South Korean Economy Stagnation


Stagnating Economy
Over the last few decades, the South Korean economy has grown from a small third world country economy to a global powerhouse. With the success of large companies such as Samsung and Hyundai, the South Korean economy has been an a steep upward tend, but recently, this growth is starting to stagnate. Because of this, South Korea has announced a fresh set of measures to boost economic growth and create jobs by offering financial support for smaller companies and a fuel tax cut to spur consumption. Song Jung states that, “The latest measures come as the administration of President Moon Jae-in comes under growing pressure to revitalize a stalled economy and weak jobs market. South Korea’s export-driven economy is threatened by the worsening trade war between the Washington and Beijing as well as China’s slowing economic growth.” These measures were created to help grow the South Korean economy despite trade wars and other worldwide setbacks. However, these measures are only one of many failed policies to create economy growth. One previous policy was increase minimum wage, but because of this, “manufacturers and retailers continue to shed staff after big increases in minimum wages. The number of newly added jobs fell to 17,000 in the third quarter, far lower than a 101,000 gain three months earlier.” South Korea has been unable to stimulate the growth of small businesses and therefore grow its economy, as large businesses often dominate the market and leave little room for competition. Furthermore, corruption among politicians have allowed those large companies to evade taxes and make profit at the expense of the consumers. Because of this, the South Korean economy has been severely damaged, with consumers losing trust in the government and companies. This lack of faith in the government has caused large amounts of emigration to other countries such as the US, leaving the South Korean economy in need for more qualified workers but unable to procure any. In order to grow its economy, it’s clear that South Korea must make drastic changes to its market policies.


Source:
https://www.ft.com/content/45bd0506-d749-11e8-a854-33d6f82e62f8

Comments

  1. AnonymousJanuary 28, 2019 at 9:22 AM

    As the economy in South Korea starts to slow down, so do the fertility rates. In an article by The Guardian explaining the downward trend in South Korean birthrates the author wrote that, "women are not having children "for fear of being denied promotions and facing discrimination at work". In the same article, they cited "worsening job prospects for young people and rising property prices" for the lack of children in South Korea. So, the economy is having a huge impact on the amount of children being born. Is there anything that the South Korean government can do to help promote increasing birthrates?

    ReplyDelete
  2. AnonymousFebruary 4, 2019 at 8:43 AM

    "Faith in government" is a concept we see often in Economic's case studies, but what does it mean? Interestingly, the interaction between citizen and ruling body is more trade-like than I personally first thought. Governments promise economic, social, and political safety in return for tax money or compliance. However, if the government begins to fail in one of these areas then trust falters as well. As a result less will invest in the market and will also likely be less compliant. This means money will be taken out of the state/country/nation and generally results in an economic collapse of sometime. Is this a case in which blind faith would actually help?

    ReplyDelete
  3. AnonymousFebruary 15, 2019 at 2:08 PM

    Interesting post! Like you said, South Korea's economy grew from a small third world country economy to one of the larger economies in the world. As we learned in class, free trade enables the growth of economy, but I think it's interesting to note that South Korea actually grew from protectionism. Asian countries like Japan, China, and South Korea have all been positively influence through import substitution industrialization which focuses on infant industry protection. This enables smaller countries to grow industries like car industry in Hyundai or electronics with Samsung.

    http://www.columbia.edu/~ap2231/ET/et25-april01.htm

    ReplyDelete

Post a Comment

Popular posts from this blog

The Cost of Inelastic Goods

Image
Many goods that are inelastic in terms of demand are ones that are essential or, in other words, necessary to one's self. There are several examples: basic foods, gasoline, or even medicine. I was interested in how producers can manipulate the prices of these goods and how the total revenue can change over time because those goods are inelastic. The first example I thought of was insulin. Considered inelastic because, without it, those who are diabetic might physically suffer, I looked at the price trends in the past couple of years. Just as I predicted, the price has been rising dramatically in the past decade or so as producers are taking advantage of the consumers' essential need for this good. There are about 7.4 million Americans that use insulin and many struggle to pay the costs of this increasingly expensive drug. So, while rising prices benefit insulin manufacturers, those same prices come at a serious cost for patients as the demand for insulin is inelastic. Other...
Read more

The Opportunity Costs of College

Image
The concept of opportunity costs has much more applications in the real world than I first imagined. The opportunity cost of one thing is the value of that which is sacrificed to obtain it. When I began to research I was stunned by the number of examples and situations, but the one that interested me the most was the opportunity cost of college. We are all about to go to college in just a couple months, so of course, I wanted to see if this upcoming journey is going to be worth it. The first cost of college: tuition. College is not cheap and according to the College Board, during the 2017-18 school year, the average cost of tuition and fees was $34,740 at private colleges. Now assume it takes you four years to graduate and that is approximately $140,000 that you spend on a college education. Thus, by deciding to go to a private college, the money spent is an opportunity cost as it is something that you did not have to spend if you didn't go to college. In addition, by going to ...
Read more

The New Taxi: Ubers

Image
In recent years the transportation industry has begun to change dramatically. At first, ride-sharing companies did not have much hold over the industry as taxicabs and rental cars dominated the needs of business travelers as they searched for transportation so they could reach their destinations. However, recently this industry has suffered a loss has rates of people using these amenities have dropped, but the rates of people using Uber have dramatically increased. Uber is a ride-sharing platform where you can request a ride from an app (sounds familiar right?) it's almost exactly like a modernized taxi. However, there are a couple key features that services like Uber provide in which taxis and the traditional temporary transportation do not. One of the key factors that draw its consumers is the easy use of the app and its services. Before you would need to take a chance and wave your hand in the street to see if you can catch a taxi or even call the number of a taxicab comp...
Read more