In 2017, Korea ranked sixth in exports. It is a great nation from the 1st to the 5th place. It is a remarkable accomplishment that we took sixth place among them. First place was China and 2nd place was USA, as you can take a look at the chart below.
France, Italy and the United Kingdom are ranked in second place in Korea. Germany and Japan is both traditional manufacturing powerhouse. Given that the Netherlands is also a global trading nation, the rankings of Korea are amazing. It is expected that this year will be similar. Korea’s aggregate demand composition is in sharp contrast to that of Japan.
In Japan, domestic demand accounts for 50.1% of total demand, while exports account for only 13.2%. Japan is also an export-led growth country, but Korea’s export dependence is much higher than that of Japan. Japan is a society where not only the proportion of household consumption is high, but also the proportion of government demand is very high. Japan is much more active in redistributing wealth through the government than South Korea. The low reliance on exports is due to the low reliance on foreign economic conditions and the huge domestic market.
In the case of Japan, even if the external economic conditions change, the domestic market has a certain size, so the economic shock caused by the decrease in overseas demand is very small compared with that of Korea. Investment is more important than consumption and maintaining export competitiveness is an important task. One is that the domestic consumption capacity is steadily declining while the dependence of the domestic economy on the foreign countries is steadily rising.
Excessive dependence on exports in the Korean economy has weakened the ability to respond positively to changes in the global economy, which can be seen only by the impact of the global financial crisis in 2008 on the Korean economy. Global demand has plummeted since 2008 due to the global financial crisis and its aftermath, and the Korean economy, which is heavily dependent on foreign countries, is directly hit by this. The greater the dependence of the economy on exports, the greater the uncertainty of the external environment.
In this regard, K-Herald, LA Times Korea (K-Herald’s Korea branch) aims to steadily enter Korean SMEs in North America and focuses on four people with expertise in Korea, focusing on SMEs overseas, particularly in North America, Japan and the Middle East: Mike Choi (IT and electronics specialist – Tokyo Electronics for about 20 years), Ralph Seo (Financial and SME support specialist – Securities business and M & A business management) Sam Kim (Medical, Beauty, and Health specialist), Dean Lee (General manager of PR team and director of video production). For about 5 years, various small and medium sized companies and midsize companies have been promoting and planning articles through the LA Times Asia section (K-Herald).
