Editing Economy of South Korea (section)

==History==
===Overview===
Following the [[Korean War]], South Korea remained a country with less developed markets for a little more than a decade. The growth of the industrial sector was the principal stimulus to South Korea's economic development. In 1986, manufacturing industries accounted for approximately 30 percent of the gross domestic product (GDP) and 25 percent of the work force. Due to strong domestic encouragement and some foreign aid, Seoul's industrialists introduced modern technologies into outmoded or newly built facilities, increased the production of commodities—especially those for sale in foreign markets—and plowed the proceeds back into further industrial expansion. As a result, industry altered South Korea's landscape, drawing millions of labourers to urban manufacturing centres.

A downturn in the South Korean economy in 1989 spurred by a decrease in exports and foreign orders caused concern in the industrial sector. Ministry of Trade and Industry analysts stated that decreased export performance resulted from structural problems, including an overly strong won, increased wages and labour costs, frequent strikes, and higher interest rates. The result was an increase in inventories and cutbacks in production at a number of electronics, automobile, and textile manufacturers, as well as at the smaller firms that supplied the parts. Factory automation systems were introduced to reduce dependence on labour, to boost productivity with a smaller work force, and to improve competitiveness.

=== Colonial period ===
[[Korea under Japanese rule|Japan colonized]] Korea, [[Japan–Korea Treaty of 1910|officially annexing it]] on 22 August 1910 as the Province of Choson.<ref name=":02">{{Cite book |last=Li |first=Xiaobing |title=The Cold War in East Asia |date=2018 |publisher=[[Routledge]] |isbn=978-1-138-65179-1 |location=Abingdon, Oxon}}</ref>{{Rp|page=24}} Japan encouraged an inflow of Japanese capital to Korea's less developed economy.<ref name=":02" />{{Rp|page=24}} A large majority of major firms in Korea became Japanese owned and operated as a result, with key positions reserved for Japanese.<ref name=":02" />{{Rp|page=24}} Koreans were permitted to work in menial roles under harsh labor conditions.<ref name=":02" />{{Rp|page=24}} Most of Korea's coal, iron, and crop production was shipped to Japan.<ref name=":02" />{{Rp|page=24}}

===Rapid growth from 1960s to 1980s===
[[File:Historical GDP growth of South Korea.png|thumb|upright=1.2|Growth of the South Korean economy 1961–2015]]
[[File:TwoKoreasGDPPerCapita.svg|thumb|upright=1.2|Economy of South Korea, compared to North Korea. North Korea began to lose the economic competition after its adoption of ''[[Juche]]'' in 1974.]]
Following [[May 16 coup|the coup]] that brought General [[Park Chung Hee]] to power in 1961, which at first caused political instability and an economic crisis, a [[protectionist]] economic policy began, pushing a bourgeoisie that developed in the shadow of the State to reactivate the internal market. To promote development, a policy of [[export-oriented industrialization|export-oriented industrialisation]] was applied, closing the entry into the country of all kinds of foreign products, except raw materials. Agrarian reforms were carried out and Park nationalised the financial system to swell the powerful state arm, whose intervention in the economy was through five-year plans.<ref>{{Cite web |url=https://www.pagina12.com.ar/104906-corea-del-sur-no-es-un-milagro |title=Corea del Sur no es un milagro &#124; Un Estado muy fuerte, industrialización, extrema flexibilización laboral y conglomerados familiares. El papel de EE.UU. |date=30 March 2018 |access-date=5 March 2019 |archive-date=29 January 2019 |archive-url=https://web.archive.org/web/20190129064108/https://www.pagina12.com.ar/104906-corea-del-sur-no-es-un-milagro |url-status=live }}</ref>

The spearhead was the [[chaebol]]s, diversified family conglomerates such as [[Hyundai Group|Hyundai]], [[Samsung]], and [[LG|LG Corporation]], which received state incentives such as tax breaks, legality for their exploitation system and cheap or free financing: the state bank facilitated the planning of concentrated loans by item according to each five-year plan, and by economic group selected to lead it.

South Korea received donations from the United States due to the Cold War, and foreign economic and military support continued for some years. Chaebols started to dominate the domestic economy and, eventually, began to become internationally competitive. Under these chaebols, workers began to see their wages and working conditions improve, which increased domestic consumption. By the 1980s, the country rose from low income to middle income.<ref>{{Cite web |url=http://documents.worldbank.org/curated/en/975081468244550798/pdf/multi-page.pdf |title=Archived copy |access-date=30 July 2019 |archive-date=10 February 2020 |archive-url=https://web.archive.org/web/20200210154516/http://documents.worldbank.org/curated/en/975081468244550798/pdf/multi-page.pdf |url-status=live }}</ref>

South Korea's real GDP expanded by an average of more than 8 percent per year,<ref name=loc/> from US$2.7 billion in 1962<ref>{{cite web|url=http://www.nationmaster.com/graph/eco_gdp-economy-gdp&date=1962|title=Countries Compared by Economy > GDP. International Statistics at NationMaster.com|work=nationmaster.com|access-date=4 March 2021|archive-date=19 May 2011|archive-url=https://web.archive.org/web/20110519125735/http://www.nationmaster.com/graph/eco_gdp-economy-gdp%26date%3D1962|url-status=live}}</ref> to US$230 billion in 1989,<ref>{{cite web |url=http://www.nationmaster.com/graph/eco_gdp-economy-gdp&date=1989 |title=Countries Compared by Economy > GDP. International Statistics at NationMaster.com |work=nationmaster.com |access-date=4 March 2021 |archive-date=11 February 2011 |archive-url=https://web.archive.org/web/20110211194900/http://www.nationmaster.com/graph/eco_gdp-economy-gdp%26date%3D1989 |url-status=live }}</ref> breaking the trillion dollar mark in the early 2000s. Nominal GDP per capita grew from $103.88 in 1962<ref>{{cite web| url=http://www.nationmaster.com/graph/eco_gdp_percap-economy-gdp-per-capita&date=1962| title=Countries Compared by Economy > GDP > Per capita. International Statistics at NationMaster.com| work=nationmaster.com| access-date=4 March 2021| archive-date=18 December 2010| archive-url=https://web.archive.org/web/20101218175831/http://www.nationmaster.com/graph/eco_gdp_percap-economy-gdp-per-capita%26date%3D1962| url-status=live}}</ref> to $5,438.24 in 1989,<ref>{{cite web|url=http://www.nationmaster.com/graph/eco_gdp_percap-economy-gdp-per-capita&date=1989|title=Countries Compared by Economy > GDP > Per capita. International Statistics at NationMaster.com|work=nationmaster.com|access-date=4 March 2021|archive-date=6 April 2011|archive-url=https://web.archive.org/web/20110406112658/http://www.nationmaster.com/graph/eco_gdp_percap-economy-gdp-per-capita%26date%3D1989|url-status=live}}</ref> reaching the $20,000 milestone in 2006. The manufacturing sector grew from 14.3 percent of the [[Gross national income|GNP]] in 1962 to 30.3 percent in 1987. Commodity trade volume rose from US$480 million in 1962 to a projected US$127.9 billion in 1990. The ratio of [[Saving|domestic savings]] to GNP grew from 3.3 percent in 1962 to 35.8 percent in 1989.<ref name=loc/> In the early 1960s, South Korea's rate of growth exceeded North Korea's rate of growth in most industrial areas.<ref name=foia-19670921>{{cite report |page=4 |url=http://www.foia.cia.gov/sites/default/files/document_conversions/89801/DOC_0001218147.pdf |title=North Korean Intentions and Capabilities With Respect to South Korea |id=SNIE 14.2–67 |publisher=[[CIA]] |date=21 September 1967 |access-date=13 March 2017 |archive-date=15 November 2017 |archive-url=https://web.archive.org/web/20171115201410/https://www.cia.gov/library/readingroom/docs/DOC_0001218147.pdf |url-status=dead }}</ref>

The most significant factor in rapid industrialisation was the adoption of an outward-looking strategy in the early 1960s.<ref>Koh, Jae Myong (2018) ''Green Infrastructure Financing: Institutional Investors, PPPs and Bankable Projects'', Palgrave Macmillan, pp.37–39.</ref><ref name=loc/> This strategy was particularly well-suited to that time because of South Korea's low savings rate and small domestic market. The strategy promoted economic growth through labour-intensive manufactured exports, in which South Korea could develop a competitive advantage. Government initiatives played an important role in this process.<ref name=loc/> Through the model of export-led industrialisation, the South Korean government incentivised corporations to develop new technology and upgrade productive efficiency to compete the global market.<ref name=":0">{{Cite book| chapter=The Developmental State in Retrospect and Prospect: Lessons from India and South Korea|last=Chibber |first=Vivek| title=The End of the Developmental State?|publisher=Routledge|year=2014|editor-last=Williams|editor-first=Michelle|pages=30–53}}</ref> By adhering to state regulations and demands, firms were awarded subsidisation and investment support to develop their export markets in the evolving international arena.<ref name=":0" /> In addition, the inflow of foreign capital was encouraged to supplement the shortage of domestic savings. These efforts enabled South Korea to achieve growth in exports and subsequent increases in income.<ref name=loc/>

Beginning in 1973, South Korea's government used its National Investment Fund and the [[Korea Development Bank]] to invest large amounts of money into what Park Chung Hee's government viewed as the six strategic industries: steel, non-ferrous metals, shipbuilding, industrial machinery, electronics, and petrochemicals.<ref name=":62">{{Cite book |last=Lan |first=Xiaohuan |title=How China Works: An Introduction to China's State-led Economic Development |publisher=[[Palgrave Macmillan]] |year=2024 |isbn=978-981-97-0079-0 |translator-last=Topp |translator-first=Gary |doi=10.1007/978-981-97-0080-6}}</ref>{{Rp|page=136}} This developmental approach was frequently criticized at the time from outside Korea, including by the World Bank.<ref name=":62" />{{Rp|page=136}} The strategy was successful and ultimately also helped develop companies like Samsung and [[POSCO]] and reduced input costs for production in downstream industries as well.<ref name=":62" />{{Rp|page=136}}

By emphasising the industrial sector, Seoul's export-oriented development strategy left the rural sector barely touched. The steel and shipbuilding industries in particular played key roles in developing South Korea's economy during this time.<ref>{{Cite journal|url=http://jwsr.pitt.edu/ojs/jwsr/article/view/316|archiveurl=https://web.archive.org/web/20200730234453/http://jwsr.pitt.edu/ojs/index.php/jwsr/article/view/316/328|title=The Steel and Shipbuilding Industries of South Korea: Rising East Asia and Globalization|first1=Kyoung-ho|last1=Shin|first2=Paul S.|last2=Ciccantell|date=26 August 2009|archivedate=30 July 2020|journal=Journal of World-Systems Research|pages=167–192|via=jwsr.pitt.edu|doi=10.5195/jwsr.2009.316}}</ref> Except for mining, most industries were located in the urban areas of the northwest and southeast. Heavy industries were located in the south of the country. Factories in Seoul contributed over 25 percent of all manufacturing value-added in 1978; taken together with factories in the surrounding Gyeonggi Province, factories in the Seoul area produced 46 percent of all manufacturing that year. Factories in Seoul and Gyeonggi Province employed 48 percent of the nation's 2.1 million factory workers. Increased income disparity between the industrial and agricultural sectors became a problem by the 1970s despite government efforts to raise farm income and improve rural areas <ref name=loc/>

[[File:South Korean inflation.webp|thumb|upright=1.2|South Korean inflation
{{legend-line|#000000 solid 3px|M2 [[money supply]] increases}}
{{legend|#FF644E|Inflation}}
{{legend-line|#00A2FF solid 3px|Inflation ex food and energy}}
]]
In the early 1980s, in order to control inflation, a conservative [[monetary policy]] and tight fiscal measures were adopted. Growth of the [[money supply]] was reduced from the 30 percent level of the 1970s to 15 percent. During this time, Seoul froze its budget for a short while. Government intervention in the economy was greatly reduced and policies on imports and foreign investment were liberalised to promote competition. To reduce the imbalance between rural and urban sectors, Seoul expanded investments in public projects, such as roads and communications facilities, while further promoting farm [[mechanization|mechanisation]].<ref name=loc/>

The measures implemented early in the decade, coupled with significant improvements in the world economy, helped South Korea regain its lost momentum. South Korea achieved an average of 9.2 percent real growth between 1982 and 1987 and 12.5 percent between 1986 and 1988. The double-digit inflation of the 1970s was brought under control. Wholesale price inflation averaged 2.1 percent per year from 1980 through 1988; consumer prices increased by an average of 4.7 percent annually. Seoul achieved its first significant surplus in its balance of payments in 1986 and recorded a US$7.7 billion and a US$11.4 billion surplus in 1987 and 1988 respectively. This development permitted South Korea to begin reducing its level of [[foreign debt]]. The trade surplus for 1989, however, was only US$4.6 billion, and a small negative balance was projected for 1990.<ref name=loc>{{Country study|url=http://countrystudies.us/south-korea/45.htm|article=South Korea: The Economy}}</ref>

===1990s and the Asian Financial Crisis===
[[File:South Korean bonds.webp|thumb|upright=1.2|South Korean bonds
{{legend-line|#CD2E3A solid 3px|50 year}}
{{legend-line|#0F64CD solid 3px|10 year}}
{{legend-line|#56C1FF solid 3px|2 year}}
{{legend-line|#000000 solid 3px|1 year}}
]]
For the first half of the 1990s, the South Korean economy continued a stable and strong growth in both private consumption and GDP. During the [[1997 Asian financial crisis]], after several other Asian currencies were attacked by speculators, the Korean won started to depreciate in October 1997.<ref name="a" /> The problem was exacerbated due to non-performing loans at many of Korea's merchant banks. By December 1997, the IMF had approved a US$21 billion loan, that would be part of a US$58.4 billion bailout plan.<ref name="a" /> By January 1998, the government had shut down a third of Korea's merchant banks.<ref name="a" /> Throughout 1998, Korea's economy would continue to shrink quarterly at an average rate of −6.65%.<ref name="a" /> and South Korean chaebol [[Daewoo]] was dismantled by the government in 1999 due to debt problems. [[General Motors]] managed to purchase the motors division. Indian conglomerate [[Tata Group]] purchased the trucks and heavy vehicles division of Daewoo.<ref name="a">{{Cite journal
 |title=Recovery from a financial crisis: the case of South Korea 
 |url=http://findarticles.com/p/articles/mi_m0DKI/is_4_2001/ai_84799965/?tag=content;col1 
 |year=2001 
 |journal=Economic & Financial Review 
 |format=w 
 |last1=Koo 
 |first1=Jahyeong 
 |last2=Kiser 
 |first2=Sherry L. 
 |access-date=5 May 2009 
 |url-status=dead 
 |archive-url=https://web.archive.org/web/20111108023544/http://findarticles.com/p/articles/mi_m0DKI/is_4_2001/ai_84799965/?tag=content%3Bcol1 
 |archive-date=8 November 2011 
}}</ref>

Actions by the South Korean government and debt swaps by international lenders have contained the country's financial problems. Much of South Korea's recovery from the 1997 Asian financial crisis can be attributed to labour adjustments (i.e. a dynamic and productive labour market with flexible wage rates) and alternative funding sources.<ref name="a" /> By the first quarter of 1999, GDP growth had risen to 5.4%, and strong growth thereafter combined with deflationary pressure on the currency led to a yearly growth of 10.5%. In December 1999, President [[Kim Dae-jung]] declared the currency crisis over.<ref name="a" />

===2000s===
South Korea's economy has moved away from a centrally planned, government-directed investment model toward a more market-oriented one. These economic reforms, pushed by President Kim Dae-jung, helped South Korea maintain one of Asia's few expanding economies,{{Citation needed|date=May 2020}} with growth rates of 10.8% in 1999 and 9.2% in 2000. Growth fell back to 3.3% in 2001 because of the slowing global economy, decreased exports, and perceptions that corporate and financial reforms had stalled.

After the bounce back from the 1997 Asian financial crisis, the economy continued strong growth in 2000 with a GDP growth of 9.08%.<ref name="a" /> However, the South Korean economy was affected by the [[September 11 attacks]]. The slowing global economy, falling exports, and the perception that corporate and financial reforms had stalled caused growth to decrease to 3.8% in 2001<ref name="b">{{cite web
 | title = Total Economy Database
 | url = http://www.conference-board.org/economics/database.cfm
 | year = 2009
 | access-date = 5 June 2009
 | archive-date = 7 May 2016
 | archive-url = https://web.archive.org/web/20160507193609/https://www.conference-board.org/economics/database.cfm
 | url-status = live
 }}</ref> Thanks to industrialisation GDP per hour worked (labour output) more than tripled from US$2.80 in 1963 to US$10.00 in 1989.<ref name="b" /> More recently the economy stabilised and maintained a growth rate of between 4–5% from 2003 onwards.<ref name="b" />

Led by industry and construction, growth in 2002 was 5.8%,<ref>{{cite web|title=South Korea's GDP up 5.8% for year|url=http://edition.cnn.com/2002/BUSINESS/asia/11/21/korea.gdp/index.html|website=CNN|access-date=26 February 2017|archive-date=27 February 2017|archive-url=https://web.archive.org/web/20170227150057/http://edition.cnn.com/2002/BUSINESS/asia/11/21/korea.gdp/index.html|url-status=live}}</ref> despite anemic global growth. The restructuring of chaebols, bank privatisation, and the creation of a more liberalised economy—with a mechanism for bankrupt firms to exit the market—remain an unfinished reform task. Growth slowed in 2003, but production expanded 5% in 2006, due to popular demand for key export products such as [[High-definition television|HDTVs]] and mobile phones.{{Citation needed|date=November 2012}}

Like most industrialised economies, South Korea experienced setbacks during the [[Great Recession]]. Growth fell by 3.4% in the fourth quarter of 2008 from the previous quarter, the first negative quarterly growth in 10 years, with year on year quarterly growth continuing to be negative into 2009.<ref name=chang>{{cite journal |last=Chang |first=Jaechul |title=The Contours of Korea's Economic Slowdown and Outlook for 2009 |journal=SERI Quarterly |volume=2 |issue=2 |pages=87–90 }}</ref> Many sectors of the economy at the time reported declines, with manufacturing dropping 25.6% as of January 2009, and consumer goods sales dropping 3.1%.<ref name=chang /> Exports in autos and semiconductors, two pillars of the economy, shrank 55.9% and 46.9% respectively, while exports overall fell by a record 33.8% in January, and 18.3% in February 2009 year on year.<ref name=kkw>{{cite journal |author1=Kim Kyeong-Won |author2=Kim Hwa-Nyeon |title=Global Financial Crisis Overview |journal=SERI Quarterly |volume=2 |issue=2 |pages=13–21 }}</ref> As in the 1997 Asian financial crisis, Korean currency also experienced massive fluctuations, declining by 34% against the US dollar.<ref name=kkw/> Annual growth in the economy slowed to 2.3% in 2008, and was expected to drop to as low as −4.5% by [[Goldman Sachs]],<ref>{{cite web|url=https://www.forbes.com/2009/03/12/korea-rate-economy-markets-currency-won.html|title=Korea's Choice: Currency Or Economy?|author=Vivian Wai-yin Kwok|date=12 March 2009|work=[[Forbes]]|access-date=26 August 2017|archive-date=9 February 2019|archive-url=https://web.archive.org/web/20190209124430/https://www.forbes.com/2009/03/12/korea-rate-economy-markets-currency-won.html|url-status=live}}</ref> but South Korea was able to limit the downturn to a standstill at 0.2% in 2009.<ref>US Department of State. [https://2009-2017.state.gov/r/pa/ei/bgn/2800.htm "Background Note: South Korea"] {{Webarchive|url=https://web.archive.org/web/20190604192157/https://2009-2017.state.gov/r/pa/ei/bgn/2800.htm |date=4 June 2019 }}</ref> Despite the [[Great Recession]], the South Korean economy, helped by timely stimulus measures and strong domestic consumption of products that compensated for decreased exports,<ref>{{cite web|url=http://english.yonhapnews.co.kr/business/2010/07/09/45/0503000000AEN20100709006500320F.HTML|title=(News Focus) Rate hike heralds start of Korea's stimulus exit|work=[[Yonhap News Agency]]|access-date=19 November 2010|archive-date=20 May 2013|archive-url=https://web.archive.org/web/20130520065613/http://english.yonhapnews.co.kr/business/2010/07/09/45/0503000000AEN20100709006500320F.HTML|url-status=live}}</ref> was able to avoid a recession unlike most industrialised economies, posting positive economic growth for two consecutive years of the crisis. In 2010, South Korea made an economic rebound with a growth rate of 6.1%, signaling a return of the economy to pre-crisis levels. South Korea's exports recorded $424 billion in the first eleven months of the year 2010, already higher than its export in the whole year of 2008. The South Korean economy of the 21st century, as a [[Jim O'Neill, Baron O'Neill of Gatley#Next Eleven|Next Eleven]] economy, is expected to grow from 3.9% to 4.2% annually between 2011 and 2030,<ref>{{Cite web|url=http://www.adb.org/sites/default/files/ADO/2010/ado2010-update-subregional.pdf|title=The Future of Growth In Asia}}</ref> similar to growth rates of developing countries such as Brazil or Russia.<ref>{{cite web|url=http://www.imf.org/external/pubs/ft/weo/2010/02/weodata/weorept.aspx?sy=2011&ey=2015&scsm=1&ssd=1&sort=country&ds=.&br=1&pr1.x=69&pr1.y=18&c=223%2C922%2C542&s=NGDP_RPCH&grp=0&a=|title=Report for Selected Countries and Subjects|work=imf.org|access-date=19 November 2010|archive-date=30 May 2016|archive-url=https://web.archive.org/web/20160530220012/http://www.imf.org/external/pubs/ft/weo/2010/02/weodata/weorept.aspx?sy=2011&ey=2015&scsm=1&ssd=1&sort=country&ds=.&br=1&pr1.x=69&pr1.y=18&c=223%2C922%2C542&s=NGDP_RPCH&grp=0&a=|url-status=live}}</ref>

[[File:Korea President Park Business Leaders 20130508 01.jpg|thumb|left|South Korean President [[Park Geun-hye]] at a breakfast meeting with [[chaebol]] business magnates [[Lee Kun-hee]] and [[Chung Mong-koo]] in 2013]]

The South Korean government signed the Korea-Australia Free Trade Agreement (KAFTA) on 5 December 2013, with the Australian government seeking to benefit its industries—including automotive, services, and resources and energy—and position itself alongside competitors, such as the U.S. and ASEAN.<ref>{{cite web|title=Korea-Australia Free Trade Agreement (KAFTA) – Key outcomes |url=http://dfat.gov.au/fta/akfta/fact-sheet-key-outcomes.html |work=Department of Foreign Affairs and Trade |publisher=Australian Government |access-date=15 December 2013 |date=5 December 2013 |url-status=dead |archive-url=https://web.archive.org/web/20131215200750/http://dfat.gov.au/fta/akfta/fact-sheet-key-outcomes.html |archive-date=15 December 2013 }}</ref> South Korea is Australia's third largest export market and fourth largest trading partner with a 2012 trade value of A$32 billion. The agreement contains an Investor State Dispute Settlement (ISDS) clause that permits legal action from South Korean corporations against the Australian government if their trade rights are infringed upon.<ref>{{cite news|title=Lessons from South Korea's Chaebol economy|url=http://theconversation.com/lessons-from-south-koreas-chaebol-economy-20158|access-date=15 December 2013|newspaper=The Conversation Australia|date=6 December 2013|author=Nattavud Pimpa|archive-date=15 December 2013|archive-url=https://web.archive.org/web/20131215204138/http://theconversation.com/lessons-from-south-koreas-chaebol-economy-20158|url-status=live}}</ref>

The government cut the [[Workweek and weekend|work week]] from six days to five in phases, from 2004 to 2011, depending on the size of the firm.<ref>{{cite web |url=http://100.naver.com/100.nhn?docid=782057 |archive-url=https://archive.today/20120714072957/http://100.naver.com/100.nhn?docid=782057 |url-status=dead |archive-date=14 July 2012 |script-title=ko:주5일근무제 : 지식백과 |language=ko |publisher=100.naver.com |access-date=14 July 2014 }}</ref> The number of public holidays was expanded to 16 by 2013.<ref>{{cite web|url=http://www.hankyung.com/news/app/newsview.php?aid=2013042600691 |script-title=ko:[시사이슈 찬반토론&#93; 대체휴일제 부활 옳을까요 |publisher=[[The Korea Economic Daily]] |access-date=14 July 2014 |url-status=dead |archive-url=https://web.archive.org/web/20150116112518/http://www.hankyung.com/news/app/newsview.php?aid=2013042600691 |archive-date=16 January 2015 }}</ref>

South Korean economy decreased in the first quarter of 2019, which happened to be its worst drop since the Great Recession. GDP declined a seasonally adjusted 0.3 percent from the previous quarter.<ref>{{cite web|url=https://www.euronews.com/2019/04/25/south-korea-economy-unexpectedly-contracts-in-first-quarter-worst-since-global-financial-crisis|title=South Korea economy unexpectedly contracts in first-quarter, worst since global financial crisis|date=25 April 2019|publisher=Euronews|access-date=25 April 2019|archive-date=25 April 2019|archive-url=https://web.archive.org/web/20190425032517/https://www.euronews.com/2019/04/25/south-korea-economy-unexpectedly-contracts-in-first-quarter-worst-since-global-financial-crisis|url-status=live}}</ref>

South Korea's prices rose more than 6 percent in July compared with last year, the fastest jump in nearly a quarter century.

In July 2022, South Korea's [[Consumer price index]] rose 6.3 percent, the highest rate since November 1998.

===High-tech industries in the 1990s and 2000s===
In 1990, South Korean manufacturers planned a shift in future production plans toward high-technology industries. In June 1989, panels of government officials, scholars, and business leaders held planning sessions on the production of such goods as new materials, mechatronics—including industrial robotics—bioengineering, microelectronics, fine chemistry, and aerospace. This shift in emphasis, however, did not mean an immediate decline in heavy industries such as automobile and ship production, which had dominated the economy in the 1980s.{{Citation needed|date=November 2012}}

South Korea relies upon exports to fuel the growth of its economy, with finished products such as electronics, textiles, ships, automobiles, and steel being some of its most important exports. Although the import market has liberalised in recent years, the agricultural market has remained [[Protectionism|protectionist]] due to disparities in the price of domestic agricultural products such as rice with the international market. As of 2005, the price of rice in South Korea was four times that of the average price of rice on the international market, and it was believed that opening the agricultural market would affect South Korean agricultural sector negatively. In late 2004, however, an agreement was reached with the [[World Trade Organization|WTO]] in which South Korean rice imports will gradually increase from 4% to 8% of consumption by 2014. In addition, up to 30% of imported rice will be made available directly to consumers by 2010, where previously imported rice was only used for processed foods. Following 2014, the South Korean rice market will be fully opened.{{Citation needed|date=November 2012}}

South Korea today is known as the Launchpad of a mature mobile market, where developers thrive in a market where few technology constraints exist. There is a growing trend of inventions of new types of media or apps, using the 4G and 5G internet infrastructure in South Korea. South Korea today has the infrastructure to meet a density of population and culture that has the capability to create strong local particularities.<ref>{{Cite web|url=http://www.innovationiseverywhere.com/south-korean-startups-save-conglomerates/|title=Can South Korean Startups (and the government) Save its Flailing Giant Tech Conglomerates? – Innovation is Everywhere|last=Tesla|first=Agence|date=22 June 2016|language=en-US|access-date=18 July 2016|archive-date=25 September 2016|archive-url=https://web.archive.org/web/20160925080223/http://www.innovationiseverywhere.com/south-korean-startups-save-conglomerates/|url-status=live}}</ref>

===The economy after the COVID-19 pandemic===
South Korea faced a turning point in its economy in 2023. With the constant growth of mainland China's manufacturing industry and the impact of COVID-19, South Korea's manufacturing sector is experiencing a consistent decline. According to SP Global, South Korea's export of manufactured goods to mainland China, one of the biggest trading partners of South Korea, had decreased by 4.4% in the fourth quarter of 2022 and by 31% in January 2023.<ref name="auto">{{Cite web |date=2023-02-03 |title=South Korea's economy faces rising headwinds in 2023 |url=https://www.spglobal.com/marketintelligence/en/mi/research-analysis/south-koreas-economy-faces-rising-headwinds-in-2023-feb23.html |access-date=2023-10-08 |website=IHS Markit}}</ref> On the other hand, their primary electronic manufacturing industry is facing a downturn. While information and communication technology maintained 34% of South Korea's total 2022 exports, at the end of the year, it decreased to 24%.<ref name="auto"/> The government had to incur a massive fiscal spending in 2020, leading a rise in the fiscal deficit as projected in their budget.<ref>https://english.moef.go.kr/ec/selectTbEconomicDtl.do?boardCd=E0002&seq=4852</ref> Moreover, their forecasted debt-to-GDP ratio jumped to 41.2% of GDP in 2020 from 37.1% of GDP in 2019. In 2021, the government unveiled a $29 billion extra budget to aid small businesses and boost employment.<ref>https://hr.economictimes.indiatimes.com/news/industry/south-korea-unveils-29-billion-extra-budget-to-aid-small-businesses-expects-to-add-164000-jobs/84024884</ref> In 2024, the government forecast a debt-to-GDP ratio was 47.4% of GDP.<ref>https://english.moef.go.kr/pc/selectTbPressCenterDtl.do?boardCd=N0001&seq=5943</ref>

With downturns in many manufacturing industries, South Korea has been facing a recession. Many economists state the reason for industries' slowdown as deteriorating global conditions. The inflation rate in South Korea is regularly rising, and the problems in the domestic economy, such as household debt, population problems, and productivity problems, are the key fiscal and monetary factors that hold South Korea's economic growth.

Due to the sudden evolution of COVID-19, private consumption decreased, and a bottleneck in the supply sector occurred. With this situation, the Bank of Korea indicated that the consumer inflation rate rose about three percent after COVID-19 evolved. Assuming that South Korea's interest rate was low compared to other countries, raising house prices and household debt became one of the problems in South Korea's economy.<ref>{{Cite web |date=2022-02-04 |title=South Korea's strong economic performance faces post-pandemic challenges |url=https://www.eastasiaforum.org/2022/02/04/south-koreas-strong-economic-performance-faces-post-pandemic-challenges/ |access-date=2023-11-26 |website=East Asia Forum |language=en}}</ref> To stabilise the inflated economy, the government has passed the "Korean New Deal Program" to invest 144 billion dollars.<ref>{{Cite web |title=South Korea's Green New Deal in the year of transition |url=https://www.undp.org/blog/south-koreas-green-new-deal-year-transition |access-date=2023-11-26 |website=UNDP |language=en}}</ref> This expansionary fiscal policy promoted private consumption and increased the number of jobs. This expansionary fiscal stimulus is designed to recover the economic and social impact of COVID-19 from the existing climate and environmental dangers. The New Deal policy is divided explicitly into healthcare and green industries.

South Korea's Ministry of Economy and Finance asserted the New Growth Strategy 4.0 in August 2023. The New Growth Strategy  suggests projects for South Korea's long-term industry growth.<ref>{{Cite web |title=New Growth Strategy 4.0: Measures to address challenges in carrying out primary projects |url=https://english.moef.go.kr/popup/20230825_policyFocus/popup.html |access-date=2023-10-08 |website=english.moef.go.kr}}</ref> The South Korean government advocates these policies as a New Growth 4.0 project, which aims to generate tangible outcomes in the future by setting the focus of policy and investments towards emerging industries. To achieve these goals, the strategy outlines the following key guidelines:

# Foster AI semiconductor industries and build up a collaborative ecosystem between businesses.
# Dominate the global market of the Urban Air Mobility (UAM) industry.
# Secure Clean Hydrogen Production Technology via Water Electrolysis.
# Advance Autonomous Driving Technologies.
# Promote the Battery Re-manufacturing and Reuse Markets.
# Expand the Private Sector-led My Data Based Services.
# Streamline the Ordering Process of Research Equipment or Facilities to Alleviate Administrative Burdens.

Besides this, South Korea is one of the countries with excellent healthcare systems, biomedical technology, and AI technology. While South Korea's value in the medical industry is projected at around 6.7 billion dollars, the medical technology market is projected to reach 11.5 billion dollars.<ref>{{Cite web |last1=cycles |first1=This text provides general information Statista assumes no liability for the information given being complete or correct Due to varying update |last2=Text |first2=Statistics Can Display More up-to-Date Data Than Referenced in the |title=Topic: Medical technology in South Korea |url=https://www.statista.com/topics/9716/medical-technology-in-south-korea/ |access-date=2023-10-08 |website=Statista |language=en}}</ref><ref>{{Cite web |title=Medical Technology - South Korea {{!}} Statista Market Forecast |url=https://www.statista.com/outlook/hmo/medical-technology/south-korea |access-date=2023-10-08 |website=Statista |language=en}}</ref> The annual projected growth rate of the medical industry is over 6%, which indicates a bright future for the industry. Many economists suggest that by adopting AI technology, South Korea will be a bio-medical industry-leading country. An article about the future data-driven healthcare industry in South Korea suggests that AI technology helps the medical industry provide customised medical services for patients and can utilise the benefits and costs.<ref>{{Cite journal |last1=Choi |first1=Ji-Young |last2=Lee |first2=Hee-Jo |last3=Lee |first3=Myoung-Jin |date=2022-04-21 |title=Future Scenarios of the Data-Driven Healthcare Economy in South Korea |journal=Healthcare |volume=10 |issue=5 |pages=772 |doi=10.3390/healthcare10050772 |issn=2227-9032 |pmc=9141477 |pmid=35627908 |doi-access=free }}</ref>

In April 2025, the incorporation of Korean government bonds into the "World Government Bond Index" was postponed from November this year to April next year. After being listed as a prospective candidate for incorporation in September 2022, it was successfully included in the regular market classification report in the second half of October 2024.<ref>{{Cite web |last=뉴시스 |date=2025-04-09 |title=한국, 세계국채지수 WGBI 편입 확정…시점 내년 4월로 연기 |url=https://www.newsis.com/view/NISX20250408_0003131469 |access-date=2025-04-14 |website=뉴시스 |language=ko}}</ref>

===Economic inequality===
{{excerpt|Economic inequality in South Korea}}