Australia and the world: South Korea's economic success
South Korea is a remarkable story of economic transformation and has gone from being a hermit kingdom to a hub economy in the space of a few decades, says UNSW Business School’s Tim Harcourt
The story of South Korea is really one of the great modern economic success stories of recent years. In the 1950s South Korea was beset by war, and in terms of economic performance, was much like many African countries were at the time, a very poor country. But now, it's an OECD country, very advanced very modern, very much a global economy and quite a success when you look at the world stage.
How do they do it? Well partly through government intervention, particularly in manufacturing and also in supporting the rise of the chaebols, which are the great South Korean international companies. We know them quite well today: Hyundai, Kia, Samsung. They've been the South Korean enterprises that [have] really driven their growth.
South Koreans do very well on the world stage. You recall Ban Ki-Moon, the head of the United Nations, and also BTS, the Kpop group, which has taken the world by storm. In fact, the success of Korean pop or Kpop could give you a whole chapter on Kpoponomics given how successful they've been. South Korea has really been an inspiration to the world and very important for the Asia-Pacific.
In terms of international cooperation with Asia and the world, South Korea and Australia could be called 'soul mates'. Together we founded APEC, Asia-Pacific Economic Cooperation forum, and also the G20, particularly at the finance ministers level. We also have the Korea-Australia, free trade agreement signed in 2014. That allows almost 86 per cent of Korean goods to come into Australia, tariff-free and 98 per cent of Australian goods, particularly in agriculture to go into South Korea.
So very successful arrangement and indeed the complementarity of South Korea and Australia, South Korea is very successful, but it's got issues with food security and energy security means that Australia's export profile is almost perfect for South Korean growth and economic development.
South Korea and Australia, strong trading partners that they are now, actually has a very bright future. One reason has been the change in global energy to tackle climate change. There's a lot of interest in South Korea in hydrogen, a lot of the minerals from Australia are used for batteries for electric-powered cars that are very important in the South Korean industry. And also COVID-19 itself has enhanced South Korea's reputation and global manufacturing, particularly in the biomedical space for so for that reason, the interests of South Korea, and Australia will be aligned in the future.
There are over about two and a half thousand Australian companies already doing business in South Korea, in agriculture, in mining and in professional services. So a lot of those companies are really going to be switched on install into the future.
Tim Harcourt is the J.W. Nevile Fellow at UNSW Business School and host of The Airport Economist TV series and The Airport Economist Podcast.