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This site presents an analysis of the South Korean government's economic policies compared to a list of 34 economic policies as prepared by student Kathy Gyehyun Lee with the Mike P. McKeever Institute of Economic Policy Analysis (MIEPA). This study was written in December of 2017. To read the analyses scroll through this site. To learn more about the background policies, click here
To learn more about MIEPA, click here
Kathy Gyehyun Lee
A detailed study of the economic policies of South Korea is presented here as written by Specialist Kathy Gyehyun Lee. The ratings herein are based on the following rating scale:
RATING SCALE
5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 2018. Used herein with permission]
RATING SUMMARY - Kathy Gyehyun Lee
POLICY NUMBER RAW SCORE ADJUSTED SCORE POSSIBLE PERCENTAGE
1 1.0 3.0 15.0 20 %
2 1.0 3.0 15.0 20
3 2.0 6.0 15.0 40
4 5.0 15.0 15.0 100
5 4.0 12.0 15.0 80
6 4.5 13.5 15.0 90
7 5.0 15.0 15.0 100
8 5.0 15.0 15.0 100
9 2.0 6.0 15.0 40
10 3.0 9.0 15.0 60
11 4.5 13.5 15.0 90
12 4.5 9.0 10.0 90
13 4.0 8.0 10.0 80
14 4.5 9.0 10.0 90
15 5.0 10.0 10.0 100
16 4.0 8.0 10.0 80
17 2.0 4.0 10.0 40
18 4.0 8.0 10.0 80
19 1.0 2.0 10.0 20
20 1.0 2.0 10.0 20
21 2.0 4.0 10.0 40
22 4.0 8.0 10.0 80
23 4.5 9.0 10.0 90
24 2.5 5.0 10.0 50
25 2.5 5.0 10.0 50
26 1.0 2.0 10.0 20
27 4.0 8.0 10.0 80
28 4.0 8.0 10.0 80
29 4.5 4.5 5.0 90
30 4.5 4.5 5.0 90
31 4.0 4.0 5.0 80
32 4.0 4.0 5.0 80
33 2.5 2.5 5.0 50
34 3.5 3.5 5.0 70
TOTAL 114.5 243.0 365.0 66.6%
===== ====== ===== =====
INDIVIDUAL POLICIES - Kathy Gyehyun Lee
1. Freedom from internal control: 1.0
Citizens of South Korea do not have the freedom to peaceful assembly. During a recent protest, the �People�s Rally�, an activist was shot with a water cannon and died. There is also a delay in the investigation of deaths during many rallies. In their fight against terrorism, South Korea has passed some anti-terrorism laws which limit civilian freedom. In fact, a representative of CAIRD, the Corean Alliance for an independent Reunification and Democracy, was arrested for trying to leave the country to talk about her member�s condition.
Sources: https://www.amnesty.org/en/countries/asia-and-the-pacific/south-korea/report- korea-republic-of/
2. Freedom of speech: 1.0
In 2014, one of South Korea�s member of parliament was jailed because of the speech he gave, which is a clear lack of freedom of speech. He is currently serving a nine year jail term.
Additionally, a South Korean court also fined a student for posting cartoons that poked fun at notable political figures. Authorities also intimidate journalists; in fact, the brother of former president Park Geun-hye sued two journalists who wrote a story that suggested that he had something to do with the murder of his cousin.
Sources:
https://freespeechfreepress.wordpress.com/south-korea/
https://www.globalresearch.ca/south-korea-threat-to-freedom-of-speech-and-political- rights-reminiscent-of-park-chung-hee-dictatorship/5413854
3. Effective, fair police force: 2.0
South Korea�s society is not known for their fair treatment of women. We can also see this in crime too. Although the crime rate is low in South Korea, men and women see the threat of crime differently. In a survey, women are twice as concerned with crime as their biggest source of anxiety than men. This isn�t due to a lack of laws, but the overall Korean attitude of women.
In fact, in a case where a school teacher was raped by three men, the police seemed dismissive of her case, did not do extensive tests, and provided information to the media that was different than what they said they were going to tell the media.
Sources:
https://www.npr.org/sections/parallels/2016/07/06/484135201/violent-crimes-prompt-soul- searching-in-korea-about-treatment-of-women
http://www.bbc.com/news/world-australia-35931431
4. Private property: 5.0
South Korea�s property rights are protected under the Civil Act. They have a reliable system for mortgages and liens, and legally purchased land cannot go to other owners. South Korea also protects the land bought by foreigners under the Alien Land Acquisition Act.
South Korea has also been making advancements in intellectual property right protection, because they want to be innovative and they are seen as a creator of intellectual property. Intellectual is heavily forces by deletion of millions of illegal files online, distribution of materials that are illegal, and blocking illegal file sharing.
Sources :https://www.export.gov/article?id=Korea-Protection-of-Property-Rights
5. Commercial banks: 4.0
South Korea�s have many big commercial banks and these banks help to facilitate the economy. These commercial banks get their money from cash deposited by civilians, international loans, and by borrowing from the Bank of Korea. In fact, one bank helped to supply credit to businesses and the government, and the Korea Development Bank, who is a shareholder of state-run enterprises, gathered funds to help build South Korea�s industry.
Sources:
http://www.country-data.com/cgi-bin/query/r-12324.html
http://countrystudies.us/south-korea/54.htm
http://banksdaily.com/world/Korea
6. Communication systems: 4.5
South Korea is a country with well developed technology, and they have fast network connections that are available anywhere you go. Any cafe you would walk into is likely to have free wifi for use. When walking down the street, you can often see PC Bang, a place with fast internet and many computers for people to use, all around.
With well developed technology and network, current events spread on media, newspapers, and magazines fast. This also has a big impact on spreading trends. When people have knowledge of trends, it would be easier for businesses to be alert and have new ideas for their own business.
Sources:
http://www.expatfocus.com/expatriate-south-korea-communications
Personal experience
7. Transportation: 5.0
When a person who is not able to speak Korean is visiting Korea, he or she will have no problem getting anywhere. Korea�s transportation has been called the best transportation in the world. Not only is the transportation fast, it is clean, cheap, there are many signs, and signs are in different languages for foreigners.
Many people are surprised by Korea�s transportation system. The airplanes, ships, railroads, and buses are available everywhere. By looking up online, anyone would be able to get to anywhere with no struggle.
Sources:
https://mic.com/articles/180164/transportation-in-seoul-south-korea-shows-americans- exactly-what-were-missing#.2um1u90Ls
http://opinion.inquirer.net/85875/south-koreas-public-transport
8. Education: 5.0
South Korea is one of the most well known countries for having a high, achieving education standard. Since a young age, parents tries to expose and teach their kids korean, math, and even english by making them read books or having them solve math equations. A majority of the kids who live in Korea, go to kindergarten, elementary school, middle school, high school, and college. Approximately 79 percent of students attending high school goes to college, which is high.
Korea is a country where they think education is essential for anyone. No matter what side of the country one is at, he or she will be able to get an education. Although there is education everywhere, if someone wants a higher and better education, they will have to go to Korea�s capital, Seoul.
Sources:
http://www.bbc.com/news/education-25187993
http://www.koreaherald.com/view.php?ud=20100907000953
Personal experience
9. Social Mobility: 2.0
The previous president, Park Geun-hye, used her authority to place one of her �secret advisors� with no government title�s child into a prestigious university despite being unqualified compared to other candidates. This shows the amount of corruption in the government that can impede social mobility.
South Korean Universities also only admit candidates who stand out, and this can mean expensive tutoring for entrance exams, extracurricular activities, and internships. Poor parents are unable to provide this for their children, which bars families from moving up the social ladder.
Sources:
https://www.nytimes.com/2017/09/14/opinion/south-korea-social-mobility.html
https://www.nytimes.com/2016/11/01/world/asia/south-korea-park-geun-hye-choi-soon- sil.html
10. Freedom from outside control: 3.0
In 2014, a female North Korean citizen fled to South Korea and exposed North Korea�s true side. Unfortunately, when she was going to China for her �business shopping� she has not been found since then.
This story has caught many South Koreans� attention, and many people have been curious to know what happened to her. Many people have made assumptions that she has been abducted by North Korea. This created the premonition for South Koreans that they are going to be kidnapped by North Koreans; therefore, they are living in fear.
Sources:
https://www.forbes.com/sites/scottasnyder/2017/06/29/a-necessary-alliance-neither-south- korea-nor-the-u-s-can-take-on-north-korea-alone/#23c619b767ca
https://www.theguardian.com/world/2017/jul/19/south-korea-investigating-abduction-north- korean-defector
11. Protection of Domestic Enterprises: 4.5
Korea is a country with one of the largest exports and imports. For all imported goods and domestically manufactured goods, Korea has a flat 10% Value Added Tax and for luxury items, there is about a 10 to 20 percent excise tax. Although Korea is a very big country for its imports, export numbers have been higher than imports, which gives a positive number for their net export.
There was a period of time when South Korea was struggling with an economic crisis, and one of the major factors that helped South Korea become one of the wealthiest countries today, is their industrial policy. Their industrial policy gives benefits to the working class by giving them more opportunities to earn money.
Sources:
http://atlas.media.mit.edu/en/profile/country/kor/
http://www.sciencedirect.com/science/article/pii/S0167268111002046
12. Foreign currency transactions: 4.5
In South Korea, the main currency being used the most is the Won, which is the South Korean money. Although some places accept dollars in Korea, a majority of the stores and businesses use Wons. In order to conduct business, it will be much easier to work with wons since many places do not accept any other country's currency.
Sources:
http://koreatourinformation.com/blog/2013/12/06/what-currency-is-used-in-korea/
http://www.fodors.com/community/asia/currency-in-south-korea.cfm
13. Border control: 4.0
As many people know, North Korea and South Korea has still not ended the war yet. Due to this situation South Korea is in a state of high security, with many guard towers, fences, and guards. Not only will South Korea be able to fend off attacks, but also stop any intruders.
Even though South Korea has a strong border, several people from North Korea and China have been smuggling items into South Korea. North Koreans know that if they are caught smuggling into South Korea, they will be in danger or be sent back to North Korea which will mean death. Although they are aware, North Koreans put their life to come over board to live in South Korea.
Sources:
http://www.businessinsider.com/north-and-south-korea-dmz-border-is-a-warzone-2017-3/#d- attacks-have-happened-many-times-north-korean-soldiers-killed-two-us-army-officers-here- in-1976-at-the-bridge-of-no-return--named-because-captured-nk-prisoners-hardly-ever- wished-to-go-back-home-3
http://www.latimes.com/world/asia/la-fg-korea-balloons-20170524-story.html
14. Currency: 4.5
Korea�s main currency is the Won, which is South Korean made money. Although U.S. dollars are accepted in some popular foreigner areas of Seoul, many places will not accept it. Which makes the Won the single currency.
The currency is regulated in Korea by the central bank. South Korea's currency is not created in any other countries or banks. South Korea using a single currency, and the currency is being regulated in the country, puts South Korea at where commerce is encouraged.
Sources:
https://www.fxcm.com/insights/krw-south-korean-won/
https://english.visitkorea.or.kr/enu/TRV/TV_ENG_1_3.jsp
15. Cultural, language homogeneity: 5.0
Korea is not a very diverse country. You can hardly see anyone speaking in a language other than Korean hand hardly anyone with different skin tone. According to statistical data about 96% people in Korea is Korean. Which states that majority of people who live in korea speak and share same culture.
The 4% of the population are from many people from other parts of Asia, such as China, Vietnam, Thailand, Philippines, Japan, and so forth which suggest we still same a similar aspect of culture. There are also people from other parts of the world in Korea such as the United States, Africa, and Europe. However, Korea is mainly populated with Koreans and other small minority groups which lets us share the same culture and language.
Sources: http://www.worldatlas.com/articles/ethnic-minorities-and-immigrants-in-south- korea.html
http://study.com/academy/lesson/south-korea-ethnic-groups.html
16. Political effectiveness: 4.0
South Korea is a country that is surrounded by the water. When raining season starts, they have flooding problems, heavy winds, and sometimes typhoons. Luckily, since the year 2000, the Architectural Institute of Korea revised the law to construct buildings with resistance to typhoons and strong winds.
Many people do not realize that North Korea and South Korea are still in war. Due to this situation, South Korea is always ready and prepared to fight by having strong military practices and a strong army. Although the government fixed the problem of natural disasters by revising the law, they cannot do anything to stop the war which can affect the businesses easily.
Sources: http://www.theglobaleconomy.com/South-Korea/wb_government_effectiveness/
http://www.air-worldwide.com/Publications/AIR-Currents/2010/Managing-Typhoon-Risk-in- South-Korea/
17. Institutional stability: 2.0
South Korea has a lot of mistrust of the government due to recent scandals. In addition, some of the largest companies such as Samsung and Lotte were also caught in the scandals. This is because institutions of South Korea- such as large companies, media, and courts- worked together to build the nation, and they have been forming close knit ties.
Due to many scandals from the government and widely known companies, there is an overall mistrust of South Korean institutions. Many South Koreans protest when they learn of disturbing news, and are often described to love to show demonstrations.
Sources: https://www.ft.com/content/c9835284-5cf0-11e7-b553-e2df1b0c3220
18. Honest government: 4.0
During 2014 and 2015, as many people know, South Korea�s previous president Park Geun- hye, who has been impeached due to her actions, has lead South Korea to a state of big mistrust in their government. Fortunately, after South Koreans realized how important a president is, South Koreans took voting seriously, and luckily they were able to elect a better president this time.
In 2016, South Korea�s new president, Moon Jaein (also a former human rights lawyer), was open to help the citizens, and listen to their opinions. South Korea is known for overworking their workers and underpaying them, and as the president, he promised to fix these problems. With a help of South Korea�s new president, Koreans are going to have a more stable and honest government.
Sources:
https://www.washingtonpost.com/world/south-koreans-go-to-the-polls-to-elect-new- president-after-months-of-turmoil/2017/05/08/1f9b5620-342a-11e7-ab03- aa29f656f13e_story.html?utm_term=.33e299d306e1
http://blog.naver.com/ktv520/221002088321
19. Common Laws: 1.0
Many people do not know about Korean laws. After the sinking of a South Korean ship, one of the worst things that can happen, 304 people drowned, a majority of which, are students. Although the president was aware of this situation, she took no action of it, and the only thing the families were left with was their grief. Even though she should� ve been punished more severely, her authority allowed her to reduce the sentence.
This was not the only incident of injustice, because many of the laws do not protect citizens, they protect the criminals. Animal protection law, Children protection law, robbery and many more laws can be solved by being in jail for 5 years maximum or with money. Many laws can be changed by having authority or power, which leads to unfairness.
Sources: https://www.nytimes.com/2016/03/06/world/asia/defamation-laws-south-korea- critics-press-freedom.html
http://countrystudies.us/south-korea/72.htm
https://www.nytimes.com/2017/03/22/world/asia/south-korea-ferry-sewol.htmln
20. Central bank: 1.0
The Korean central bank is owned by the government. However, in 1990, some of the banks were returned to private ownership. South Korea central bank helps to regulate the GDP by executing monetary policies. While having some banks that are controlled by private companies is good, the central bank is under the influence of the government putting them under political pressure.
Sources: https://www.reuters.com/article/us-southkorea-economy-rates/south-korea-central -bank-holds-rates-at-record-low-to-boost-domestic-consumption-idUSKBN19Y02E
https://www.britannica.com/topic/Bank-of-Korea
21. Domestic budget management: 2.0
The South Korean government has recently had around -2.4 percent of its budget converted to GDP. Which is stating that Korea has a budget surplus. Having a surplus budget indicates a contracting economy which causes the GDP to decrease.
Sources:
https://tradingeconomics.com/south-korea/government-budget
https://tradingeconomics.com/south-korea/indicators
http://www.koreaherald.com/view.php?ud=20170912000215
22. Government debt: 4.0
Currently, Korea has approximately 523.5 trillion dollars of debt. South Korea has borrowed a lot of money from foreigners, but has been able to pay them back due to the value of its exports. As the national debt clock reports it, the debt converts to about 38.86 percent of its GDP.
Although this is not necessarily at 50 percent, the ideal percentage rate of the GDP which makes it extremely indebted, it is close. Therefore we can make a conclusion that Korea may not be excessively indebted but is indebted for sure. Which will not limit jobs and economic growth.
Sources:
https://tradingeconomics.com/south-korea/government-debt-to-gdp
https://www.britannica.com/topic/Bank-of-Korea
http://www.nationaldebtclocks.org/debtclock/southkorea
23. Economic statistics: 4.5
South Korea has many economic statistics posted about population, taxes, debt, unemployment, GDP on newspaper, media, and magazine which many of them are fairly accurate. These statistics will help people and businesses to have knowledge about what is going on economically. Having these statistics will increase investments and awareness of business opportunities increasing new businesses.
Sources: https://data.oecd.org/korea.htm
https://theodora.com/wfbcurrent/korea_south/korea_south_economy.html
24. Protection of public health and safety: 2.5
After the Korean War, Korea had a high rate of tuberculosis, but after amazing economic growth, South Korea was able to achieve a higher standard of living. They were able to make a amazing growth financially and technologically leading a decrease in many sicknesses. However, South Korea does have a tuberculosis rate seven times higher than that of countries similar to it. This is because of the increasing elderly population, who now have a weakened immune system due to old age, who were exposed to tuberculosis at a young age.
Since 2000 to now, there has been a steady decrease in infant mortality rate, which means there has been less death of babies or kids that are typically one year old or less. Which helps the economy to grow.
Sources:
https://wwwnc.cdc.gov/eid/article/21/11/14-1894_article
https://www.indexmundi.com/g/g.aspx?c=ks&v=29
https://www.indexmundi.com/g/r.aspx?c=ks&v=29
25. High wage policies: 2.5
In 2017, the minimum wage in korea is 6470 won per hour which is approximately 5.69 US dollars. When people hear the wage, many are surprised by how low it is, but rent and the goods are not as expensive in United States. With the minimum wage, people would be able to live in a house with some food, but it won't be luxurious and they will have to work a lot.
Since the minimum wage is not very high, there are some programs for low income people. For those who are categorized as a low incomer, they get money for school supplies and the textbooks, and as they get older, they will be receiving more money since the materials are more costly. Although there are health programs, a social security program, and education program for low incomers, it is not easy to get money from the government, and in order for them to be successful, it is best for them to work more.
Sources: https: https://tradingeconomics.com/south-korea/minimum-wages
http://www.koreaherald.com/view.php?ud=20170731000890
https://www.ssa.gov/policy/docs/progdesc/ssptw/2010-2011/asia/southkorea.html
26. Environmental protection: 1.0
Recently Korea has been having a very serious air pollution. As the wind rotates around earth, Korea receives air from China which is polluted due to many factories. Sadly, Korea has been ranked second place to have the most polluted air.
Air pollution is not the only problem Korea has, it is the environment in general. The government have abandoned the two most important international environmental organizations, the GGGI and the GCF. Sadly, due to this lack of regulation for the environment policy, Korea is becoming a harder place to live or have a business.
Sources: http://www.sgi-network.org/2014/South_Korea/Environmental_Policies
http://www.scmp.com/week-asia/politics/article/2087447/china-blame-koreas-pollution- really
27. Strong army: 4.0
Young healthy men are required to go to the military for two years. People in the military get sent to different groups to be in charge of many things. Some people would be in charge of sailing, shooting, instructing, and many more. These categories combined and working as one makes Korea�s military strong.
Recently, Korea and the United States had a call to have a talk about the missile treaty that have been made in 2012. After adjusting some statements from the past, they have agreed once again, and the U.S is giving Korea protection from other countries.
Sources:https://www.globalfirepower.com/country-military-strength-detail.asp? country_id=south-korea
http://www.cnn.com/2017/09/02/asia/south-korea-us-missile-treaty/index.html
28. Foreign trade impact: 4.0
Many korean people are interested in goods from other countries. Due to that interest, the percent of GDP from the export does take a good amount of portion in GDP. In 2016, foreign export took approximately 42%. Usually 33% would be the best amount, but fortunately 42% is not too far off from 33%.
Korea is somewhat depended on the exports but not extremely low, which tells us that they are providing domestic jobs well. Although we are doing well having exported good, we can see that we are a bit depended on trade which can suddenly affect our supply and demand.
Sources: http://www.theglobaleconomy.com/South-Korea/Exports/
Personal Experience
29. Management of foreign currency budget: 4.5
In 2015, South Korea had a positive trade balance of $115 billion dollars. However, South Korea�s total GDP was $1.3 trillion dollars, which makes the trade balance of $115 billion dollars around 10% of the GDP.
South Korea has a foreign debt from europe for about $500 million euro in 2015, and they are planning to pay back $700 million by selling foreign bonds the next year. This is good because South Korea is not accumulating large amounts of debt or large amounts of surpluses because they are using foreign bonds to pay for their foreign debts.
Sources:http://www.reuters.com/article/us-southkorea-economy-budget/south-korea-to- sharply-boost-budget-spending-to-spur-economy-idUSKBN0HD01220140918
http://atlas.media.mit.edu/en/profile/country/kor/
30. Layers of Collective Action: 4.5
Korea is a small country, but a lot of the population is cumulated in downtown, Seoul. Although Seoul is just small part of Korea, about 24% of South Korea's population lives in Seoul. Which explains why there are so many stores and businesses headquarters and just businesses it self in Korea. In order to become actively involved in the business or major you would have to move or come to Seoul.
Although South Korea�s GDP is growing, it has a decline in the middle class, with wages growing at a slow rate as well as a decline in the amount of jobs . Middle class Koreans are unable to move further up the ladder.
Source : http://worldpopulationreview.com/world-cities/seoul-population/
http://www.marketwatch.com/story/south-korea-is-an-overlooked-asian-gem-2014-05-13
31. Pro Business Climate: 4.0
Confucianism is a big part of Korean culture. When they have high social status many people would respect and look up to them. Many Korean people are always interested in authority and power, they tend to like to tell people what to do. When someone is a business owner, the first impression from korean people would likely to be impressed. Since having business promotes them of being at a higher status, they will most likely be looked up to.
Source: http://sydkorea.um.dk/en/the-trade-council/korean-business-culture
Personal experience
32. Government Enterprises: 4.0
In Korea, State owned enterprises are expected to execute economic development strategies. In total, state owned enterprises contributed 32.2 percent of the Nation�s overall GDP. This is less than that of the United States, whose government contributes 38.3 percent to the GDP. South Korea is also home to many chaebols, large, family businesses, (i.e Samsung). Samsung alone, contributed to 20 percent of South Korea�s GDP.
Source:
http://www.heritage.org/index/country/southkorea
http://money.cnn.com/2017/02/17/technology/samsung-south-korea-daily-life/index.html
https://www.theatlantic.com/business/archive/2012/07/whoa-samsung-is-responsible-for-20- of-south-koreas-economy/260552/
33. International Security Agreement: 2.5
Under the agreement, GSOMIA, with Japan, Korea now has an intelligence sharing network with Japan. With Korea�s use of satellites is limited to the area south of the military demarcation line, and with an absence of a military satellite, it is natural that Korea cooperates with Japan who already has four intelligence satellites on North Korea. This grants Korea increased protection against North Korea.
However, recently on June 2017 when Korean President, Moon Jaein met with United States President Donald Trump to have a conference it did not work out very well. Currently there is tension between south korea and US because of South Korea�s refusal to allow US to attack without their consensus.
Source:http://thediplomat.com/2016/11/korea-and-japans-military-information-agreement-a- final-touch-for-the-pivot/
https://www.thenation.com/article/south-korean-president-moon-jae-in-prepares-for-a- difficult-meeting-with-trump/
34. Protection of Domestic Enterprises From Government Mandated Costs: 3.5
South Korea puts 7.9% tariff on U.S agricultural goods, but starting from March 15, 2017 they got rid of 95% of tariffs on US imports. Although there is no tariffs on US imports there is 10 percent value added tax on all products including domestic and imported goods, but for imported luxury goods, there is tax that is around 10 to 20%. Thus the imported luxury may be more expensive, other US imported goods more affordable due to the reduction of tariffs.
Source: https://www.export.gov/article?id=Korea-Import-Tariffs
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