South Korea's economy is a market economy with a high
degree of state control. A strong export-oriented industry
is the mainstay of the South Korean economy. China is South
Korea's most important trading partner.
When Korea was divided, the southern part was essentially
an agricultural country. According to
countryaah, most of the industry was located in
the north, which also had the bulk of Korea's significant
mineral deposits. Until the mid-1960s, living standards in
North Korea were higher than in South Korea. Since the
1960s, South Korea has prioritized rapid economic
development. A thriving export industry has been built, with
an emphasis on consumer electronics, semiconductors,
automobiles, steel and petrochemicals, partly thanks to
Japanese loans and investments.
After constant high economic growth since the 1960s, in
the early 1990s, South Korea entered a period of somewhat
slower growth rates. Two-digit wage increases in the period
1988–1993 led to a slight weakening of competitiveness.
South Korea was hit hard by the Asian financial crisis of
1997-1998, and unemployment reached 8 percent. Car
manufacturer Daewoo Motors was hit in 2000 by the largest
bankruptcy in the country's history with a debt of $ 70
billion. Around the turn of the millennium, economic growth
accelerated again. Already in 2001, unemployment had fallen
to 3 percent, a level that persisted for the following
Agriculture used to be the main trade route, and as late
as 1966, it employed 56 percent of the working population.
In 2002, the primary industries (agriculture, forestry and
fisheries) accounted for only 10 per cent of employment and
4 per cent of gross domestic product (GDP). In 2017, these
figures had fallen to 4.8 per cent of employment and 2.2 per
cent of GDP.
Only one fifth of the land can be cultivated, but where
climate and terrain allow, two crops are harvested a year.
Farms are generally small (10 to 15 acres) and usually
divided into small tigers, but thanks to a stronger degree
of artificial irrigation, increased mechanization and more
extensive use of improved cereals, yields in South Korean
agriculture have increased significantly. Today, the country
is largely self-sufficient with rice, but not with other
cereals. It is grown among other things rice, barley,
soybeans, sweet potatoes, potatoes, fruits, yams, tobacco,
maize, millet, wheat and various kinds beans. For use in the
textile and silk industry some cotton and mulberry trees are
Like North Korea, since the 1990s, South Korea has been
repeatedly haunted by natural disasters with major
Forestry plays a modest role in the country's economy.
The timber is usually of poor quality and not sufficient to
meet local needs. Some South Korean companies own forests in
Malaysia and Indonesia, among others.
South Korea is one of the world's leading fishing
nations. Fishing meets the country's own need for fish, and
the surplus is exported. In addition to fishing, farming is
driven by oysters and clams, and shellfish and edible
seaweed are exported to Japan.
South Korea has only 10-15 percent of Korea's estimated
mineral resources. Mining accounts for about 0.3 per cent of
GDP, and only 0.1 per cent of the workforce is employed in
the mining sector. There are deposits of coal, iron ore,
graphite, tungsten and gold.
A strong export-oriented industry is the mainstay of the
South Korean economy. In 2017, exports of goods and services
accounted for 43 per cent of GDP. In 2017, the industry
accounted for 24.6 per cent of the country's employment and
39.3 per cent of GDP.
The industry has had a very rapid expansion in foreign
capital investment, including many Japanese corporations,
which have withdrawn much of their profits and made little
use of domestic capital.
The country's industrial policy is reminiscent of Japan,
with an export-oriented industry based on imported raw
materials. The export industry was partially transformed in
the 1980s and 1990s from industries such as textiles and
footwear to more advanced industries such as cars and
electronics. The automotive industry has seen particularly
strong growth. The country's industry is largely dominated
by so-called chaebols; large industrial
conglomerates, such as Hyundai. An increasing part of the
production base has been moved to other countries, not only
to China and other low-cost countries in Asia, but also to
Europe and America.
The Japanese have, among other things, participated in
the development of the country's iron and steel industry,
which includes the large integrated iron and steel plant in
Pohang on the southeast coast and smaller plants in Busan,
Ulsan and Seoul. Primary metal production forms the basis
for an extensive mechanical industry, and South Korea is one
of the world's largest shipbuilding nations. In the early
1990s, South Korea became the world's leading shipbuilding
nation, led by Hyundai Heavy Industries. The largest
shipyards are located in Ulsan and Okpo on the island of
Koje southwest of Pusan, but Pusan, Mokpo, Kunsan and Inchon
also have a considerable shipbuilding industry.
In 2004, work was started on the infrastructure of three
financial fronts for foreign investors. The Incheon Free
Economic Area is located at one of Asia's largest
airports, which opened in 2001. A stated goal with the
freezes is to make South Korea more of an economic hub in
South Korea's export-driven economy has benefited from
the strong Japanese yen currency. In 1995, South Korea
became the 12th country in the world whose exports have
passed US $ 100 billion. In 2017, exports reached US $ 577
billion, while imports reached US $ 457.5 billion that year.
Industrial products primarily focus on semiconductors,
consumer electronics, automobiles, steel and petrochemical
products. Japan and the United States are the main targets
for South Korea's exports, in addition to Hong Kong,
Singapore and Germany. Since the establishment of diplomatic
relations between South Korea and China in 1992, trade with
China has increased significantly.
Japan and the United States are the most important
countries for South Korea's imports, as well as Germany,
Saudi Arabia and Australia. Since the establishment of
diplomatic relations with China in 1992, China's trade has
shown particularly strong growth. In 2017, 25.1 percent of
exports to China and 12.2 percent to the United States went,
while Vietnam took 8.2 percent, Hong Kong 6.9 percent and
Japan 4.2 percent.
Of South Korea's imports, 20.5 percent came from China,
11.5 percent from Japan, 10.5 percent from the United
States, 4.2 percent from Germany and 4.1 percent from Saudi
Arabia (2017). The main import goods are machinery and
transport equipment, petroleum and petroleum products,
chemical products and various factory-manufactured goods.
Transport and Communications
During the rapid economic development, transport has been
heavily invested. The country has a well-developed
state-owned high-speed rail network that connects the
capital of Seoul with, among others, Pusan (via Taegu),
Mokpo on the southwest coast and Samchok on the northeast
In 2001, North and South Korea agreed to reopen the old
railroad between North and South, and on May 17, 2007, a
passenger train crossed the border between the two countries
for the first time in over 50 years. This was a preliminary
one-off event, but is seen as an important part of the
process of normalizing the relationship between North and
The road network has a total length of approximately 100
428 kilometers (2016), which includes the 428 kilometer long
motorway between Seoul and Busan. A highway through the DMZ
border zone was opened in 2005, but only for strictly
regulated traffic to/from a joint Korean industrial
project near Kaesong. However, efforts are being made to
improve the road connection between the two countries.
During the 1990s, the car fleet multiplied from just over
2 to 8 million. Seoul has had a subway since 1974.
The privately owned airlines Korean Airlines (KAL) and
Asiana operate domestic and foreign routes from Seoul. In
2001, one of Asia's largest airports opened on reclaimed
land at the port of Inchon. Other international airports can
be found at Seoul (Kimpo), Busan and Cheju. The main port
cities are Pusan, Inchon, Donghae, Masan, Yosu, Kunsan,
Mokpo, Pohang, Ulsan, Cheju and Kwangyang.