According to the World Bank, Foreign Direct Investment are the net inflows of investments to buy a continuing management interest (10 per cent or more of voting stock) in an enterprise operating in an economy other than that of the investor. In South Korea, FDI accounted for 0.94% of GDP in 2013 and has considerably fluctuated since 2003 as the bar chart below illustrates.
In addition, as stated by the Central Intelligence Agency (The World Fact book), gross fixed investment as percentage of GDP was at 26.7% in 2012, Stock of direct foreign investment at home was about $152.3 billion (31 December 2013) and abroad was about $223.2 billion (31 December 2013) which placed South Korea as 30th and 23th respectively in comparison with the rest of the world.
In line with the Department of Foreign Affairs and Trade, South Korea is Australia’s third largest export market, ahead of India and the USA and it is currently ranked as the 12th largest economy in the world and the 4th in Asia. The Australian Government Austrade also informs that the northeastern Asian country is projected to have a 3.7% economiv growth from 2014 to 4% in 2015, the highest of all advanced economies. Furthermore, the Korea-Australia Free Trade Agreement (KAFTA) strengthens investment opportunities for Australian companies by improving protection for investors in Korea, safeguarding competitiveness in the market as well as creating new service opportunities. Under KAFTA, tariffs have been eliminated on 84% of Korea’s import from Australia.
So, the Korean market seems to be a very attractive and developed market for foreign business in Australia such as Bulla Dairy Food to trade and invest.
Principal Exports / Imports
As made available by the Central Intelligence Agency, (2014, The World Factbook: South Korea), exports in South Korea amounted to about $547.9 billion in 2012 and $557.3 billion in 2013 which places the country in the 9th position in comparison to the world. The export commodities are mainly semiconductors, wireless telecommunications equipment, motor vehicles, auto parts, computers, display, home appliances, wire telecommunication equipment, steel, ships and petrochemicals. South Korea imported $519.6 billion and $516.6 billion worth of goods in 2012 and 2013 respectively. The main import commodities were machinery, electronics and electronic equipment, oil, steel, optical instruments, transport equipment, organic chemicals and plastics.
South Korea’s principal export destinations in 2012:
China (24.5%), USA (10.7%), Japan (7.1%), Hong Kong (6%), Singapore (4.2%).
South Korea’s principal import sources in 2012:
China (15.6%), Japan (12.4%), USA (8.3%), Saudi Arabia (7.6%), Qatar (4.9%) and Australia (4.4%).
In addition to the above information, according to the Central Intelligence Agency, over the last decades South Korea has adopted several economic reforms after the Asian financial crisis of 1997-1998, including greater openness to foreign investment and imports. In 2014, the country is likely to encounter imbalances regarding heavy reliance on exports with developing domestic-oriented sectors, such as services. The South Korean economy's long term challenges include a rapidly aging population, inflexible labor market, dominance of large conglomerates (chaebols), and strong reliance on exports, which comprise about half of GDP.
Balance-of-payments situations, recent trends, debts, surplus or deficit
As defined by Investopedia website, the balance of payments is a summary of an economy’s transactions in relation to the rest of the world over a period of time. The balance of payments include all transactions between a country’s residents and its non-residents involving goods, services and income with the rest of the world and it is an important indicator as to the health of a countries economy. The balance of payments classifies transactions into two accounts – the current account which includes…