What economic problems does South Korea, one of the four Asian tigers, face as i
In previous articles, the author discussed a series of issues related to the economic development of various countries, such as Russia, Vietnam, and so on. Today, let's talk about South Korea. South Korea is a developed country in Asia and is also one of the Four Asian Tigers, having created the famous Miracle on the Han River. So, how did South Korea gradually become a developed country over several decades? What issues does the South Korean economy currently face? Today, we will discuss the issues of South Korea's economic development.
First, let's talk about the actual situation in South Korea. After the armistice in 1953, South Korea was economically far behind North Korea at the same period. This was because, during the Japanese colonial period, the northern part of the Korean Peninsula was designated as an industrial zone, and the southern part as an agricultural zone. Therefore, North Korea indeed had a better foundation than South Korea in the 1950s. At the same time, it could also receive assistance from the Soviet Union and a series of allies, quickly restoring its economy and strength. Compared with North Korea during this period, South Korea was significantly worse off.
In 1960, South Korea's per capita GDP was less than 80 US dollars, far behind North Korea. However, in 1962, the Vietnam War broke out. As the scale of this war grew larger, in order to have South Korea send troops to help, the United States had to provide South Korea with a large amount of foreign exchange and technical assistance, laying the initial foundation for South Korea's economic development. During the same period, South Korea successively proposed the three major slogans of "trade-oriented nation," "export-first policy," and "priority development of heavy industry," and the economy began to develop gradually.
By 1970, South Korea's per capita GDP had reached over 280 US dollars. By 1980, it had reached over 1,800 US dollars. The aforementioned period was the economic takeoff period for South Korea, also known as the Miracle on the Han River, and South Korea became one of the Four Asian Tigers. South Korea established its own basic industries in a series of fields such as shipbuilding, steel processing, electronic contract manufacturing, and automotive components. For example, South Korea's electronics technology, automotive, and shipbuilding industries are still major competitors for our country to this day.
Of course, economic development is not a simple matter. From the 1960s to the 1980s, South Korea successively implemented four "Five-Year Plans," rising rapidly with an average annual GDP growth rate of 9.8%. The core of the "Five-Year Plans" was to use the Economic Planning Board as the decision-making core, with large conglomerates and major projects as the main implementers, to carry out a series of economic development policies. By the end of the 1980s, South Korea had reached the level of a medium-developed country.
However, South Korea's economic development prematurely depleted the country's future potential. Taking foreign debt as an example, it grew exponentially year by year. In 1985, South Korea's foreign debt balance was 46.7 billion US dollars. By 1992, it had exceeded 90 billion US dollars. By 1996, it had surpassed 110 billion US dollars. With the advent of the 1997 Asian financial crisis, the Korean won suffered a severe blow and began to rapidly depreciate.Starting from the late 1980s, South Korea's economic growth rate had already begun to decline significantly. In 1988, South Korea's GDP growth rate was 12.1%, a level that could be considered miraculous. However, by 1989, it rapidly fell to 7%. At the same time, South Korea's total exports to the United States also began to decrease substantially. Concurrently, the issue of an aging population started to plague South Korea, significantly increasing labor costs.
From the early 1980s to the late 1980s, South Korea's labor costs nearly tripled, leading to a noticeable increase in expenditures for a series of enterprises. Alongside this, as the demographic dividend was lost, the problem of an aging population in South Korea began to emerge, with a clear disparity in the proportion of newborns and young adults. For instance, by the end of the 1980s, the proportion of the population aged 0-14 was only 25.7%. Under immense pressure and a combination of various other factors, South Korean young people generally became reluctant to have children.
In this broader context, South Korea swiftly began to scale up its foreign investments, particularly in Vietnam. A number of South Korean enterprises made large-scale investments and established factories in Vietnam, thereby alleviating the pressure of high domestic labor costs. However, the issue of South Korea's low birth rate remained unresolved. In 2018, the proportion of South Korea's population aged 65 and above exceeded 14%, entering an aging society. In the same year, South Korea's fertility rate fell below 1%. By 2022, the employment rate of South Koreans aged 55 and above had increased from 10% in 2012 to 17.8%.
It is evident that the issue of an aging population in South Korea has become very severe. To mitigate this problem, South Korea began to introduce a large number of foreign workers on a large scale. The immigrant economy has become an important part of South Korea's economy, with a certain scale of foreign workers forming the foundation of South Korea's economic stability and social development. As of the end of December 2023, there were a total of 2.508 million foreigners residing in South Korea, an increase of 11.7% year-on-year.
Long-term residents (over 90 days) accounted for 75% of the total, with 1.883 million people; short-term sojourners made up 25%, with 625,000 people. Among them, the Chinese were the most numerous, with 942,000 people. They were followed by Vietnamese with 272,000 people; then Thais with 202,121 people; Americans with 162,000 people, ranking fourth; and Uzbekistanis with 88,000 people, ranking fifth.
To adapt to domestic conditions, South Korea has been actively developing the biohealth industry in recent years, along with non-memory semiconductors and future-oriented automotive industries. At the same time, it has been actively planning for industries that are friendly to the elderly. The scale of South Korea's elderly-friendly industries has been rapidly developing since 2015, with a market size reaching 728.3 trillion won in 2020. In the past two years, with the vicissitudes of the international financial market, we ordinary people are inevitably affected to varying degrees.