South Korea gdp per capita. South Korea: The real reasons behind the massive growth. Structure of the financial and banking system

ECONOMIC DEVELOPMENT OF SOUTH KOREA

I.V. Novikov, student V.A. Utkina, student

Far Eastern federal university(Russia, Vladivostok)

Annotation. The work analyzes the economic growth rates of South Korea as the most successful example of effective government and economic policy among developing countries. The author describes the main factors that influenced the country's GDP growth in the period from 1962 to the present. Key words: South Korea, economy, GDP, development, consumption.

Korea is currently a clear example of the country's successful economic development. A state that does not have significant natural resources, destroyed by war, with a per capita income of no more than $100 in 1962, reached $10,000 by 1995, and average annual GDP growth was 10%. Currently, Korea ranks 13th in the production of goods and services, is the 8th largest trader in the world, and has a per capita income of more than $25,000 per year. It is one of 60 countries whose per capita income was less than $300 in 1960, but Korea was able to increase this figure to $10,000 by 1995. Korea also became the second country after Singapore to withdraw from the lending program during the Asian financial crisis World Bank.

Currently, research continues into the reasons for such significant economic growth in South Korea. For example, scientists point to the accumulation of human capital as a source of growth, but its contribution to economic development was less than 10%. At the same time, the role of education, training and dissemination of knowledge, which undoubtedly played an important role in the development process of Korea, is considered. However, they cannot be considered major factors, since it is known that between 1962 and 1994 the government did not spend more on education than other developing countries with the same level of per capita income. According to the majority

researchers, such impressive growth rates of the Korean economy are the result of annually growing investments that exceed 30% of the country's GDP, with a significant part of it coming from official foreign financial assistance.

Official foreign support for Korea.

Extent and types of official foreign assistance.

During the social and economic development of South Korea between 1945 and 1999, the total amount of official foreign financial assistance is about 44 billion US dollars at current prices. This amount includes about $7 billion in government development grants and loans for social development in the amount of 37 billion dollars. Thus, the total amount of loans is divided into "Official Development Assistance" of $6 billion (grants are more than 25%) and "Other Official Assistance" of $25 billion (grants are less than 25%). While the amount of financial aid received by Korea between 1965 and 1995 was comparable to the other 59 developing countries with per capita income of less than $300 in the 1960s, Korea achieved an average annual GDP growth of 2% . However, the other 15 developing countries achieved GDP growth of 10%, so it cannot be said that the rapid growth of the Korean economy is due to foreign investment alone.

The main “donors” of financial assistance were the USA, Japan and Germany. The main multilateral donors were the United Nations, the UN Reconstruction Agency in Korea, and the International Development Bank.

Distribution of financial assistance

Because the most of grants and loans were directed mainly to food and emergency needs, and loans for public development accounted for 84% of the total volume of official investments, then the use of these funds actually reflects the government’s strategy in the development of the country, so, despite the financial crisis, infrastructure development 51% of investments were directed, 24% to modernization of the manufacturing sector, and about 12% to social infrastructure sectors. This model of fund allocation differed from those used in other developing countries, in better side Therefore, rational sectoral distribution of financial assistance can be added to the number of factors of economic growth.

Modern economic situation: total economic activity.

As of today, economic growth continues at a moderate pace. Growth for 2017 is projected to be 2-2.8%, and by 2018 this figure should reach 3%. This is due to the fact that development in the service sector remains at a sufficient level, but the level of growth in industrial production and the corresponding share of production capacity utilization remain at a low level. It is expected that the country's economic growth will be achieved due to a moderate recovery in demand in the domestic market and growth in exports. But all these prospects are based on the assumption that the world economy will also increase its growth rate. Also, along with a decrease in interest rates on loans, their number has increased sharply, which significantly influenced the current situation of the country’s economy.

Domestic consumption fell by 3.5% last year and is continuing its slow decline. This is due to a slowdown in global economic growth, a decline in private consumption and investment related to construction, and therefore GDP growth amounted to 2.3% compared to the planned 2.7%. The level of domestic consumption plays a significant role in the Korean economy, as its share in the country's GDP is 46.5%.

In 2014, investment in fixed capital amounted to 7%, and greatly affected the growth rate of the economy, which suffered during the economic crisis. But some reductions in investment in the electrical industry and electronic technologies are due to increased competition in the electrical goods market, and therefore the demand for this category of products has also decreased. But more positive forecasts target investment in the construction industry, which has been stagnant since the global financial crisis, leading to a cash shortage in 2013. But after this, investment in construction increased sharply, and by the end of 2013 it amounted to 6.7%, and every year this figure continues to increase by an average of 1.9%. At the same time, the number of real estate transactions has increased, despite the fact that prices continue to rise. According to forecasts for 2017, real estate investment should grow by at least 4.5% compared to last year.

According to today's forecasts, the Korean economy will continue to grow at a moderate pace if domestic and external conditions will remain favorable, but there are concerns about consumer debt, which has a significant impact on the country's economy. At the same time, given the weakening of domestic consumption and low inflation in conditions of international economic uncertainty, there is a need to maintain an expansive macroeconomic policy, in which a significant role is given to foreign investment, and together with

Therefore, tax and budget policies are at a high level; in order to maintain high growth rates, the Korean economy must continue to be maintained. stimulate economic activity

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ECONOMIC DEVELOPMENT OF SOUTH KOREA

I.V. Novikov, student V.A. Utkina, student Far Eastern federal university (Russia, Vladivostok)

Abstract. The paper analyzes South Korea's economic growth rate as the most successful example of effective state and economic policy among developing countries. The author describes the main factors that influenced GDP growth in the period from 1962 to the present. Keywords: South Korea, economy, GDP, development, consumption.

Lately I've been watching a lot of videos and reading a lot of materials about South Korea. What prompted me to do this was watching several Korean dramas and, admiring their young cinema, I decided to get acquainted with a country that was able to produce such high-quality series. At first the thought flashed through my mind to compare South Korea with Ukraine or North Korea, but then I changed my mind. Maybe I’ll do this in future articles. After getting acquainted with South Korea, I decided that it was worthy of comparison with at least the USA, EU and Russia. Actually, I will compare this rising country with the latter.

First, let's give the bare numbers.

Russia:

Territory area / area of ​​the European part of the Russian Federation – 17,125,407 km2 / 3,960,000 km2
Population - 146,267,288 people
Population density - 8.39 people/km2
The population density of the European part of the Russian Federation is 27 people/km2
GDP (nominal) / per capita – 1,176 billion US dollars / 8,184 $ (2015)
GDP (PPP) / per capita – US$3,458 billion / US$24,067 (2015)

South Korea

Territory area – 100 210 km2
Population: 51,302,044 people
Population density - 512 people/km2
GDP (nominal) / per capita – US$1,435 billion / US$28,383 (2015)
GDP (PPP) / per capita – US$1,854 billion / US$36,601 (2015)

The population of South Korea (hereinafter referred to as South Korea) is 2.85 times smaller than Russia (hereinafter referred to as the Russian Federation), while the territory of South Korea is 171 times smaller than in the Russian Federation, and the territory of the European part of the Russian Federation is 40 times larger than the territory of South Korea. Koreans are richer than Russians in nominal terms by 3.5 times, and in purchasing power parity by 1.52 times. If we compare GDP on a national scale, then the South Caucasus is 1.22 times richer than the Russian Federation nominally and 1.86 times poorer than the Russian Federation in PPP terms.

Moving into the economic sphere, it is difficult to find accurate data, but a general analysis makes it clear that the South Caucasus is a clearly industrialized country with a highly developed industry, a rapidly developing IT sector and a developed service sector, in particular financial ones. The South Caucasus, unlike Russia, has few natural resources and is forced to import them at high prices, but this stimulates the development of other sectors of the economy.

Koreans are very hardworking people, although relatively recently they switched from a 6-day work week and a ten-hour work day to a 5-day week and an 8-hour work day. However, many private businesses operate as usual. Koreans study a lot and begin their labor activity somewhere around 24-28 years old. They simply don’t have time for such stupid things as drinking beer with friends or sitting for 10 hours a day computer game. It is normal for a Korean child to play for 1 hour a day and study for 10-12 hours a day. They have a highly developed competition - exams take place throughout the life of the student and student, and after that the competition begins in the workplace. I think it’s unnecessary to talk about how people study and work in Russia, you already see it every day.

Korea is a country ruled by corporations. The government apparatus in Korea serves to serve the population and business, and not vice versa as in Russia. And indeed it is. The police in Korea are not the most respected part of society, this is due to the period of the occupation of Japan - then the police personified the Japanese arbitrariness in Korea, but at the same time they consciously fulfill their duties and do not feel like kings having received power into their own hands. Compare this with how police officers behave in Russia.

Korea is a country with a developed market for IT services and communications; already in 2001, the WiBro 4-18.4 Mbit/s network was deployed in South Korea, covering almost the entire country. Comments are unnecessary here, drive 50 km from Moscow and try to find the Internet somewhere.

In conclusion, I would like to say that we need to carefully study the South Korean experience, which in 20-30 years has brought it to the top of the ranking of developed countries, and take the best of it and implement it at home.

Attention!!! I also remind you once again that the most popular cashback services that will help you get some of the money back for purchases in online stores in the CIS countries are

South Korea is a unique country in terms of economic growth. During 1960-2010, GDP per capita at purchasing power parity increased 25 times and today stands at $36.6 thousand. Now Korea is a highly developed country, a member of the G20, the 11th largest economy in the world. Korea is often cited as an example of successful dirigisme—government intervention in the economy. Alexander Zholud carefully studied modern economic history Korea and found the answer to the question of whether government intervention is really that good for the economy.

Republic of Korea, or as it is more often called after Korean War 1950-53 South Korea is a unique country in terms of economic growth. Over 50 years (1960-2010), GDP per capita in constant prices (that is, excluding inflation) at purchasing power parity (PPP) increased 25 times. The country, which started out on the same level as China at that time, today has a PPP GDP of $36.6 thousand.

Rice. 1. GDP per capita in constant 1990 dollars, North and South Korea, 1950-2008

Such significant and long-lasting growth certainly aroused the interest of economists. This may seem strange to the general public, but today there is no consensus in the economic environment as to what exactly helped Korea achieve such success. The purpose of this article is to attempt to describe the factors and policies that influenced the development of the Korean economy and possible lessons for Ukraine.

The development of the Korean economy is usually divided into 3 periods: import substitution, export orientation, industrialization.

First period, 1953-1961: “import substitution”

After the war ended, South Korea was poorer than most countries in Africa, not to mention Europe. Most of the capital and land before independence were owned by the Japanese colonialists. These assets were confiscated to the state and privatized after the end of World War II, often with powerful and well-connected family groups as buyers. The first attempt to launch economic growth was the then popular idea of ​​import substitution—“self-sufficiency” of the economy. To implement it, the government introduced high (up to 77% of the price) import tariffs, importers had to obtain a special permit to import products, and several exchange rates existed at the same time. This policy made money for a number of businessmen close to the government, who later formed “sister corporations” or chaebols, but as a policy it was a failure - the average growth rate at that time was at the level of 5.5%, which is very low for a country that is recovering from war. Even irrevocable financial, technical and humanitarian assistance from the United States, which amounted to 10% of Korea's GDP per year, did not help - from 1954 to 1960.on average over two thirds of annual imports financed by US aid. In 1960, the next presidential (and vice-presidential) elections took place, in which 85-year-old President Syngman Rhee won by a large margin. The elections were heavily flawed and sparked massive student protests (the army opened fire on protesters, killing 180 and injuring thousands of civilians), leading to the overthrow of Syngman Rhee's regime. The result was a short-lived “second Korean republic,” which was overthrown in less than a year by a military junta led by Park Chung-hee, who took over the country.

Second period, 1962-1972: “export orientation”

Park Chung Hee was an implacable opponent of communism, which did not stop him from actively introducing government intervention in the economy, the creation and implementation of five-year plans, and the illegal persecution of political opponents. At the first stage, he tried to actively fight corruption and businessmen close to the previous government, but it did not lead to any significant “landings”, and the connection between big business and the authorities only intensified. We moved from the failed import substitution policy to an export orientation.

Rice. 2. Construction, agricultural and processing industries, shares of added value,%

It is very important to understand the geopolitical situation of the early 60s: Korea is improving relations with the former colonialist Japan (Japan is paying multimillion-dollar compensation) and in exchange for military and political support for US actions in Vietnam, it gains access to purchases that the US carried out to conduct the campaign. For example, according to Kim (cited in , original 1970 article not available online), Korea's revenue from Vietnam War-related contracts totaled $185 million in 1967, or about 4% of the country's GDP for that year.

Procurement not only provided foreign currency for the purchase of modern imported equipment, but also created a guaranteed sales market and helped to acquire skills that could then be used in other projects. According to Glassman and Choi , 21% of construction work in 1965-1969 was carried out by order of the United States. The projects were built by civilian companies within the chaebols. For example, Hyundai was building the Pattan-Narathiwat road in Thailand in 1965, which would supply troops and supplies to Vietnam. As a result, 40% to 60% of gross fixed capital formation (GFCF) came from US public procurement contracts and US financial and humanitarian assistance in the late 1960s.

The new government continued to actively intervene in the economy, but changed the emphasis of this intervention. Import tariffs were reduced, but businesses that met established export quotas received access to subsidized loans and other benefits. Until 1967, there was a list of permitted goods for import (the rest were prohibited. They could be imported only with a special permit and there were restrictions on the purchase of hard currency for these purposes), but under external pressure, since 1967 the government changed the policy to the opposite - a list of prohibited goods .

Loans to exporters were issued both by foreign banks under state guarantees and by the state through renationalized banks. The main development of industry took place through labor-intensive industries that could attract labor from agriculture. If in 1963 43.1% of GDP was produced in agriculture and 63.4% of the labor force was employed, then in 1970 these figureswere 26.7% and 50.4%, respectively . Export promotion was successful in both absolute and relative terms: export growth from $55 million in 1962 (2.4% of GDP) to $1.6 billion in 1972 (15% of GDP). The structure of exports shifted from agricultural products and minerals to light industrial goods - the top three leading goods in exports in 1970 were textiles (40.8% of exports), plywood (11%) and wigs (10.8%). In general, labor-intensive light industrial goods accounted for more than 70% of exports - that is, the country, in full accordance with the classical theory of international trade, used its competitive advantage. Korea's main trading partners were the United States (47.3%) and Japan (28.1%).

Rice. 3. Net exports as a percentage of GDP

Exports grew at a very high rate - in 1963-1969 the average annual increase was at 35% , while imports grew by an average of 22% annually. However, it should be noted that throughout this period, net exports remained negative with an average level of -6.9% of GDP in 1962-1971. Maintaining such a persistent and large trade deficit required an influx of external capital—first financial aid, then investment and debt.

Because it was necessary to have significant production and export volumes to receive most government incentives, business concentration and the development of chaebols occurred. Government lending support was not always successful, often requiring additional resources to be spent to bail out failed projects. To generate revenue to support such spending, the government provided protection to successful companies by restricting the entry of new entrants into the market. 4 attempts to change legislation in favor of deregulation and competition during this period failed.

During the 1960s, Korean firms invested heavily in new assets—the growth rate of gross fixed capital formation increased from 10.5% per year in the first half of the decade to 33.2% in the second. Companies did not have enough own funds for such investments and they actively increased debt - the ratio of net worth to assets fell from 51.6% in 1965 to 23.3% in 1970, a large proportion of companies appeared that had positive cash flow , but were critically dependent on the continuation of credit lines and the circulation of their own bills. When bank loans were not available to companies, they borrowed from the domestic unregulated financial market, often at significant interest rates.

Third period, 1973-1979: "development of heavy and chemical industries"

In July 1971, the Federation of Korean Industry (representative of the interests of large companies) turned to President Park with a request for the government to buy out the debts of troubled companies. The last straw in the accumulation of problems was the 17 percent devaluation of the national currency in the previous month, which led to an increase in the cost of servicing foreign currency loans. The possibility of bankruptcy of such firms was considered, but due to fears of stopping foreign investment in the event of high-profile bankruptcies, a possibly more expensive, but more politically acceptable option was chosen. It's been a while more than a year, and the government issued a decree (the so-calledDecree of August 3 ), by which all old debts of companies to the unregulated financial market were replaced with debt at a flat rate (1.35% per month), which had to be repaid 5 years after an initial three-year period without payments. Short-term debts to the banking system were replaced by a unified debt (8% per annum, 3 years of grace period, 5 years of payments). Real interest rates were practically zero or negative - annual inflation in 1971-1974 was 13.5%, 11.7%, 3.2% and 24.3%, respectively.

Rice. 4. Gross fixed capital formation as % of GDP

So, there was a redistribution of value in favor of borrowers at the expense of the formal and informal financial sector, from which large businesses primarily benefited, while small and medium-sized businesses were significantly limited in their ability to obtain loans. However, this brought only temporary relief to large businesses - the reduction in loan payments led to an opportunistic build-up of new debts.

In addition to direct credit support for large businesses, the government introduced a moratorium on servicing companies’ debt to unofficial financial markets. Companies that did not want to invest in industries chosen by the state not only lost access to financing (the banking system was under government control), but also faced tax problems and restrictions on obtaining licenses, which denied them access to promising markets. Many companies created excess production capacity that they could not use due to lack of demand for the relevant goods.

In January 1973, Park Chung Hee announced a “declaration on the development of heavy and chemical industry” (English: Heavy and Chemical Industry, HCI). The 1970s were the peak of government intervention in corporate activities. Prior to this, export promotion did not select the types of industrial activities that should be supported. The transition to direct support for industries was a consequence of three main factors (according to Anne O. Krueger (1995) :

1) a decrease in the US military presence, which created the need to develop our own military-industrial complex;

2) rising wages due to general economic growth, which made labor-intensive exports less competitive. The growth of neighboring countries with similar labor-intensive industries;

3) the presence of a large deficit in the current account of the balance of payments, despite the stimulation of exports, including due to the use of imported resources in production.

The reduction in financial support from the United States meant that the foreign trade deficit urgently needed to be reduced, because the source of its financing was disappearing.

Rice. 5 Real GDP growth rate,% per annum

State-owned industrial enterprises were created, one of the most famous examples of which is POSCO (Pohang Iron and Steel Company), an iron and steel plant built with funds provided by Japan as part of the program of mutual understanding between the former mother country and the colony. An agreement on credit, financial and technical assistance was signed in 1969, steel production began in 1972. The company was privatized in the late 1990s, and today it is the fourth largest steel producer in the world.

During this period, Korea's GDP grew faster (11% per year in 1973-1979 versus 9.6% in 1963-1972), although opponents of government intervention note that most of the growth was due to the general export direction of the economy and the influx of direct foreign investment and its pace could be higher without government intervention. It should be noted that in 1980 there was the first drop in GDP in almost thirty years. This was certainly influenced by the murder of Park Chung Hee and the second oil shock, but the slowdown was obvious even before these events.

1979-2017: bug fixes

In 1979, a series of events occurred that created a crisis and forced the government to move away from supporting specific companies to creating a more level playing field - a process that is still ongoing. First, there was a second oil shock that hit the chemical industry, one of the industries with significant government support. Second, the acceleration of inflation to 18.3% in 1979 and 28.7% in 1980 due to large budget and foreign trade deficits and price distortions by government policies led to shortages of many consumer goods. Thirdly, on October 26, 1979, a successful assassination attempt was made on President Park Chung-hee, a dictator who almost single-handedly decided tactical and strategic issues of economic development. Fourthly, due to drought in 1980 there was a very poor harvest, GDP showed a decline for the first time since 1953 - by 1.7%.

Another group of military men came to power, led by Chun Doo Hwan, who, fearing the restoration of a military conflict with North Korea, entered state of emergency. In response, protests by students and ordinary citizens against the political dictatorship and the dominance of the chaebols became more frequent - for example, the uprising in Gwangju in May 1980, suppressed by the army, as a result of which more than one hundred and fifty people died. Trade union protests began. The protesters achieved success only in 1996, when ex-president Chun Doo-hwan will be sentenced to life imprisonment in particular for excessive use of force in suppressing protests.

By the early 1980s, the level of GDP per capita in constant 1990 dollars in Korea was approximately the same as in modern Ukraine. Chun Doo-hwan's advisers explained the futility of continuing the policy of active government intervention in the economy - Korea at that time was already approaching the technological frontier, and its economy had become so complicated that it became almost impossible to predict the success of one or another intervention. Therefore, gradual economic liberalization took place. It did not prevent further economic growth - from 1981 to 1997 (the year of the Asian financial crisis) - average annual GDP grew by 9.1%. Import duties were reduced, new government projects in industry were not launched, and businesses received more equal access to credit.

However, as became clear especially after the Asian crisis of 1997, the country still has significant structural imbalances. The banking system still has problems with significant volumes of loans issued under government pressure to large corporations, some of which (for example, Daewoo) went bankrupt. The chaebol leadership is accused of bribery, financial fraud, tax evasion and influence on government - in last years Similar court sentences were handed down to the heads of such large companies as Samsung, SK, Hyundai, Hangwa and Lotte. At the same time, the heads of large chaebols, after being convicted, receive an amnesty - as was the case with Lee Kun-hee (Samsung) or Chong Mong-ku (Hyundai). At the end of 2016, the first female president was impeached Park Kin Hye on charges of corruption.

1953-1979: three decades of government intervention

Was such a policy positive influence there is no consensus on economic growth. The majority agrees that at the stage of import substitution the intervention had Negative influence, as evidenced by moderate GDP growth rates despite massive external financial assistance. Government restrictions on imports did not produce either a direct effect of reducing the foreign trade deficit or significant industrial growth. The situation changed only with a reorientation towards external expansion.

The periods of export orientation and the development of heavy industry are similar in the sense that in both periods there was active government intervention, but they differ significantly in the mechanisms of such intervention. In the first case, any exporter received access to preferences for fulfilling established export plans - low-rate loans, hard currency, tax breaks, and the like. Therefore, the development of industries took place according to market laws - the country specialized in light industrial goods, in which it had a competitive advantage - cheap labor. When the state took up the development of heavy and chemical industries, main goal It was not about maximizing profits, but about the country's defense. Therefore, a policy of direct support for specific industries and enterprises was applied - the government set prices for them below market prices for materials, sent engineers and other qualified labor. This led to the introduction of controls on consumer prices, the emergence of shortages of consumer goods and the black market, and ultimately a slowdown in economic and export growth.

It is worth noting that the division into camps according to the point of view on the role of the state in the development of Korea does not at all reflect the division according to economic schools or the nationality of the authors. Thus, a prominent proponent of the role of the state in the development of Korea was Alice Amsden with her book Asia's Next Giant: South Korea and even to some extent representatives of the World Bank ( study welcomes government intervention only in cases where there are problems for the market, for example, asymmetric information in lending, problems achieving economies of scale in competition, etc.). Opponents noted that when calculated at available world prices, the productivity of the heavy and chemical industries remained below the productivity of the light industry, the development of which was hampered in the 1970s ( Yoo Jung-ho, 1990 ), OECD countries' imports from Korea grew less in the 1970s than from Taiwan, which had a similar export structure but did not engage in significant government intervention during this period. An undeniable difficulty in the assessment is the lack of a perfect “control case” with which Korea could be compared. All counter-historical assessments are based on certain assumptions that cannot be clearly proven.

In general, over the entire period, the following factors can be identified that had a significant impact on the development of the Korean economy:

Economists usually distinguish two types of economic growth: extensive and intensive. The first is to increase the amount of resources used - capital, labor, etc. The second means more efficient use of available resources. European countries and North America developed mainly due to intensive growth - the emergence of new, more efficient technologies. At the same time, the USSR during the industrialization period was a clear example of extensive growth - due to the displacement of people into urban industrial work (in particular by the rationing system), the squeezing out of private savings (Torgsin's work to buy gold during the Holodomor), forced savings and the purchase of Western factories and other modern capital. The problem with extensive growth is that at some point resources run out. Thus, it is possible to double the workforce by attracting women to production, improve its quality through educational programs and education, but one can hardly expect to attract everyone - from infants to the elderly - to production or train everyone to the level of candidates or doctors of science. That is why, after resources were exhausted, growth in the USSR slowed down significantly, which ultimately led to the fall of the Soviet empire.

In the 1970-1980s, a significant part of Western economists considered the “Eastern economic miracles” to be the result of a repetition of the Western path, that is, an increase in efficiency. However, in the 1990s, after Japan's economic growth stopped and financial problems Korea, the prevailing view became that their success was the result of favorable conditions (including political ones) for foreign trade, coupled with a significant mobilization of resources. Just as in the USSR, such mobilization makes it possible to temporarily have significant rates of economic growth simply by increasing production factors.

Lessons for Ukraine

Ukraine is unlikely to be able to directly copy the experience of South Korea due to a number of economic and political restrictions:

• Lack of labor reserve. There are no significant numbers of young people moving from less productive agriculture into industry. It is unlikely that young people will agree to work 10-12 hours a day for a small salary. In Korea in 1980 (that is, after significant direct government intervention), 34% of all workers were employed in agriculture, in 1963 there were 63.4%; in Ukraine in 2012-2015 this figure averaged 17.3%.
• Significant level of budget expenditures on social protection, requires a significant tax burden. If preferences are provided to industries and firms, the burden on the rest of the economy will only increase. An aging population will require additional increases in social and health care costs.
• Low level of savings and low probability of forced mobilization of funds
• Lack of significant external support - The Korean economy ran a trade deficit from 1953 to 1997, driven by aid from the US and Japan in the 1950s and 1960s and FDI and credit in the later period, as well as promoting market access to the US and Japan.
• The political unacceptability of dictatorship and the further merging of the state and big business.

Notes:

About 1000 dollars of GDP per person. For comparison, GDP per capita at PPP in Ukraine in 2015 was almost $8,000.
The Americans initially placed high demands on the sale of confiscated Japanese assets, and few Korean citizens met these demands, so ownership was transferred to the new Korean government. The government first put the banks up for sale in 1954 with a number of provisions to prevent ultra-low sales with restrictions on the source of funds, but no offers were received. The government has sharply relaxed the requirements. Using political connections, large industrial capitalists borrowed money from banks in order to buy these same banks. When privatization was completed in 1957, all commercial banks were under the control of industrial capitalists. According to one study, the share of insider loans of such banks exceeded 50 percent. Buyers actively supported President Syngman Rhee's Liberal Party financially. (for workPhillip Wonhyuk Lim “Path Dependence in Action: The Rise and Fall of the Korean Model of Economic Development” )
In addition to commercial banks and state-controlled "deposit banks," there was a significant domestic unregulated market that provided primarily short-term loans. In 1972, the volume of loans from the unregulated market amounted to 346 billion won, commercial banks - 646 billion and depository banks - 823 billion (see page 166 of the bookFinancial Development in Korea, 1945-1978 ).
He was founded only in 1988 year. Before this, there were funds for civil servants and the military, but they covered a small part of the population.

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Economic - geographical position South Korea

The Korean Peninsula closes the northeastern tip of the Asian continent, stretching from north to south for about 800 km, and from west to east - from 132 to 360 km. In the north, the Republic of Korea is separated from the DPRK by a military demarcation line running approximately 38” north latitude. The southernmost point of the peninsula lies at 33"07"N.

The country is washed on three sides by the Sea of ​​Japan, East China and Yellow Sea. This geographical position of Korea left a noticeable imprint on the history, culture and economic development of the country, which became a bridge for civilization between the continent and Japan.

The total area of ​​the Republic of Korea (hereinafter referred to as the ROK) is 98,500 km. The capital is Seoul, other large cities: Busan (3.9 million), Daegu (2.5 million), Incheon (Chemulpo) (2.4 million), Gwangju (1.4 million), Daejeon (1.3 million). The population of the Republic of Korea in 2001 was 47.6 million people.

In terms of economic development, the Republic of Korea belongs to small Asian countries with an average level of development in the category of economically developed countries with market economy. Korea belongs to the countries of the new industrialization of the first wave, which made a big breakthrough in economic development in the last half of the 20th century.

Some indicators:

Total GDP in 2012 was $1129.6 billion.

GDP per capita in South Korea in 2012 was $23,052.

Political system and territorial and administrative division.

South Korea is a parliamentary republic. The head of state is the president. The Constitution was adopted on July 17, 1948, and was last amended in 1987. Power is divided into executive, legislative and judicial. The executive branch is the government headed by the Prime Minister. The legislative branch is the unicameral National Assembly (assembly). Judicial - Supreme Court and appellate courts.

South Korea is a unitary state, its territory is divided into provinces.

There are nine of them in total (Gangwan-do, Gyeonggi-do, Chuncheon-nam-do, Chuncheon-buk-do, Gyeongsang-nam-do, Jeollabuk-do, Gyeongsang-nam-do, Jeolla-nam-do, Jeju-do), as well as six cities (Seoul, Busan, Incheon, Gwangju, Daejeon, Daegu) are independent administrative divisions.

Features of population reproduction and distribution.

In terms of population reproduction, the country is on the verge of the first type of reproduction.

The population of the Republic of Korea is one of the most ethnically and linguistically homogeneous in the world. With the exception of a small diaspora (about 20 thousand people) of Chinese, virtually all Koreans share a common cultural and linguistic heritage.

With a population of over 47 million people, Korea has one of the highest population densities in the world (484 people/sq. km). The most densely populated areas are located in the northwest of the country and on the plains south of Seoul-Incheon.

The level of urbanization is high: the urban population makes up the majority of the inhabitants of the Republic of Korea - 81%, the rural population - only 19%.

Provision of natural resources and their placement

Land resources

There are not many lowlands suitable for agriculture in the country; They are located mainly along sea coasts and in river basins.

The lowlands are covered with alluvial deposits, the fertility of which has made these areas the most densely populated. Koreans take care of the land: over thousands of years, fields not only occupied flat areas, but also rose in terraces along the slopes of the hills.

Water resources

The rivers of Korea are generally of short length, and their basins are small (as a rule, several hundred or even tens of square kilometers). The major rivers of South Korea include the Hangan (514 km), the sources of which are on the territory of the DPRK, the Kumgang (401 km), the Yonsongan (713 km), which carries water into the Yellow Sea, and the Naktong (515 km), which flows into the East China Sea. In the east, in the Sea of ​​Japan basin, there are practically no large rivers. The economic role of rivers is largely related to irrigation: more than 70% of rice fields are irrigated by river water. Many rivers are regulated, they have dams and dams, the function of which is both to prevent floods and to provide irrigation and electricity generation.

Forest resources

Over a long historical period, the vegetation of Korea was not exposed to sudden climatic cataclysms and therefore remained practically unchanged since the Tertiary period. There are not many forests left in today's Republic of Korea. They are mainly broad-leaved, consisting of various types oak, maple, linden, ash, elm, hornbeam. In the far south, evergreen plants such as Japanese camellia, magnolia, evergreen oak, benzoin tree, and euonymus add an exotic note. In the Republic of Korea, the state monopoly is the cultivation of ginseng.

Animal world

In the Republic of Korea today there are about 80 species of mammals, including brown and Himalayan bears, wolves, wild boars, gorals, roe deer, martens, hares, etc. About 380 bird species have been recorded, of which only about 50 are permanent residents of Korea, while the rest are migratory.

Marine resources

The seas washing the Republic of Korea are rich in plankton and algae, including economic importance have kelp, porphyra, alaria, codium, etc. Some of these algae are traditionally eaten; they are a valuable source of vitamins and microelements: dried porphyry leaves are considered a delicacy. In addition, algae are used to feed livestock and serve as valuable raw materials for a number of industries, including pharmaceuticals.

The seas also abound in fish and marine resources, which became an important element of the diet for the ancestors of today's Koreans. The most widespread is pollock; There is also fishing for flounder, tuna, squid, mackerel, and salmon. Delicacies of Korean cuisine include crabs, shrimps, sea cucumbers, sea ​​urchins, cuttlefish, squid and octopus, edible shellfish - mussels, scallop.

Numerous bays and lagoons also provide excellent opportunities for the artificial breeding of these and other invertebrate marine animals.

Minerals

The Republic of Korea is quite poor in mineral resources, and therefore almost completely depends on the import of mineral raw materials from abroad.

Coal reserves - anthracites and lignites - are of industrial importance in the Samcheok - Jeongseon basins (Gangwon Province) and in Chungcheong Province: these areas account for 7 reserves, the total volume of which is estimated at 1.7 billion tons. The quality of coal is quite low, only 3.5 % of the extracted fuel has a calorific value of over 5200 kcal/kg.

Iron ore reserves are also small (128 million tons) and iron content is low. The main production centers are Yangyang (58%), as well as Chungju, Ulsan, Mulgym. Deposits of lead-zinc ores (their reserves are 29 million tons) in the Ponghwa and Socheon regions (Gyeongsangbuk-do province), silver, and gold are being developed. The tungsten deposits (Sandon) remain important, with total ore reserves estimated at 34 million tons.

Large reserves of amorphous graphite are concentrated in the provinces of Gangwon-do, Chuncheon-nam-do, Gyeongsang-buk-do, and crystalline graphite occurs in the province of Gyeonggi-do. It is also worth mentioning the deposits of high-quality kaolin (Hadon, Gyeongsangnam-do province), talc (Chungju, Chungcheongbuk-do province), and limestone, which is found everywhere and serves as a raw material for the cement industry.

Industry of South Korea

The economy of the Republic of Korea is the twelfth economy in the world in terms of GDP. Since 1979, Korea has pursued a policy of economic openness to foreign investors, which has led to large-scale American, Japanese and Western European investment. By the end of the 1980s, Korea's own conglomerate companies began to seriously compete with Western multinational companies. The country, having begun, like Japan, by borrowing foreign technologies that were not the first freshness, gradually turned into a fairly strong power in scientific and technical terms, producing high-tech products and launching satellites. The country's scientific and technical potential is under the special patronage of the government.

In 2012, Seoul invested in the knowledge and technology industry and the development of knowledge-intensive industrial centers about 110 billion dollars.

The main branch of material production is industry, 98% of the products of which are provided by manufacturing industries. More than half of their products are supplied to heavy industry, incl. about a third are mechanical engineering. The light industry is dominated by textiles (20% of the cost), food and flavoring. The number of mining industry enterprises is only 5% of the total number of enterprises in the country. The main industry is coal mining, which employs about 60 thousand people.

In addition to coal, the mining industry produces tungsten concentrate, gold, silver, copper, as well as non-metallic minerals - limestone, kaolin, talc, etc.

Iron ore mining is concentrated in Yangyang, tungsten - at the Sandong mine (the concentrate is enriched in Daegu).

The basis of the electric power industry has traditionally been thermal power plants. However, the country's concern was its dependence on oil imports. The share of coal in the energy balance accounted for 34%. Currently, active exchanges with other countries in the field of science and technology have allowed South Korea to create the basis of nuclear power. There are 10 nuclear reactors in the country, producing more than half of the total electricity output.

One of the branches of industry specialization is ferrous metallurgy: about 40% of the metal is exported to the world market, mainly to the USA and Japan. Kazakhstan came in eighth place in the world in steel production (22 million tons in 1989), ahead of, for example, Great Britain and France. The largest factories are located in Pohang and Gwangyang. Domestic demand for metal is satisfied by approximately 80%. The limiting factor is the need to expand the import of raw materials (100% of coking coal, 80% of iron ore and coal are purchased).

The importance of non-ferrous metallurgy is not so great: aluminum, lead, zinc, copper (plant in Cheongyang and Gyeongnam Industrial Zone), and noble metals are smelted. The non-ferrous metallurgy zone actually developed in the Onsan area.

Mechanical engineering of South Korea

This industry is most closely connected with the world economy, since financial resources, technology and components mainly come from abroad, and sales in foreign markets stimulate production growth in the main industries.

One of the important events was the creation of the Changwon Industrial Zone, specializing in mechanical engineering.

The automotive industry has become one of the most rapidly developing sectors of international specialization in the Republic of Kazakhstan. More than half of the cars are exported to the international market. Cars produced in South Korea are beginning to displace their national brands from the European and American markets.

The Hyundai company (the main production of cars) has factories in Ulsan and Namyang. Other automobile factories are located in the cities of Bupyeong, Busan, Changwon, Gwangmyeon, Asan, and there are many branches abroad.

The most growing area of ​​specialization of the Korean industry is electronics. The country is among the top ten global leaders in the production of electronic products. Moreover, more than half is exported. The production of technologically sophisticated products is growing rapidly consumer electronics- video recorders, laser devices, computers and peripheral devices for them, as well as microcircuits.

The location of electronic enterprises gravitates towards large cities along the Seoul-Busan axis, with their strong scientific and technological potential and qualified workforce. Kazakhstan ranks second in the world in ship production after Japan. And shipbuilding, despite the global decline in this field, still remains one of the pillars of its economy and international specialization.

Large shipyards are located in Ulsan, Busan, Changwon, Okpo, etc. Korea is one of the top ten global textile producers, and the bulk is exported. Mainly finished clothing is exported abroad, with fabrics and yarn in smaller quantities. Textile industry enterprises are located mainly in large cities: Daegu and Gyeongsangbuk-do province, Seoul and Gyeonggi-do province, Busan and Gyeongsangnam-do province.

It is estimated that South Korea's overall level of technological development is 40% of the average level of industrialized Western countries. At the same time, in the last decade, the share of labor costs has decreased, and the role of technology has increased. According to the noted indicators, the country has approached the level of Japan in the 60s. In general, according to the level of economic development, social structure South Korea's economy has become equal to that of moderately developed capitalist countries. In 1996 it was admitted to the OECD.

Agriculture

At the start of the economic boom in 1963, most South Koreans were farmers. Sixty-three percent of the population lived in rural areas. Over the next twenty-five years, South Korea transformed from an agricultural nation to an urban, quasi-industrial country, and the agricultural workforce dropped to 21% in 1989. The current rate of agricultural workers is 19%.

South Korean agriculture had a number of inherent problems. South Korea is a mountainous country, with only 22% of its land arable, and receives much less rainfall than most other neighboring rice-growing countries.

Major land reform in the late 1940s and early 1950s. consisted of transferring land ownership to peasants. The plots of land, however, were too small (averaging one hectare, making cultivation inefficient and preventing mechanization) or too scattered for the family to be able to produce sufficient food. The enormous growth of urban areas meant that there was almost no one to work in agricultural areas, while due to the increase in population the demand for food products increased. The result of these events was that by the end of the 1980s. approximately half of South Korea's food needs, mainly wheat and livestock feed, had to be purchased abroad.

At the turn of the century, agriculture represented a small percentage of GDP. It employed 1/7 of the working population. After the land reform of 1948, a large part of large farms was restructured, and small family farms now predominate in the country. The main crop is rice, which accounts for 2/5 of the cost of all products produced.

The government purchases most of the crop at stable prices. In addition to rice, barley, wheat, soybeans, potatoes, and vegetables are grown. Pigs and cattle are the basis family farms. With government support, fishing has recently taken center stage. This industry fully meets the needs of the population, and surplus fish and seafood are exported. The Republic of Korea is emerging as a leader in the world as a deep-sea fishing country.

To give a more accurate idea of ​​the productivity of the above sectors of the economy, I will indicate in the table the main most important indicators:

Automotive industry

In South Korea, the automobile industry accounts for 9.4% of total value added, 8.3% of total exports, and employs 7.4% of the country's total workforce.

Production began in the early 1960s, when the first five-year economic plan was adopted. Since then, the South Korean automobile industry has become one of the most important sectors of the economy, showing high growth rates. Now South Korea is the world's fifth largest automobile manufacturer (its share is 5.4% of global production). The country has five main enterprises producing automobile products - Hyundai Motor, Kia Motors, GM Daewoo Auto & Technology, SsangYong Motor Company and Renault Samsung Motors.

In 2002, the country produced more than 3.1 million cars, and in the same year, sales in the local market amounted to 1.62 million cars, which is 11.8% more than in 2001. Exports remained at the same level (1.5 million vehicles).

In the long term (by 2010), the South Korean government plans to increase production volume to 4.25 million cars per year and export volume to 2.1 million cars per year.

Transport

Transport in South Korea is the country's transport communications system, such as railways, roads, airways and sea routes.

total length railways-- 6,240 kilometers (of which 525 kilometers are electrified). The six largest cities in South Korea - Seoul, Busan, Daegu, Incheon, Gwangju and Daejeon - have subways. The Seoul Subway is the oldest in the country, the first line from Seoul Station to Cheongnyangni opened in 1974. The total length of roads is 97,252 km, of which 74,641 km are asphalted. The main ports of the country: Jinhae, Incheon, Gunsan, Masan, Mokpo, Pohang, Busan, Donghae, Ulsan, Yeosu, Sokcho. The main air carriers of South Korea are Korean Air and Asiana Airlines. Both provide air transportation services both domestically and internationally. Seoul is served by two airports: Incheon Airport and Gimpo Airport. International flights are received mainly by Incheon Airport, while Gimpo receives mainly domestic flights. Other major airports are located in Busan and Jeju. There are 108 airports in the country.

Main Features of the Korean Financial System

When analyzing the state of the Korean financial system, it is necessary to highlight a number of features: the general underdevelopment of the financial system, and in institutional terms, its special emphasis on the banking sector. In this country, there are practically no such elements of ensuring the stability of the financial system as national deposit insurance, centralized identification of “problem” financial institutions and supervision of them, etc. A relatively small role is played by the so-called sustainable conservative investors (national), primarily non-state pension funds and insurance companies.

The instability of the system was also contributed to by numerous barriers widespread in the country that limited the access of foreign capital to direct control over local firms; in such conditions, most of the investments of foreign investors were of a portfolio nature.

The main government body involved in regulating the activities of the financial system is the Ministry of Finance and Economy of Korea, which is actively involved in the development economic strategy, distributes financial resources between industries and firms, and determines tax and tariff benefits.

The Ministry of Finance and Economy develops new laws and carefully reviews existing ones, and also takes many measures to strengthen the national currency, increase savings, expand exports, promote the investment of both national and foreign private capital, and attract investment and technology from abroad. The Ministry of Finance and Economy is often asked to assume the risk associated with the investment activities of private entrepreneurs by providing guarantees for external loans used to cover the costs of large-scale projects.

The experience of organizing the financial system of South Korea is very instructive, primarily in connection with the successfully found combination of a strict hierarchy of credit and banking institutions and non-banking financial institutions, clear control over all aspects of money circulation and financial markets.

The basis of government credit is the Bank of Korea, whose position is very large and whose authority is indisputable. The Bank exercises control over the issue Money in circulation, monitors the activities of private banks, issues permits to open branches of foreign banks, and carries out statistical and analytical functions. The system of state banks also includes 7 specialized banks (initially they were state property since more than half of their capital was paid for from public funds). State-owned banks hold about 37% of the country's deposits. Deposit banks include 10 national commercial banks, 10 local banks and 66 branches of foreign banks. 5 The concentration of financial and currency resources in the hands of the state influenced the formation of the main proportions of social production. At the same time, the main emphasis was placed on promoting exports in every possible way. The state used subsidies for national exporters, who were provided with banking benefits.

The coordination capabilities of the state are also determined by its control over foreign trade, prices and the banking and lending system. The distribution of borrowed capital coming from abroad takes place through government agencies, which significantly increases the state’s influence on the process of effective use of foreign capital.

It is obvious that in modern conditions of a highly developed division of labor, the basis of any regulatory measures is monetary circulation. In Korea, achieving financial and monetary balance was given top priority. Even in years of significant economic difficulties, monetary circulation, inflation, and state budget deficits did not escape the control of the state.

State debt

The public debt of the Republic of Korea (ROK) increased 8 times from 1998 to 2013 and amounted to $432 billion. Such data is contained in the report of the Ministry of Finance distributed today.

According to experts, in 2014 the national debt of the Republic of Kazakhstan will grow to $478.4 billion. Thus, public debt per capita in South Korea will exceed $9 thousand for the first time. In Russia this figure is 3.6 thousand dollars, in the USA - more than 53 thousand dollars.

A dictatorial president, 350 working days a year and a planned economy - no, we are not talking about the DPRK, but about South Korea. Thanks to supernatural efforts, the Koreans of the South made an economic breakthrough, turning the agricultural country into an industrial one. We will tell you how it happened and what it led to.

There is little money in the budget, there is not even enough electricity, the country is corrupt, and in the place of the main industrial region a well-armed “people's republic” has appeared - a situation that is familiar to us once in South Korea. But thanks to reforms, the country has become a world economic leader. In Ukraine, they often talk about the Korean experience, but often reduce it to deregulation and the fight against corruption. In fact, there were more changes, but not all of them can be repeated in our conditions.

1. South Korea became the 11th largest economy in the world

Korea has few natural resources, but its GDP is higher than that of oil and gas producing countries like Norway and Iran. And the Koreans left most of Europe behind. South Korea was once a poor agricultural country, but has managed to modernize its economy.

1. Its GDP grew 179 times thanks to... a planned economy

Over the past 54 years, Korea's per capita GDP has grown from $156 to $27,000 per person. However, during the first decade of reforms - from 1961 to 1970 - gross domestic product grew by only $136. Modernization did not have an immediate effect, but the Koreans did not change the country’s course. More precisely, President Park Chung-hee did not change him - from 1961 to 1979 he virtually ruled the country single-handedly. Korea introduced five-year plans and built an economy under government control. The president ruled like a dictator, and this provided the stability necessary for reforms.

1. Exports helped Korea become a developed country

If you compare this graph with the previous one, you will see that the export of Korean goods grew even faster than GDP - in 54 years it increased 7,000 times! Korea ranks eighth in the world in product exports. The government helped exporters with subsidies. Every year, Koreans received more and more foreign currency, and this money helped develop the country's economy. In 2014, international trade revenues amounted to 714 billion - half of South Korea's GDP

1. The country turned from an agricultural one to an industrial one

After the division of Korea, the south was predominantly agricultural, but industry now accounts for 39% of the country's GDP. And agriculture accounts for only 2% of income. The secret of this transformation is, again, government support. Manufacturers of finished products received subsidies and orders from the state, and business taxes were reduced. Preferences were given only to the most successful enterprises - this is how competition was stimulated in Korea. As a result of this policy, chaebols emerged - groups of industrial companies, like Samsung or LG.

Now the Korean economy is becoming post-industrial: the share of services in the country's GDP is growing and has already overtaken income from industry. Last year, Korean businesses earned $814 billion in the services market.

1. Korea is one of the top 5 high technology suppliers...

In 2014, the sale of technological products brought Korean companies $133 billion - for comparison, income from all Ukrainian exports that year amounted to 53 billion. And the global revenue of the Korean Samsung group of companies is estimated by the World Bank at 150 billion - almost the same amount earned by all those located in the United States companies.

1. ...and invests in science more than anyone else in the world

The millions spent on science allow the country to earn billions from high-tech exports. In 2014, the country allocated 4.3% of GDP to science - more than Japan or the United States. Koreans not only allocate a lot of money for research and development work, but also use it effectively.

1. To achieve the "economic miracle", Koreans worked 350 days a year

Even in the 90s, the average Korean rested 4-5 days a month. But this was also a relief: a decade earlier, the average number of working days reached 363! No country in the world could compare with Korea in terms of labor productivity; even the Japanese, whom we consider to be workaholics, were left behind. However, now Koreans work much less: on average they have 8 days off per month - a schedule quite familiar to us.

Every year the number of working days is decreasing, but do not think that Koreans work 10-12 hours - they simply began to work less. However, this has not yet affected the country’s economy, because the result of work depends not only on the number of working days, but also on the organization of labor and the use of technology, and on the productivity of work. For example, Germans have much fewer working hours, but this does not hinder the country's development.

8. Every third ship in the world comes from Korea

If a country produces a lot of steel, it can be sold abroad and make an easy profit, as they do in Ukraine. Or build ships from metal, sell them at a much higher price and not depend on the prices of raw materials - this is what they did in Korea. The development of shipbuilding also did not happen without government support, but now the country produces 35% of all ships in the world - almost on par with China.

The decline in purchases of Korean ships is the first sign of the global financial crisis. The country produces supertankers - these ships are so large that they cannot pass through the Panama and Suez Canals. They are priced to match the size, and if ship operators suddenly stopped ordering supertankers, it means that there will soon be an economic recession and customers are afraid to take risks.

1. The country leads in the number of Internet connections

In Korea greatest number cable Internet connections for 100 people. In addition, local users are increasingly connecting to high-speed Internet - according to this indicator, South Korea ranks sixth in the world. While Europe is moving from 3G to 4G, the Koreans are preparing to launch a more advanced communication standard - 5G, although they already have the fastest Internet access in the world.

The “internetization” of the country makes life easier for businesses, allowing them to save on stores and sell goods via the Internet, since most of the population accesses the Internet. Even small enterprises that usually do not have money for “promotion” and renting retail space can sell their goods and services in this way. In addition, the Internet allows businesses to use new services such as Internet banking, and it is easier to find partners via the Internet.

But the accessible Internet also has by-effect: It causes addiction among Korean teenagers, for which they have to be treated in special centers.

1. Korean schools are third in the world in terms of quality of education

South Korea ranks second in the world in terms of average resident IQ, and it's not a matter of genes or heredity. According to estimates by the Organization for Economic Cooperation and Development, the local schools are third in the world in terms of quality of education. And the educational company Pearson recognized the Korean education system as the best in the world, although it noted that students often “memorize” dozens of pages rather than analyze the material.

1. But a high standard of living does not make the country's residents happy

According to the UN, in 2015 South Korea ranked 58th in the world on the Happiness Index, and over the past 10 years the country's position in the ranking has changed little. According to the Organization's data, Koreans lack freedom of choice, and they also consider themselves insufficiently protected. However, the answers depend not only on the standard of living, but also on the optimism of citizens. For example, Korea is ahead of crisis-ridden Venezuela and Mexico, where drug lords are at war with the government.

1. Korea drops in competitiveness ranking, although it is in the top 30

According to the World Economic Forum, in 2015, Korea ranked 26th in the world on the competitiveness index. This rating shows the state's ability to ensure the development of the country and good living conditions for citizens. The Koreans are ahead of the economically powerful Turkey, Brazil and China, but this is not the highest figure for them: in 2007, South Korea ranked 11th.

1. But the country failed to defeat corruption

We tend to think of developed countries as being free of corruption, but South Korea ranks 37th on the Corruption Perceptions Index. However, Korean corruption does not prevent entrepreneurs from working: the country ranks 4th in the Doing Business ranking.

1. Unification of Korea will cost the South a trillion dollars

The DPRK's gross national income is 43 times lower than that of South Korea, and the North's industry is outdated, and the South Koreans will not benefit from unification. But they will have to feed 25 million North Koreans, provide for them modern medicine and education, to help 120 thousand prisoners of northern concentration camps. The southerners will also have to reduce the million-strong army of the DPRK and dispose of nuclear warheads.

Yes, South Korea will receive millions of new workers - but they will have to be retrained, because the technical level of the DPRK is much lower. And if not all North Koreans agree with unification, the new state will face an “urban war”, like the one that happened in Northern Ireland. Either way, the threat of change will cause capital flight and spook investors.

The eventual reunification of the country will be very costly for the more developed South. Therefore, the normalization of relations between the DPRK and South Korea is possible, but the South Koreans are unlikely to agree to pay out of their own pockets for the restoration of the north.

While Korea is working hard, Ukraine is resting

Once upon a time, South Korea was similar to today's Ukraine: a poor agricultural country that survived the war. Now Korea has managed to become a world leader in almost all indicators. Koreans worked, and worked, and worked... They invested in science and industry. They realized that the fate of the country depended on what they did for its future.

In Ukraine, it is not yet possible to work as zealously as in Korea: in June the government planned 11 days off, 2 days off more than in rich South Korea.