Most Promising Economies of the 21st Century In 2005, Goldman Sachs economist Jim O’Neill created the Next eleven (N11) list: a document naming 11 economies that he believed had the potential to grow into some of the most major in the world over the course of the 21st century.
O’Neill’s N-11 list forecasted that after the BRIC countries – Brazil, Russia, India and China – these economies would experience immense growth and become extremely powerful. These included Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey and Vietnam.
Years after this in 2011, O’Neill developed another list outlining the economies that he believed had the strongest emerging markets; Mexico, Indonesia, South Korea and Turkey (the MIST list). Each of these countries has battled conflict, social challenges and economic setbacks in the recent past including South Korea, which shares a border with one of the most closed-off states in the modern world. Despite the challenges that have come with this and other geopolitical factors, it was included on both the N-11 and the MIST list.
This blog will take a look at how South Korea’s economy managed to repair itself after the Korean war between 1950 and 1953 and transform into the economic powerhouse that it is considered to be today.
Export Led Development of the Economy
While the war was damaging for the country’s economy, soon after it ended, South Korea moved to open its markets and push for export-led economic growth that would fuel the country’s industrialisation. This aggressive campaign ultimately enabled the country to achieve one of the fastest rising GDP rates in the world between the eighties and early nineties, which was also aided by a transition from authoritarian rule to a democratic society.
As South Korean companies like Samsung, LG and Hyundai began marketing and distributing their products around the world in the early 2000s the country made a name for itself in the automotive, electronics and ship-building industries. This trend continued and other industries in the country have followed suit; South Korea has established an entire sub section of pop culture of its own. K-pop, K-dramas and Korean cinema rapidly spread and became popular around the world, showing that the country is now a strong economic and cultural influencer.
2008 Global Crash
During the beginning of the 2008 global crash, South Korea struggled after major international investors lost confidence, however it remained resilient throughout the remainder of the recession as the country, which experienced similar troubles during the 1997 Asian financial crash, responded swiftly.
Because of its experience with downturns, the government was somewhat prepared and was able to rapidly implement a robust package of measures combined with monetary policies that help the country to remain a liquid and stable player in the market.
As mentioned above, the country’s major exporting companies: Samsung, Hyundai and LG were already established as significant exporters and held significant market shares in their respective industries. During the period of recession these companies invested in research and development to diversify their portfolios. This ability to adapt allowed them to expand market share in emerging product markets in subsequent years.
The government was actively encouraging this, establishing policies such as the ‘Creative Economy’ initiative that provided support to entrepreneurs, startups, and promoted the convergence of various industries.
On top of these initiatives the US and South Korean governments had signed the Korea – US Free Trade Agreement in 2007, which helped the Asian powerhouse to continue on as a major international exporter.
Some experts also note that the country’s education system played a big role in its economic resurgence. The system is particularly focused on the STEM subjects – science, technology, engineering and mathematics – which other world economies have only recently made a key focus.
With a workforce well educated in these industries, South Korea could push technological innovation and entrepreneurship which contributed to economic growth despite the challenges at the time.
Business in South Korea Today
As outlined, the country’s economy boasts a number of internationally renowned companies, while also being an incubator for many smaller enterprises. Entrepreneurs, investors, business people and accountants in Korea all note the country’s capital Seoul as an economic hub with huge opportunities.
The concepts of networking and interacting with other market influences are big there so many businesses outsource some of the more technical, financial tasks to a tax accountant near them. There are numerous benefits to doing this, not least because the country’s tax regulations are complex and frequently changing, which can be very difficult to navigate.
Experienced tax accountants in Korea have a specialised understanding of these laws and engaging their services will ensure that a business is always operating in compliance while minimising liabilities and maximising deductions.
Aside from this, business advisors and accountants can provide companies with tax-efficient strategies and financial operations, which can ultimately increase profitability.
When looking for an accountant in Korea, make sure that they tick off all of these boxes. Don’t just search for ‘tax accountant near me’, look for a professional who can offer you the best guidance possible on and help your business to thrive in the country’s dynamic and competitive landscape.