South Korea: Economic and Political Outline

Economic Overview

Ranking fifteenth in the list of the world's largest economic powers, South Korea has shown a spectacular growth over the past thirty years. However, due to its strong incorporation into international trade and finance, South Korea was one of the most affected countries in Asia by the international financial crisis. Therefore, its GDP growth fell from 5.1% in 2007 to 0.2% in 2009. South Korea was, nevertheless, one of the first economies to get out of the crisis, its recovery was strengthened by the dynamic growth in exports and an important budgetary and currency stimulus plan. The country's growth again slowed down in 2011, however it remained supported by exports, taking advantage of the weak won. This downward trend should continue in 2012, the government expecting a growth of less than 4%, essentially driven by private consumption.

Due to the economic difficulties faced by the United States and the European Union, the government seeks to support the economy through tax incentives and an accommodating monetary policy. The central bank must strike a balance between stimulating the economy and maintaining price stability. The effects of free trade agreement signed with the United States are yet uncertain, namely concerning agriculture and small-scale trade. The budget passed in December 2012 provides for an increase in social spending of more than 7%. The high level of household debt compromises the sustainability of domestic demand. The country must also address the structural problems posed by the underdevelopment of the financial market and the aging population.

The revenue per capita in South Korea increased from USD 100 in 1963 to almost USD 20,000 today. Although unemployment rate has been decreasing, the number of irregular workers is very high and social inequalities are deepening.

Main Sectors of Industry

The primary sector in South Korea is weak, counting only with a negligible contribution to the country's GNP. Rice is the main agricultural crop. However, barley, wheat, corn, soybeans, and sorghum are also extensively cultivated. Likewise, livestock farming is done on a large scale. South Korea's mineral resources are limited to gold and silver.
The country's main sectors of activity are textile, the steel industry, car manufacturing, shipbuilding and electronics. South Korea is the largest producer of semiconductors in the world. The manufacturing sector represents about 35% of the GNP, while the tertiary sector accounts for more than 60%.

Source: World Bank - Last Available Data.

Indicator of Economic Freedom

Score:

69.8/100

Position:

Moderately free

World Rank:

33/179

Regional Rank:

8/38

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation

Note: The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Sources of General Economic Information

Ministries

Ministry of Commerce, Industry and Energy (MOCIE)
Ministry of Finance and Economy (MOFE)
Ministry of information and Communication (MIC)
Ministry of Foreign Affairs and Trade(MOFAT)
Ministry of Environment (MOE)
Ministry of Construction & Transportation (MOCT)
Ministry of Health & Welfare (MOHW)
Ministry of Agriculture & Forestry (MAF)

Statistical Office

Korea National Statistical Office

Central Bank

Bank of Korea (BOK)

Stock Exchange

Koea Exchange

Other Useful Resources

Korean Customs Service
Korean Agency for Technology and standards
National Tax Service

Main Online Newspapers

Korea Herald
korea Times
The Chosun Ilbo
JoongAng Daily
Yonhap News
Dong-A Daily

Economic Portals

Government Website

Political Outline

Type of State

Republic, Parliamentary democracy with a Presidential form of government.

Executive Power

The President is the chief of the state as well as head of the government. He's elected by a popular vote for a single five-year term. President is the commander-in-chief of the armed forces and enjoys executive powers. He appoints the Prime Minister and the State Council (cabinet) with consent of the parliament.
Prime Minister is not required to be a member of parliament and his main role is to assist the President.

Legislative Power

The legislature in South Korea is unicameral. The parliament called National Assembly has 299 seats distributed between parties in proportion to their share of the vote to serve four-year terms.
The executive branch of the government is directly or indirectly dependent on the support of the parliament, often expressed through a vote of confidence.

Main Political Parties

South Korea has a multi-party system, but parties have little chance of gaining power alone. The major parties in the country are:
- GNP (Grand National Party): a conservative party which won the presidential election in Dec 2007. It is strong in the Gyeongsang region;
- United New Democratic Party (UNDP): a liberal party which is strong in the Jeolla region.
- DLP (Democratic Labor Party): a democratic socialist party with its support base in farmers, industrial workers, and progressive intellectuals;
- MDP (Millennium Democratic Party): a party with its support base in provinces of Jeolla.

Current Political Leaders

LEE Myung-bak: President (since 25 February 2008) L1- GNP (Grand National Party)
- KIM Hwang-sik: Prime Minister since October 2010;
- SOHN Hak-kyu: Leader of United New Democratic Party (UNDP).

Next Election Dates

Presidential: December 2012
National Assembly: April 2012

Indicator of Freedom of the Press

World Rank:

44/179

Evolution:

2 places down compared to 2010

Source: Worldwide Press Freedom Index 2011, Reporters Without Borders

Note: The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position is assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).