OVERALL ATTRACTIVENESS OF

SOUTH-KOREA

BENEFITS:
Political: The government system of South Korea is a pluralistic, democratic and presidential
system, the president is elected by popular vote every five years, for one term only. The
president appoints the prime minister and has the right to release him from his duties. The
democratic system of governance is very good for the investors. In fully established
democracies, the governments play a minimal role in the economy and promote innovation and
accumulation of private wealth. It is a politically stable country. Because of its commitment to
democracy and market economy principles, it is a good investment destination.
Economical: In 1960, South Korea was considered a Third World nation, however, in 2000 it
was declared as the 12th largest economy in the world and 4th largest in Asia, measured in terms
of GDP. The country’s GDP composition indicates that it has emerged from primary industry
and is now heavily reliance on the service industry and the manufacturing sector. The best
developed sectors in the manufacturing industries are electronics, telecommunications
equipment, ship building, the steel industry, and automobile production.
Legal: South-Korea is the most educated country in the world. This means the country benefits
from highly educated and skilled work force. In the 1980s, Korea’s government began to
strategically invest in human capital development, research, and technological
innovation. Korean households at the same time catered much of their resources to education,
thus instigating a drastic expansion in education participation.

COSTS:
Political: The CPI of South Korea places it in the 52nd position among 172 countries. This means
corruption in South Korea is moderately high. This high corruption rate increases cost for new
entrepreneurs.
Economical: South Korea is a well developed country and has a very rich economy. This cuts the
economic cost. It has a high quality infrastructure and strong international financial position.
Legal: South Korea has a very strong and strict legal system. This might be an inhibition for new
business to start and make it costly.
RISKS:
Political: Due to its political stability and the rule of law, regulatory quality and government
effectiveness being solid, risks of new business is decreased.
Economical: South Korea has a very strong FDI inflows and its chance of going meeting
inflation and bankruptcy is unseen for a few years, hence it benefits new entrepreneurs.
Legal: South Korea follows a civil law legal system which is beneficial for entrepreneurs,
however, joint venture investments might suffer.
ECONOMIC GROWTH

Figure 1 GDP growth rate of South-Korea in %

REAL GDP AND INFLATION RATE
UNEMPLOYMENT RATE
POPULATION GROWTH

South-Korea has one of the highest population densities in the world, which means a high
number of inhabitants per square kilometer. Nonetheless, this doesn’t affect the living standard
of the country and on the human development index, which ranks countries by the basis of their
living standards using literacy rate, fertility and mortality rate, etc.
INFANT MORTALITY RATE (IMR)

This statistic shows the infant mortality rate in South Korea from 2008 to 2017. In 2017, 2.8
infants out of 1,000 live births died in South Korea.

South Korea is mentioned in a recent ranking of the best birth place for children. Inspite of the
high population, South Korea has one of the lowest fetility rates, i.e no of births by women of
child bearing age
MATERNAL MORTALITY RATE (MMR)

Maternal mortality rate (MMR) is the annual death of females per 100,000 births due to
pregnancy or any mismanagement. The MMR includes death during pregnancy, labour or with
42 days of termination of pregnancy.
This trend shows the MMR is South Korea 7 years. The lowest being in 2016. Which means
MMR rate is declining in South Korea.
HUMAN DEVELOPMENT INDEX (HDI)

The human development index (HDI) is a summary measure for evaluating progress in three
basic elements of human development. They area long and healthy life, education and a decent
standard of living. A long and healthy life is measured by life expectancy. Education level is
measured by mean years of education among the adult population. Standard of living is
measured by Gross National Income (GNI) per capita.

Life Expected Mean years GNI (per HDI value

expectancy years of of schooling capita)
schooling
1990 71.7 13.6 8.9 11614 0.728
1995 73.9 14.5 10.0 16482 0.778
2000 76.0 15.6 10.6 20601 0.817
2005 78.4 15.3 11.4 25315 0.855
2010 80.5 16.8 11.8 30387 0.884
2015 81.9 16.5 12.1 34276 0.898
2016 82.2 16.5 12.1 35122 0.900
2017 82.4 16.5 12.1 35945 0.903
Life expectancy of South Korea has been increasing since 1990 with the highest being in 2017.
This means Korean people lead a healthy life, with a flourished medical system. Mean years of
schooling has also increased in a span of 27 years, this means education system of South Korea
is also very strong. There is a very big increase of GNI from 1990 to 2017 aswell. The HDI of
South Korea has also become very high by 2017, whicg implies people of South Korea enjoy a
very good way of living.
A COUNTRY OF RICH CULTURE
AND TRADITIONS

Folkways of Korean people

-Elders are served first and they start the dining process
-Do not stand too close to people you are meeting for the first time – an arm lengths
should be kept
-Do not tip the waiter if a ‘no tipping’ sign is seen
-Do not point with your chopsticks, or leave them sticking out of your bowl
-Always remove your shoes before entering a Korean home

Mores of Korean people

-Being invited into a Korean’s home is considered an honour (especially if it is for a
meal) so it is essential to treat it as such. Be polite, respectful and observe their customs
 -Avoid gifts such as knives, scissors, sets of four, and red writing (these are seen as
‘cutting ties’ and signifying death respectively)

-Do not place your thumb between your middle and index finger while making a fist as
this an obscene gesture

-Communication can be complicated in South Korea due to an inherent dislike of saying

‘no’ as it is considered poor etiquette

-It is considered very impolite to address a Korean with his or her given name. They
should be addressed using their professional titles, or Mr, Mrs Etc, until permission is
given otherwise.

 
DETERMINANTS OF CULTURE IN SOUTH KOREA

There are several factors that come into play, contingent upon which the cultural foundations are
laid.
Religion- South Korea experiences notable diversity in terms of religion as it is booming as a
multi-ethnic and multi-cultural and multi-religious society. Every individual is protected to
follow whatever faith they choose by law. Religions such as Christianity, Buddhism,
Confucianism and Islam coherently, coexist. Religions dictate the way people live and have a lot
of input in their lifestyle. Hence South Korea experiences a culture that can be rooted back to
several religions, as there are people from all major faiths.
Language- Koreans speak their native language ‘Korean’ also known as ‘Hangul’ it is the
official language of the country.
Social Structure- Modern day south Korea is a Democratic nation there are no social classes
that segregate people. All are united under a democratic rule. The social structure is dictated by
democracy. The backgrounds of people given there are no cast systems or social class
distinctions they make the culture diverse due to the mixture of local, foreign and indigenous
people.
Political Philosophy -South Korea is a constitutional republic, led by the President. A multi-
party system exists and within a framework of presidential representative democratic republic the
president is head of the state with Executive powers.
Economic- South Korea is the 11th largest in the world and the 4th largest economy in Asia.
With an annual GDP of 1.6 trillion, Korea is a very economically stable nation. The GDP per
capita is also admirable and commendable, which is reflected in the lifestyle of the people.
Education -Almost all of primary schooling up to the age of 12 is free of charge this ensures that
everyone gets a head start towards being educated. With a literacy rate of 97.9% the people of
South Korea are very adapted and very much in the right direction to follow the modern world to
wherever it is heading.
HOFSTEDE’S THEORY OF CULTURE IN SOUTH KOREA

Power Distance: South Korea has a power distance of 60, which means it is a slightly
hierarchical society implying people accept a hierarchical order in which everybody has a place
and which needs no further justification.
Individualism: South Korea has an individualism score of 18 is considered a collectivistic
society. This means they want group process and not succeed individually.
Masculinity: South Korea has a pretty low masculinity score of 39, which implies a very
feminine society. This means equality is practiced and there is an absence of specific gender
roles.
Uncertainty avoidance: South Korea has a very high uncertainty avoidance whicg is at 85. This
means they are intolerant of any unorthodox behaviors and ideas and innovation is unwelcomed.
It is one of the most uncertainty avoiding countries in the world.
Indulgence: At 29, South Korea has a very low indulgence score. South Koreans do not put much
emphasis on leisure time and control self gratification feel that indulging them-selves is

something wrong.
REGIONAL ECONOMIC INTEGRATION OF SOUTH KOREA

From being one of the poorest countries in the world to a developed, high-income country within
few generations South Korea has come a long way and has showed its outstanding rise in the
fields of economy and development . Their growth is considered to be a miracle which was later
named as Miracle on the Han River . The country falls under two of the economically integrated
groups , APEC and APTA respectively. These regional integrated groups carry out an agreement
between groupof countries in a geographical region to reduce and ultimately remove tariff and
non tariff barriers to ensure free flow of trade between each other. These groups also provide
their member countries with many benefits and advantages.

Recently ,with the risinig interest in regional economic integration among many Asian
economies, South Korea , Japan and China have seriously traversed the prospects of closer
economic relations and co-operation. Their feature of economy is mostly similar which includes ,
outward looking and depend for growth on their economic relations with other economies , are
export oriented and share large number of domestic outputs to other economies and these three
countries trade heavily among themselves. Their top export destinations are China, US, Vietnam
,HongKong and Japan.

The economically integrated groups serve a lot to the prosperity of the economies . In case of
South Korea APEC and APTA are contributing to a wide-ranging manner as well. APEC stands
for Asia Pacific Economic Cooperation which is an inter –government forum for 21 Pacific Rim
those with bounadries on the Pacific Ocean ,working to advance the region’s economic
integration and prosperity and promotes free trade throughout the Asia-Pacific region. APEC
exerts a significant global influence. South Korea is recognized as Republic of Korea in APEC.
The Republic of Korea receives benefits as a member of APEC. Some of include
 Trade Agreements
 One goal of APEC is to establish a Free Trade Area among its member countries by

2020.

Again,The Republic of Korea and United States implemented the Korea US Free trade

Agreement on March 15,2012 which is the largest trade agreement (FTA).

Korea was the host country for APEC summit in 2005 .

Again, Korea has free trade agreements with ASEAN ,Australia, Canada, Chile, China ,
Colombia ,India, New Zealand , Peru, Singapore , EU , US , Turkey and Vietnam.

 Korean Peninsula
APEC plays an important role in ensuring peace and security on the Korean peninsula.
CBPR ( Cross Border Privacy Rules)
CBPR system that APEC has focus on preventing harm, notice, collection limitation , use
,choice , safe guarding security etc. South Korea being a member of this system expects
The overall level of protection of its citizens personal information and maintenance of
Privacy and security of companies thus improving Korean competitiveness in global
market.
Besides, The Republic of Korea has contributed much to greater economic integration in
the Asia Pacific through a donation of USD 700,000 to the APEC Trade and
liberalization and facilitation account.
South Korea as a member of APTA also receives some benefits. Three of the main benefits that
APTA provides to the Republic of Korea are stated below
 Duty Benefit on import by Bangladesh
Bangladesh has offered duty benefit on import of 602 products from 5 countries under
APTA which includes South Korea . South Korea will enjoy a preferential allowance
rates of custom duty ranging from 10 per cent to 70 per cent .

 Trade Liberalization Measure

APTA provides trade liberalization measures that contribute to regional trade expansion
and economic cooperation.

 Tariff Concession
India has agreed to provide Tariff concessions on 3,142 products to five members of APTA
including South Korea.

When it comes to Korea’s trade pattern, it is based on the gravity model which assumes that
trade flows between two countries are positively related to their economic size and negatively
related to the distance between them. South Korea has bilateral trade flows. In 2017 South Korea
exported $596B and imported $ 471B resulting in a positive trade balance of $124B.
South Korea has an export oriented industrialization.
A graphical data is shown below which depicts the capital flow of South Korea from July 2018
to April 2019.

According to a source the capital flows in South Korea averaged 1627.03 USD Million
from 1980 untill 2019 which is the highest among all time.
5 LOCAL COMPANIES IN SOUTH KOREA

NAME INDUSTRY LOGO

Samsung Electronics

Hyundai Motor Automotive

Posco Iron and

Steel

KIA Automobile

Shinhan Financial Finance

Group
5 MULTINATIONAL COMPANIES OF SOUTH KOREA

NAME INDUSTRY LOGO

Apple Electronics

Toyota Motor Corporation Automobile

Siemens Electronics

General Electric Global

Digital

BASF SE Chemical
The corruption perception index of
South Korea

According to the Transparency international South Korea stands 45th position on Corruption
perception index in 2018, among all the countries in the globe. The corruption perception index
of South Korea is moderate compared to other countries
 There is a significant corruption problem in South Korea, a scandal which took place in
2015 led the former president at that time Park Geun-hye to resign after which the current
president Moon Jae-in took over.
 The country faces moderate corruption in tax administration irregular payments between
the tax officials do takes place sometimes on the other hand land administration are quite
protected under Foreigner’s Land Acquisition Act
 South Korea operates following the Government e-Procurement system that is a one stop
shop for public procurement which helped save billions of USD in both public and
private procurement sectors proven in 2016
 The government of South korea established the Act on the Protection of Public Interest
Whistle Blower that is used for reporting public, private and foreign bribery even though
Chaebols hold some strong power in business that holds corruption and tax invasion
 In 2017 South korea ranks as world 20th top host economy in terms of FDI inflows, there
is a rise in merger and acquisitionsales in south korea for foreign companies to attract
FDI. FDI stock has progressed by 22% reaching 230 billion (15.4% of GDP) from 2016
to 2017
 There was a significant problem in lack of transparency and informal desk faced by
foreign investors previously for which the government established Foreign Legal
Consultant Act (FLCA) in 2016. Investment in Foreign direct invest are governed in the
country by Foreign investment Promotion Act that gives tax benefits, price support,
remittance and same beneficial treatment as the local enterprises.

South korea by far has shown significant growth in economic , new information, regulation
and communication systems which is a very good base for Foreign direct investment in the
country. The world bank believes south korea has suitable economic environment due to it’s
5th position The Doing Business 2019 ranking and hence holding its 45Th position compared
to other countries south korea is one of the best country for FDI to investment. Even if the
country faces corruption there are significant rules , regulations and law forces introduced in
the recent years by the Government for which it is absolutely suitable and safe for Foreign
investments to take place in the country.
A FEW INTERESTING FACTS OF
SOUTH-KOREA
 South Korea is one the biggest economy in the world. The country has progressed a lot from
war and poverty, and now is ranked 11th largest economy in the world and 4th in Asia

 South Korean is world recognized for having its K-Pop band which contains world’s finest
dancers and singers and has the largest views on YouTube

 South Korea is a paradise for tech junkies and have world’s fastest internet connection speed.

 South Korea is the largest market in cosmetic medical surgery in the world
 All of the microchips used in Apples iphones are made in south Korean companies such as
Samsung