Asia's Turning Point: An Introduction to Asia's Dynamic Economies at the Dawn of the New Century

10

South Korea Reformed: Challenges for a Newly Developed Nation

A Few Basics

South Korea is a mid-sized country with a population of 48.3 million people. In 2007, it was the thirteenth-largest economy in the world in terms of nominal gross domestic product (GDP)—after India and above Australia—and ranked thirty-fifth by per-capita GDP (purchasing power parity (PPP))—between the Bahamas and the Czech Republic and also ahead of Portugal.

The country is divided into nine provinces and seven metropolitan cities. Economic activities are mainly concentrated around two the major cities—the Seoul metropolitan area in the northwest and one of Asia’s major seaports, Busan, on the southeast coast. The population of the Seoul metropolitan area, neighboring Gyeonggi Province, and the Busan metropolitan area comprises 50 percent of South Korea’s total.

Today’s South Korea is an industrially developed country. It was the second Asian nation, after Japan, to join the Organization for Economic Co-operation and Development (OECD), gaining membership in 1996.

In 2006, agriculture accounted for 2.9 percent of the country’s GDP, industry 35.2 percent, and services 61.9 percent. The share of agriculture in the total number of persons employed was 7.4 percent, manufacturing 17.4 percent, and other industries (mostly services) 74.3 percent (ADB 2007).

South Korea has almost the full set of heavy and light manufacturing industries. The most internationally competitive among them are transportation machinery ...