In a relatively short time, South Korea has transformed itself from a rural agricultural society to an industrial powerhouse. Its export-led growth strategy, primarily involving iron, steel, cars, ships, petrochemicals, and electronics, has proven to be extremely successful.

According to the International Monetary Fund, South Korean gross domestic product (GDP) per capita in 1970 was just $275. However, this year, only three decades later, GDP is estimated to reach $9,127, a number almost 10 times greater than China’s.

The Economy Is Back On Track

In 2001, U.S. merchandise imports worth $35.2 billion from South Korea represented a drop of almost 13% from 2000. This, combined with the global economic slowdown and weak world demand, especially in semiconductors, dampened Korean GDP growth. Almost topping 11% in 1999, GDP dropped from 8.8% in 2000 to 2% last year, according to the Organisation for Co-operation and Development (OECD).

In turn, South Korean consumption and imports decreased. For example, from 2000 to 2001, U.S. merchandise exports to Korea, the U.S.’ second largest Asian market, fell by 20% to $22.2 billion. As a result of the steep decline, since 1993, U.S. export gains to the Asian country increased only 50%.

But, as U.S. and world market demand resume, the Korean export sector is expected to heat up. According to the OECD, Korean world exports of goods and services are forecast to rise 3.2% this year and 10.8% in 2003. This will boost Korean GDP growth, which is anticipated to rise 3.2% this year and 6.2% in 2003, making it one of the highest rates worldwide.

Korean Imports Are Expected To Rise

South Korea ranks 7th worldwide in the number of mobile telecom service subscribers, even ahead of the U.S. and the U.K. It also is one of the world’s fastest growing markets for information technology. Korean world imports of goods and services, projected to rise 2.5% this year and 10% next year, will help drive U.S. exports of technology products.

The best prospects for U.S. trade and investment in South Korea include:

  • Digital TV broadcasting equipment
  • Retail services
  • Geographic information systems
  • Pollution control equipment
  • Safety and security equipment
  • Computer software
  • Aircraft and parts
  • Education and training services
  • Medical equipment
  • Drugs and pharmaceuticals
  • Architectural/engineering services
  • Semiconductors (non-memory)
  • Electrical power systems.

A Growth Market To Consider

South Korea has implemented substantial structural reform, which is designed to promote greater stability and make the country less vulnerable to financial crisis. Although the upcoming December presidential elections could temporarily slow this process, South Korea’s future appears bright. If you are not already doing business there, now is a good time to investigate opportunities and risks.

This article appeared in April 2002. (CB)

John Manzella
About The Author John Manzella [Full Bio]
John Manzella, founder of the, is a world-recognized speaker, author and an international columnist on global business, trade policy, labor, and economic trends. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.

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