International Marketing -- South Korea Term Paper

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SAMPLE EXCERPT . . .
South Korea's GDP is for instance greater that that of Australia, Canada, the Netherlands or Switzerland. Four decades ago however, South Korea's GDP was comparable to the national output of the poorer countries in Africa or Asia. This was however the time when the state officials became engaged in processes of modernization, global integration and introduction of high technology applications with business operations.

The most important features of the South Korean economy are summarized throughout the following table:

Economic Indicator

Value of the Indicator in South Korea

Global Average of the Economic Indicator

U.S. Value of the Economic Indicator

1.

GDP

- from agriculture

- from industry

- from services

$1.338 trillion

- 3%

- 39.5%

-57.6%

$70.14 trillion

- 4%

- 32%

$14.44 trillion

- 1.2%

- 19.2%

- 79.6%

2.

GDP growth rate

2.2%

2.9%

0.4%

3.

GDP per capita

$27,700

$10,500

$47,500

4.

Labor force

- in agriculture

- in industry

- in services

24.35 million

- 7.2%

- 25.1%

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- 67.7%

3.232 billion

- 40.5%

- 20.5%

- 39%

154.3 million

- 0.6%

- 22.6%

- 76.8

5.

Unemployment rate

3.2%

30%

5.8%

6.

Population living below the poverty line

15%

NA

12%

7.

Investments

27.1% of GDP

Term Paper on International Marketing -- South Korea Assignment

21.8% of GDP

14.3% of GDP

8.

Budget

- revenues

- expenses

$10.8 billion

- $227.5 billion

- $216.7 billion

NA

-- $454 billion

- $2.524 trillion

- $2.987 trillion

9.

Public debt

24.4% of GDP

NA

37.5% of GDP

10.

Inflation Rate

4.7%

1% to 4% in developed countries; 5% to 20% in emergent economies

3.8%

The used data in the construction of the table above have been retrieved from the website of the Central Intelligence Agency. They point to the fact that both United States and South Korea are superior to the global averages. Nevertheless, it cannot be safely argued that the U.S. is entirely superior to the eastern Asian country. Both U.S. And South Korea manage to overcome the other in terms of certain economic elements. In terms of the GDP volume for instance, the United States is the undisputed leader; in terms of the growth rate of the national output however, the winning country is South Korea. Overall then, it can be argued that a solid partnership between the two states would materialize in mutual benefits for both parties.

9. South Korea's Trade

South Korea's current account balance registers a negative value of $6.349 billion, a major decrease from the $5.954 billion registered in 2007. The percentage presentation of the negative evolution translates into the fact that South Korea's current account balance decreased by 206.63% comparative to the previous year. This massive reduction can be attributed to the decreased power of the South Korean won, the internationalized economic crisis, the threat of cheap imports or the changing consumer preferences. Nevertheless, it must also be noted that South Korea's CAB has been following a descendant trend ever since 2006, as best revealed in the chart below:

* The data used in the construction of this chart were retrieved from Indexmundi, 2009

The shift in the country's current account balance translates in the fact that South Korea's savings in report to the investments have suffered reductions. Otherwise put, the negative value of the CAB indicates that the investments of other countries within South Korea have increased (Economics About, 2009).

Given the relative scarcity of natural resources, South Korea has most often turned to international trade as a source of economic prosperity. The country's foreign trade policy has been focused on the liberalization of market as well as the diversification of the trading partners. In terms of diversity, this became a goal of the Seoul authorities as they strived to reduce the country's dependency on some of its trade partners (American Memory for the Library of Congress, 1992). Today, exports account to $433.5 billion and they have followed an ascendant trend by increasing from their 2007 value of $379 billion. Imports account for $427.4 trillion, and they have registered an increase comparative to 2007. The following table reveals some pivotal information on the foreign trade of South Korea.

Trade indicator

2009

2008

1.

Total value of exports

$433.5 billion

$379 billion

2.

Export commodities

Wireless communications equipments, Semiconductors, motor vehicles, steel, computers, ships and petrochemicals

3.

Export partners (2008)

China (21.4%), United States (10.9%), Japan (6.6%), Hong Kong (4.6%)

4.

Exports of oil

800,000 bbl per day

NA

5.

Exports of natural gas

0

NA

6.

Exports of electricity

0

NA

7.

Total value of imports

$427.4 billion

$349.6 billion

8.

Import commodities

Electronic equipments, machineries, transport equipment, steel, oil, plastics, organic chemicals

9.

Import partners (2008)

China (17.7%), Japan (14%), United States (8.9%), Saudi Arabia (7.8%), United Arab Emirates (4.4%) and Australia (4.1%)

10.

Imports of oil

2.982 million bbl per day

NA

11.

Imports of natural gas

36.21 billion cubic meters

NA

12.

Imports of electricity

0

NA

*Table constructed on information retrieved from the website of the Central Intelligence Agency, 2009

In 2008, the export of merchandise totaled up to $422.077 billion, revealing as such a 14% increase relative to 2007; the imports accumulated $435.275 billion, revealing a 22% increase comparative to 2007. Manufactured items represented the largest majority of exported merchandise, with 86.5%; the category was followed by fuels and mining products, with 11.3% and, lastly, by agricultural products, with 1.8% in the country's merchandise exports. In terms of imports, these mostly revolved around manufactured items -- 53.3%, fuels and mining items -- 40.3% and agricultural products -- 6.1%.

In terms of services, exports amounted to $74.107 billion, having increased by 20% comparative to 2007. The imports of services totaled up to $91.768 billion, a 12% increase comparative to the previous year. South Korea mainly exports transportation services -- 58.8%, travel services -- 12.2% and other services -- 29.0%. The services imported are structured in a similar manner: transportation -- 40.5%, travel -- 18.7% and other commercial services -- 40.9% (World Trade Organization, 2009).

As it can easily be observed, the United States of America represents a main trading partner for South Korea as it receives 10% of the Asian country's exports and it constitutes the sources for nearly 9% of its imports. The table below presents figures on the past ten years of trade between the two states:

Year

Exports to the U.S.

Imports from the U.S.

Trade Balance

1999

31,178.4

22.958.4

8,220.0

2000

40,307.7

27.830.0

12,477.7

2001

35,181.5

22.180.7

13,000.8

2002

35,571.7

22.575.7

12,996.0

2003

37,229.4

24.072.6

13.156.8

2004

46,167.9

26,186.7

19,981.2

2005

43,781.4

27,571.6

16,209.8

2006

45,803.6

32,219.1

13,584.5

2007

47,562.3

34,401.7

13,160.6

2008

48.069.1

34,668.7

13,400.4

*Table constructed based on the information retrieved from the United States Census Bureau, 2009

The chart below reveals the evolution of the trade balance between South Korea and the United States of America.

It must be noted that despite the fluctuating values from one year to the other, the trade balance has always been positive, meaning that South Korea exported more to the U.S. than it imported from the North American country. This is a model desired by any economy as it constitutes the basis to sustainable revenues from global trade. Nevertheless, to the American investor, it could imply that the country is not looking to purchase American products, but is more focused on selling Korean products to the Americans. As a specific feature, it could mean that the American investor ought to consider operating a manufacturing plant and then exporting the resulted products onto other markets.

10. Foreign Direct Investments in South Korea

The federal authorities recognized the country's necessity for foreign investments and liberalized the economy in order to increase the foreigner investors' access to the national markets. Additionally, they also developed and implemented numerous incentives. For instance, they allocated enlarged budgets to develop the country's infrastructure and as such better support the investors' logistics operations, communications and so on. Then, they reduced the taxes and the regulations to be complied with by foreign investors. These measures were even more so necessary as South Korea was recovering from the economic crisis that hit the Asian continent in 1998 and 1999. In 2001, FDIs once again decreased, but this only reflected the reduced financial powers of the foreign investors, who were feeling the pressures of the economic difficulties characteristic to the western countries of that period. The investments again picked up in 2003 and 2004, but began to decrease again in 2005 (Industry Canada, 2008). The years since then have been marked by fluctuations, generally pegged to the state of the global economy and the policies implemented by the national governments.

11. Infrastructure

South Korea pries on a well developed infrastructure, characterized primarily by a strong transportation system and increased communication abilities. In terms of transportation, the following are of the utmost importance:

a total number of 116 airports, out of which 72 have paved runways a total number of 516 heliports

1,423 kilometers of gas pipelines and 827 kilometers of refined products… [END OF PREVIEW] . . . READ MORE

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