, reinforcement and expansion of professional advancement education Phase 3 (1980s-1990s) Phase 4 (2000-present) Development of technology, knowledge, information-intense industry Enter into the Global Era, Transform into the information and knowledgeoriented economy 35 Expansion of higher education Popularize higher education, informatization of education, lifelong education, efforts in developing human resources at national level

36 Budget in Education Public Expenditure on Education as a percentage of GDP Source: TheGlobalEconomy.com, UNESCO (April, 2015) Year % of GDP (36 th ) 4.90(30 th ) * Educational tax was introduced in Source:

37 Leadership The House That Park Built: A survey of South Korea The Economist, June 3, 1995 p.15 Prof. Tanev How strategists think

38 Willingness of the People Korean nurses and miners went to work in West Germany in exchange for a public loan from West Germany (1960 s s) Koreans sold or donated their gold to help country pay debt ( )

39 5.Challenges Asian Financial Crisis 1997 The countries most affected by the 1997 Asian financial crisis

40 Causes of Financial Crisis Declining Marginal Productivity of Capital Heavy Corporate Debt Leverage Further Expansion of Chaebols Investment Labor Market Rigidity Decreasing Profitability Increasing Competition from China Increased Corporate Failure Deteriorated Financial Soundness Massive Capital Outflow Denied Rollover of Short-term external Debt IMF Rescue Package Lax Financial Supervision South East Asian Crisis

41 Overview - Swift Crisis Resolution and Economic Recovery Cleaning up Non-performing Loans Improving Corporate Governance Accelerating Liberalization Expanding Social Safety Net Rapid Economic Recovery Stronger Corporate and Financial Sector Improved External Positions - GDP Growth: -6.7% (1998) 10.7% (1999) - Unemployment: 6.8% (1998) 3.5% (2004) - Debt-equity Ratio: 396% (1997) 110% (2004) - No. of Banks: 33 (1997) 19 (2004) - Early Graduation from the IMF Rescue Package - Foreign Reserves of more than USD 200bn in 2004

42 Aging Shock Korea is the fastest aging society The ratio of population aged over 65 increased from 7% in 2000 to 14% in 2015 due to low birth rate and better medicine (%) 40 Population Share of Japan Korea China India OECD USA Source: KDI

43 Decline in Potential Growth Rate Low labor input due to the low birthrate and aging population & Low productivity of the capital Decline of potential growth. To boost the potential growth, total factor productivity should be improved through creativity and innovation. 12 Growth potential of Korea based on growth accounting (%) ~ ~ ~ ~ ~ ~30 Labor 노동 Capital 자본 Total Factor 총요소생산성 Productivity Source: KDI.

44 Growth Patterns of the Korean Economy The Korean economy entered the stage of growth by innovation. Previously, the forces of growth were capital and labor. Now innovation based on knowledge, creativity and exploration is more important than economic resources. Stages of Economic Growth - Korea 60s- 70s Labor-oriented Labor intensive production Initial stage of development 70s- 90s Capital-oriented Manufacturing with capital Heavy & chemical industries Innovationoriented High tech + Innovation After economic crisis 00s - Years for Transition UK 200 years Japan 100 years Korea 30~40 years China 30 years?

45 Creative Economy Strategies Since 2013 Focus on creativity and convergence of business Invest in Science & Technology, Education &Culture

46 Thank You