South Korea is a presidential republic and a developed country with a very high standard of living. It is Asia’s fourth largest economy and the world’s 15th in nominal terms and 12th largest economy in PPP terms, according to the IMF in 2011. The economy is export-driven, with production focusing on electronics, automobiles, ships, machinery, petrochemicals and robotics. South Korea is a member of the WTO, OECD, APEC, and G-20 major economies.
High income economy affects business in South Korea
South Korea has a market economy and is a high-income developed country, in contrast to its northern neighbor North Korea, which follows a centrally planned economic model. South Korea is one of the Asian Tigers, and is the only developed country so far to have been included in the group of Next Eleven countries. South Korea is still one of the fastest growing developed countries in the 2000s, along with Hong Kong, Singapore, and Taiwan, the other three members of Asian Tigers, according to a report by the IMF. The South Korean economy is heavily dependent on international trade, and in 2010, South Korea was the sixth largest exporter and tenth largest importer in the world.
Controversy takes a toll on business in South Korea
Despite the South Korean economy’s high growth potential and apparent structural stability, South Korea suffers perpetual damage to its credit rating in the stock market due to the belligerence of North Korea in times of deep military crises, which has an adverse effect on the financial markets of the South Korean economy, according to a report by Moody’s credit rating agency. However, even with the relative unease on the Korean peninsula, investors and businesses have largely gotten used to the situation, and any geo-political problems have less effect on the South Korean economy than before.
South Korea was one of the few developed countries that were able to avoid a recession during the global financial crises, and its economic growth rate reached 6.2 percent in 2010, according to an article by Newsweek. This is quite impressive considering that 2010 was a difficult year for the global economy, and South Korea being particularly dependent on foreign trade being especially vulnerable. Yet even with these circumstance, the South Korean economy has managed to perform quite well. The IMF, also complimented the resilience of the South Korean economy in a recent report, saying that the economy did quite well against various economic crises, due to low state debt, and high fiscal reserves that can quickly be mobilized to address any expected financial emergencies. As of 2008, South Korea also ranked 5th highest in terms of R&D, according to a report cited by Korea.net News. South Korea is also among the world’s most technologically advanced and digitally-connected countries; it has the third most broadband Internet users among the OECD countries and is a global leader in electronics, digital displays, semiconductor devices, and mobile phones, according to statistics published by the OECD.
Overall, South Korea is a great market to do business in, it was ranked as the 8th Easiest Place to Do Business in, by the World Bank for 2012. In the same ranking index, South Korea was ranked 79th for Protecting Investors, 4th for Trading Across Borders, and 2nd for Enforcing Contracts. The South Korean market is also quite rich and large, with a nominal GDP per capita of $23,749 and a population of 48,875,000. South Korea had a GDP of $1.163 trillion, as estimated by the IMF in 2011. South Korea has managed to do quite well over the past few decades, with a fast growing economy that ha not yet fallen into the trap of stagnation like the Japanese economy or the Argentine economy. It remains to be seen whether South Korea can continue this kind of success, but as of now all the numbers and indicators say that business in South Korea will continue to perform well into the future.