As the South Korean economy has reached a more mature stage of its economic growth, what are the evolving challenges it has had to face?

What are its prospects of continued economic success in the increasingly globalised world economy?

The rapid growth and development in the newly industrialising economies (NIE's) in recent decades has been nothing short of spectacular. Now among the world's most dynamic industrialised economies, the NIE's of Singapore, Taiwan Hong Kong, and South Korea which will be the focus, stand as perhaps the best examples of successful economic development. The economic development of South Korea, which has been among the most rapid in the world is typical of the 'miracle' that is the NIEs.

Korea has come far since the days it was 'a nation of hungry rice farmers', by pursuing an industrialisation-led development commitment since 1961, which has since produced annual GDP growth of 8.4% per annum, second only to China. The success of South Korea, has been identified by a number of factors including the shift away from import substitution strategies towards e

The prospects for continued economic growth hinge on the success of the aforementioned drivers for economic growth. Deregulating services in addition to lowering barriers to imports, allowing FDI (which can reduce the risks of future financial crisis in the medium and long term) and improving corporate governance would be the key to restoring strong growth in Korea. This reduction would come mainly because fair competition with best practice together with more careful bankers and demanding shareholders would force Korean manufacturers to improve their return their return on investments. In an increasingly globalised economy higher productivity in manufacturing and low import barriers would allow domestic competition to increase due to lower prices. Opening the domestic market would not lead to an increase in the trade deficit or external debt as higher capital productivity would reduce the need to import capital.

In the future, South Korea will need to reform its financial sector, remove the burden of excessive business regulation, provide a more favourable environment for foreign investment and restructure its economy away from declining manufacturing and agricultural industries towards services and sophisticated manufacturing.

Other challenges that Korea has had to face, continues to face, and must overcome are the consistent current account deficits (CADs) and foreign debt which may put a constraint on South Korea's future economic performance. South Korea's economy relies heavily on high exports and thus is susceptible to global fluctuations. Secondly there is a pressing need in South Korea to use imports more efficiently.

As an advanced economy, South Korea now needs far more than simply hard work and determination to succeed in this new century, Companies in South Korea need to keep ahead of the profound social, economic and political transition. It is the inherent need for human capital that drives much of South Korea's business and government spending. Many would agree that a well educated workforce is paramount to future success.

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Approximate Word count = 2163
Approximate Pages = 9 (250 words per page double spaced)