The Future Economy of Korea Technicians in R&D (per million people) Researchers in R&D (per million people) Population ages 65 and above (% of total) Population ages 0-14 (% of total) Population growth (annual %) Age dependency ratio (% of working-age population) Population, female (% of total) Possible Solutions and Problems ❖ Promoting Large Immigration? ➢ Homogeneous ethnic group ➢ Net migration rate: 2.6 migrant(s)/1,000 population (2016 est.) ➢ Language and Cultural Barrier ( Similar as Japan) ❖ Increasing the female participation of labor force ➢ Possible approach ❖ Developing technology ➢ Feasible approach ➢ Eg. AI ( Artificial Intelligence) Energy problem 1. To meet its energy need, Korea is almost entirely dependent on foreign import. 2. Korea’s largest import item is crude oil and fossil fuels.(30 percent of total import) 3. 96 percent of energy requirement is imported. GDP growth and Energy consumption are highly co-integrated. Problems Middle East import must travel through several straits. Supply can be disrupted by military events blockades and so on. Several choices Renewable and nuclear energy. 1. In 2008, Korea had 20 operational nuclear plants with 8 more under construction. 2. The unclear plan was challenged by political pressure and safety problem. 3. In 2008, Korea rolled out policies and investment on renewable energy and wanted to reduce the greenhouse gas. 4. Policies of renewable energy were revised in 2013. Actual choice Considering with the need of reducing dependency on Middle East oil and avoid increased coal consumption, Korea will support greater gas). 1. Lower lost 2. Short-term LNG(Liquefied natural Other problems that Korea is facing nowadays 1. Inflation in neighboring countries 2. Exposure to China Inflation in neighboring countries South Korea’s economy is heavily dependent on international trade, with exports totaling close to 50% GDP in 2014. Exchange rates with currencies in nearby countries are therefore important to Korea’s outlook. Because China and Japan are two of South Korea’s closest trading partners. Depreciation of the Yuan and Yan could have a deflationary impact, as imported goods and services will become cheaper and exports more expensive in end markets. Exposure to China South Korea’s economy is massively exposed to China, with the Chinese being the largest importer of South Korean goods. Aggregate demand in China is therefore an important driver of economic growth in South Korea, and China’s well-publicized GDP growth deceleration appears to be causing some stagnation in Korea’s exports growth. Many Chinese companies are struggling to maintain their levels of operation profits, and an increasing number of Chinese bonds are also reaching maturity, which could create liquidity issues. A narrowing trade surplus could create a significant drag on the Korean economy and destabilize exchange rates. Other than using monetary policy to minimize any exchange rate fluctuations, there is little South Korea can do to stoke demand in China for imports. Chaebols Samsung as an example ~In 2013, Samsung contributed about 20 percents to South Korea’s GDP and holds about 15% of Korean stock market. ~Most college students want to work for Samsung after graduation. 200,000 students who just graduated applies for Samsung, ⅓ overall. ~White collar crime is the major issue. References http://cn.nytimes.com/opinion/20140604/c04kim/zh-hant/ https://www.nytimes.com/2017/02/17/business/south-korea-chaebol-samsung.html?_r=0 https://www.cia.gov/library/publications/resources/the-world-factbook/geos/ks.html http://data.worldbank.org/indicator/SP.POP.TOTL.FE.ZS
