south korea

The economy of South Korea is a highly developed mixed economy. It is the 4th largest GDP in Asia and the 10th largest in the world. In 2019, South Korea was the eighth largest exporter and eighth largest importer in the world. South Korea was one of the few developed countries that was able to avoid a recession during the global financial crisis @2008y.

The following tables and chart will tell the change details in last 5-10 years:

South Korea Distribution of workforce from the last 5 years:

Sector 2016 2017 2018 2019 2020
Agriculture 4.82% 4.78% 5.0% 4.88% 4.77%
Industries 24.99% 25.07% 25.2% 25.13% 25.01%
Services 70.19% 70.14% 69.8% 69.99% 70.23%

South Korea Distribution of GDP across economic sectors:

Sector 2015 2016 2017 2018 2019
Agriculture 2% 1.86% 1.85% 1.82% 1.69%
Industries 34.15% 34.3% 34.77% 34.12% 32.97%
Services 55.58% 55.36% 54.85% 55.45% 56.77%

Here attached the last 10 years chart of South Korea GDP: (amount in billion USD):

south korea

3 Sectors of the Economy – Agriculture, Industry and Services:

  • Agriculture:

Agriculture is an important part in the South Korea’s economy. South Korea is dependent on food imports with just only 22% of the land area is arable. It employs almost 4.77% of the total workforce and contributed almost 1.69% in GDP.

National Agricultural Cooperative Federation (NACF) is South Korea’s Agricultural cooperative, which is a nationwide organization in charge of agriculture banking, supply of agriculture input factors and sales of agriculture products. The NACF was founded in 1961 with the goal of “improving the economic, social, cultural and status of agriculture people and enhancing the competitiveness of agriculture to improve the quality of life of farmers and contribute to the balanced development of the national economy.

Major products in this sector:

Rice: South Korea’s rice production is among the highest in the world per unit of land. The most important crop in South Korea is rice, accounting about 90 percent of the country’s total grain production and over 40 percent of farm income. In 2019, the area of rice fields in South Korea was approximately 854,000 hectares, accounting for 50.3% of the cultivated land area. South Korea charged 513% tariff on rice for protecting the local farmers.

Agriculture Subsidy in South Korea:

Agriculture industry is very protective in South Korea. Government charges a high tariff for certain products like rice, to protect the local farmers, also gives high amount of subsidy to farmers annually. In 2019 the country has allocated a budget of 15.3 trillion won (US$13 billion) for the agricultural segment next year, the highest figure in the past 10 years.

That South Korean government provides direct payments to producers to support their income, influences positively farm productivity due to the importance of the agricultural sector in securing food security. In fact, the South Korean government spent about 18 percent of its total agricultural budget on direct payments in 2019 (The rest of the total agricultural budget is used for farm-management stability such as insurance, grain management, and farm-production management such as water management, rural welfare, and development). This indicates that direct payments play an important role for sustainable agricultural production in South Korea.

  • Industries:

Industries plays a significant role in the South Korea’s economy. It contributes almost 32.97% in the GDP and employs almost 25.01% of the total South Korea’s workforce.

Major industries in this sector:

Electronic and Electrical Equipment: South Korea exports of electrical, electronic equipment was US$153.63 Billion during 2019. This is the 31% of the total export of South Korea. South Korea is the world’s largest producer of semiconductors. Samsung and SK Holdings are the key companies in this industry.

Automobile: South Korea’s automobile industry is now the fifth largest producer of passenger cars in the world. The automobile industry accounts for 13 percent of manufacturing output, generates 12 percent value added, and is a very important industrial area that contributes to about 12 percent of total employment in South Korea. Every year South Korea export almost $54.2 billion of vehciles.

  • Services:

Service sector is a significant part in the South Korea’s economy. It contributes almost 56% in the GDP and employed almost 70% of the total South Korea’s workforce.

Major industries in this sector:

Finance: In 2020, the finance and insurance sector in South Korea generated real GDP of approximately 111.77 trillion South Korean won. Korea has a highly developed and profitable financial services sector including the third largest insurance market and third largest banking market in Asia. The stability of the banking sector is underpinned by strong fundamentals and active regulation.

Tourism: In 2019, South Korea saw a record number of around 17.5 million visitors. The country’s tourism industry is constantly growing. South Korea generated around 26.22 bn US Dollar in the tourism sector alone. This corresponds to 1.6 percent of its the gross domestic product. It is estimated to support 1.4 million jobs, representing 5.3% of total employment. Travel exports represented 15.5% of total service exports in 2019.

Top 10 Companies in South Korea:

Company Name Sector Fortune 500 Rank
Samsung Electronics Technology 19
Hyundai Motor Automotive 84
SK Holdings Holdings 97
POSCO Steel 194
LG Electronics Technology 207
Korea Electric Power Corporation Utilities 227
Kia Motors Automotive 229
Hanwha Conglomerate 277
Hyundai Mobis Automotive Parts 385
KB Financial Group Banking 426

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