The scale of Korea's international trade is expected to exceed USD500 billion this year. That is an accomplishment achieved a generation after it was USD10 billion, and only five years since it was USD300 billion. Trade accounts for 70 percent of the GDP, so Korea can really be called a trading nation. The people have reason to be proud of the way exports have brought economic growth. However, there are issues hidden by the quantitative growth that will require a lot of work to overcome.
The biggest problem is that Korea's trade terms, the amount the country is able to import for all that it exports, have continued to worsen since the financial crisis of 1997. A lot is being sold, but less and less is being gained from it. Korea falls behind by comparison to other highly trade-dependent nations like Japan and Taiwan because the situation refuses to improve.
There are still a lot of products that are low in added values, are of common enough technology, and that are of relatively low price. The situation is not to be taken lightly when Korea is importing fewer products that are the world's best. That is why it needs to actively diversify its trade to include tourism, logistics, and finance. Another problem is the overconcentration of just a few exports going to just a few nations. Half the country's exports are semiconductors, automobiles, and mobile phones going to China, Japan, and the United States. A high dependence on a few products going to a few places makes the Korean economy less stable.
It is disturbing that exports are doing so well while the domestic economy continues to stay the same. The problem there is that there is a disconnect between the two. One example would be that in 1990, every W10 billion in exports translated into the creation of jobs for 46 people, and now it only creates jobs for 15. There needs to be more effort spent on fostering the growth of middle-sized companies and the parts and materials industry if exports are going to lead to economic growth and jobs. Having most capital goods be dependent on imports only fattens overseas companies.
The Hankyoreh, 30 November 2005.
[Translations by Seoul Selection]
[Editorial] The Problem with $500 Billion in Trade |
