BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific
BBCi NEWS   SPORT   WEATHER   WORLD SERVICE   A-Z INDEX     

BBC News World Edition
 You are in: Business  
News Front Page
Africa
Americas
Asia-Pacific
Europe
Middle East
South Asia
UK
Business
E-Commerce
Economy
Market Data
Entertainment
Science/Nature
Technology
Health
-------------
Talking Point
-------------
Country Profiles
In Depth
-------------
Programmes
-------------
BBC Sport
BBC Weather
SERVICES
-------------
EDITIONS
Tuesday, 25 June, 2002, 13:25 GMT 14:25 UK
South Korea's economy 'Goes West'
Thousands of South Korean soccer fans gather in front of Seoul City Hall
Evan Davis: "The most absorbing sight"

South Korea never does things in halves.

Whether it is playing football, celebrating football or running companies, the country has developed something of a recent knack for spotting how the rest of the world does things, and then doing them bigger and better - Korean style.


It's got that Asian tiger in its tank again

For example, standing in the square outside the City Hall in Seoul during the Korea/Spain match, looking at several hundred thousand football fans cheer and sing was truly one of the most absorbing sights I can remember.

Korea may have been beaten by Germany in the World Cup semi-finals, but the team progressed further in the tournament than anyone had imagined.

The crowds outside the City Hall were a manifestation of the ubiquitous global football culture; but far more extreme than anything we, who invented it, do ourselves.

A man looks at a Korean stock market board
Korea is recovering faster than expected
One couldn't help but spot an irony in hearing the fans sing to the tune of that old Village People and Pet Shop Boys hit, "Go West".

As that is much of what Korea is doing at the moment - mixing its own idiosyncratic national characteristics with Western global culture.

And building an economy that is more Western than anything the country has hitherto seen.

The formula appears to be working rather well. It's not just in soccer that the country has been elevated to the world's premier league.

Its economy has been too - Korea is officially an advanced nation; the 13th largest economy in the world and a member of the OECD (the rich nations' club).

Fast mover

All this has occurred far more rapidly than any economic change the West has seen.

South Korea's Ahn Jung Hwan celebrates his goal against Italy in the World Cup
The economy has seen highs and lows
It is only five years since the Asia crisis engulfed the country, and humiliated it.

The nation was bailed out by the International Monetary Fund.

Yet since then, it has recovered faster than most people could have dared to have hoped - with a couple of years of 10% growth and an anticipated 6% this year.

It's got that Asian tiger in its tank again. But it is following a model of development that is less Asian than before the crisis.

Not like the old days

First, the huge, sprawling conglomerates that dominated the business landscape - the chaebol - have been reformed.


Credit card use is surging. The consumers who had little sovereignty in the past, now find themselves more powerful.

In the old days (i.e. before 1997) they ran banks that provided themselves with finance with little regard for investor return, and with a fair degree of government intervention.

They oriented themselves to high levels of investment and export market share, not always very efficiently.

Not so much these days. They have been cut back, and the banks re-oriented to run on market principles.

Big spenders

Related to that, there has been another significant change: domestic consumption has grown, domestic savings have fallen.

Borrowing is back in Korea - and this time it's personal. The bank lending that might once have gone to the chaebol is now finding its way to consumers.

Credit card use is surging. The consumers who had little sovereignty in the past, now find themselves more powerful. Debt is rising to Western levels.

This buoyant domestic market has been responsible for Korea's resilience in the face of a weak global economy in the last year.

At the same time, the labour market is becoming more Western - the common six-day working week is evolving into a five-day working week.

Jobs are also becoming more insecure and the population is said to be becoming more entrepreneurial.

Room for improvement

Of course, Korea still has plenty of challenges on the economic front.

Its average income is only reckoned to be half that of Britain, and corruption and cronyism have yet to be totally eradicated.

We might expect painful adjustments to occur as newly liberated consumers overspend (after all, many do not have much experience of over-borrowing).

But most of Korea's remaining problems are actually those that are very familiar to the populations of the world's richest nations - sorting out the health and pensions systems for example.

And of course, satisfying the population's new found thirst for World Cup football.

See also:

23 May 02 | Business
29 Apr 02 | Business
28 Nov 01 | Business
31 Aug 01 | Business
08 Mar 02 | Country profiles
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories

© BBC ^^ Back to top

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East |
South Asia | UK | Business | Entertainment | Science/Nature |
Technology | Health | Talking Point | Country Profiles | In Depth |
Programmes