On what competitive advantages did South Korea lean to build a successful model of economic development? What factors can make South Korea particularly attractive as a market and as a base for value-added activities?
After the war which led to the division of the peninsula and Korea in 1953, South Korea became the first-rate economic power and a model of speed and effectiveness in its development policy over the last decade.
Today, South Korea is the world's 15th economic power, after Australia and Brazil, while at the beginning of 1960s, the Korean GDP per head was equivalent to that of Cameroon or of Indonesia. South Korea is one of the few countries that are ranked worldwide in consumer electronics, the steel industry, cars and the naval industry. South Korea is the second biggest supplier to China, leaving behind the European Union and Taiwan.
The question is why during last decades South Korea and other Asian countries knew of such an economic development, while other countries stagnated or even regressed in spite of their efforts?
According to Porter, to be really efficient, the advantage must be at the same time unique, difficult to imitate, adaptable, and superior in terms of quality against competition. Two types of competitive advantages can be identified, they are costs and differentiation. An advantage can have numerous origins: A brand with solid notability, a unique expertise, an exclusive patent, an upper network of distribution to others, a not very expensive and malleable working force (as in the case of China), a rare resource or an ideal geographical position.
[...] The aim is to create an operational research network. The government encourages private and public partnerships, between those different actors. Human resources are also in the center of the politics led by the government for the development of the South Korean clusters. The ministry of education, which encourages universities and firms to share their research capacities, has set up the project named (RHRD) Regional Human Resources Development, so that firms could utilize universities and training centers that have the necessity human capacities. [...]
[...] This allows us to draw a conclusion that in spite of a halting internal demand, South Korea benefits from a high international demand on its electronic products, because of its very good export. The country is a worldwide leader on the market of television and the ship building industry. It has a good reputation concerning high-tech industry, as well as well-known automobile and steel industries. Thus we can suppose that the international demand in relation to the South Korea is not going to weaken next year. [...]
[...] South Korea has 10 ports, among which there are two big scale ones (Pusan and Inchon). Pusan is the fifth worldwide harbor in terms of traffic of containers. France also has 10 ports. Thus the Koran port network is more developed than the French one. To conclude, communications, maritime and air transport networks are satisfactory. International airports and ports are primordial for export. On the other hand, the road infrastructure is not developed enough. The integration of the companies of support is important thanks to the predominance of the industrial parks developed by the government and the multiplicity of the activities of chaebols. [...]
[...] By 1990, significant shifts were occurring within the electronics industry. In 1989, South Korea had lost some of its cost advantage to newer consumer electronics producers in Southeast Asia. At the same time, production of electronic components and industrial electronics, particularly computers and telecommunications equipment, continued to expand to such an extent that overall demand for South Korean electronics products was expected to increase modestly in the early 1990s. In 1990, Seoul projected that the microelectronics industry would grow at an annual rate of 17.2 percent in the early 1990s. [...]
[...] South Korea doesn't have any natural resources except coal, tungsten and graphite. Concerning the geographical location of the country, it is a disability and an advantage at the same time; disability because South Korea has only one single border with North Korea, the most closed country in the world. The geographic location is also an advantage, because the country is situated in Asia, the most promising continent in terms of growth and development. Concerning the advanced factors, firstly, we shall examine the modernity of the communications network. [...]
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