HỌC VIỆN NGOẠI GIAO

KHOA KINH TẾ QUỐC TẾ

FROM POVERTY TO PROSPERITY: THE RISE OF

KOREA AND ITS ECONOMIC MODEL

Instructor guides: Trần Thị Thanh Liên

Subject: Tiếng anh Ngoại Giao IV
Class: TANG 32
Group: 6
Contents
I. Introduction............................................................................................................................3
II. Situation of South Korea after the Korean War....................................................................4
III. Economic policies of Korea.................................................................................................5
Phase 2: Replacing Imports with Exports (1962 - 1979) Transform the economy from aid-
based to self-reliant, focusing on export development.............................................................5
Phase 3: Heavy and Chemical Development (1979 - 1987). Improve the competitiveness of the
economy, focusing on developing heavy and chemical industries............................................5
Phase 4: Democratization and Globalization (1988 - 1997). Democratization of the economy
and international integration.................................................................................................6
Phase 5: Developing knowledge and creativity (1998 - present). Transition to a knowledge-
based and innovative economy...............................................................................................6
IV. Stages of South Korea's economic development...............................................................6
Export-Oriented Phase (1960-1970):.......................................................................................6
Priority on Heavy and Chemical Industries (1970-1979):.......................................................8
Structural Adjustment and Economic Liberalization (1980-1989):.........................................8
Implementation of "New Economy" and "Globalization" Policies (1990-1996):.....................8
Period from 1997 to Present:...............................................................................................10
IV. Achievements of the South Korean economy...................................................................11
1. US-Korea Relations: The Springboard for South Korea's Rapid Economic Development......13
2. Hallyu - Korean Wave.....................................................................................................15
3. Hallyu's Economic Boom: Quantifying the Korean Wave's Impact.....................................16
VII. CONCLUSION.................................................................................................................18
TÀI LIỆU THAM KHẢO..........................................................................................................20

LIST OF GROUP MEMBERS

 STT Họ và tên Mã sinh viên

1 Nguyễn Thị Huyền Trang KTQT48A10333

2 Nguyễn Lê Minh Anh KTQT48A10130

3 Nguyễn Thị Phương Anh KTQT48A10132

I. Introduction

The South Korean economy, often considered a miracle story of the modern era, is a
testament to an impressive recovery and rapid growth from the ashes of war. Since the
1950s, when it was still a poor country and suffered many losses due to war, South
Korea has transformed rapidly into one of the largest and fastest growing economies
in the world, going through a period of continuous industrialization and
modernization. After only 20 years of war with North Korea in 1953, from a poor
country, Korea has made great strides in development and has now become one of the
four Asian dragons. With prominence in sectors such as heavy industry, high
technology, automobile manufacturing, electronics, home appliances and cosmetics,
along with its expanding cultural influence, Korea has demonstrated its strength. its
strength and flexibility in the global economic context. This development is not only
the result of smart and decisive economic policies, but also thanks to huge investments
in education and technology, along with a tireless work ethic and a desire to move
forward from Korean people.

II. Situation of South Korea after the Korean War

After the Korean War ended in 1953, South Korea faced an extremely difficult and
complicated situation. The war left severe consequences not only in terms of human
life and society but also caused serious damage to infrastructure and the economy. An
estimated 80% of South Korea's industry and 75% of its infrastructure were destroyed.

The war destroyed the capital Seoul and many other major cities. Transportation
systems and basic infrastructure such as roads, bridges and houses were destroyed,
slowing economic recovery and development.

The Korean War caused a huge loss of life, with millions dead and injured, and many
more displaced, losing their families and living unstable lives. The war created about
100,000 orphans and over 300,000 war widows.

The Korean economy after the war was at a state of exhaustion. The agricultural
sector, which accounted for the majority of the economic structure at that time, was
severely devastated. The fledgling industries and services were also completely turned
upside down by the devastation of the war. Outdated industry, lack of facilities,
business team and technical human capital; The country's area is small, land is poor,
and resources are scarce. Overcrowded population, widespread unemployment, people
falling into poverty; The political situation is often unstable....

Rebuilding the country requires great resources and support from the international
community. Help from countries like the United States and international organizations
became necessary to rebuild the nation from the ashes.

Faced with these enormous challenges, Korea began to take the first steps on the path
to reconstruction and global economic integration. The first years after the war were
an important stepping stone, preparing for extensive reforms and economic
transformation in the decades that followed.

III. Economic policies of Korea

In the 1950s, Korea was a very poor and unstable country, politics was in chaos,
democracy was corrupted, and the government was incompetent. In the early 1960s,
Korea's average income per capita was just under 100 USD, but thanks to high
economic growth, after 30 years, the average GNI per capita reached 10 thousand
USD, by 2015. reached 28 thousand USD. During the period from 1962 to 1992,
Korea went through 6 times of implementing the 5-year plan, the economy maintained
a high growth rate, an average of about 9.2%/year. The secret to South Korea's rapid
growth and development can be summarized in the following stages:

Phase 1: Reconstruction and Development (1953 - 1961) Rebuilding the country

after the Korean War, focusing on agricultural and light industrial development.

- Receive foreign aid, especially from the United States.

- Implement land reform and distribute land to farmers.
- Encourage the development of light industry to replace imported goods.
- Development of labor-intensive industries for export (in the 1960s)

Phase 2: Replacing Imports with Exports (1962 - 1979) Transform the economy
from aid-based to self-reliant, focusing on export development.

- Implement the export-oriented development (LED) strategy.

- Focus on labor-intensive industries such as textiles and electronics.
- Encourage foreign investment, especially from Japan.
- Developing heavy and chemical industry (HCI), promoting exports (1970s)

Phase 3: Heavy and Chemical Development (1979 - 1987). Improve the

competitiveness of the economy, focusing on developing heavy and chemical
industries.

- Invest heavily in infrastructure and technology development.

- Support large corporations (chaebol) to develop industries - heavy and
chemical.
- Raise exchange rates to encourage exports.
- Industrial structure reform to increase export competitiveness (before the
1980s)
- Shift from export development to trade development (after the 1980s)
 - Actively develop export-oriented industry, creating many incentives for export
enterprises.

Phase 4: Democratization and Globalization (1988 - 1997). Democratization of

the economy and international integration.

- Liberalize the market, minimize government intervention in the economy.

- Open the market to foreign companies.
- Enhance the role of the private sector.
- Suppress socio-political instability and prioritize economic growth.

Phase 5: Developing knowledge and creativity (1998 - present). Transition to a

knowledge-based and innovative economy.

- Invest heavily in education and scientific research. The Korean government has
applied a compulsory education program for children aged 6-15, along with an
equality policy to reduce competition for students to study at prestigious high
schools. In "equity zones", students are considered for admission to prestigious
schools using a random selection system (like a lottery), not based on merit.
- Encourage innovation and entrepreneurship. Universalize primary education
and reduce illiteracy, build culture, value education and focus on vocational
training. Build social infrastructure to provide minimum protection for low-
income households and create jobs.
- Develop high-tech industries.

Although the Park Jung Hee government creates a dictatorship, it is a fairly honest and
capable government, with leaders with foresight and a high sense of responsibility in
all circles, from civil servants and businesses. industry to all people; building an
effective government, a tough top-down economic management policy, strong ableism
(public civil servant recruitment exam and promotion based on ability); Strengthening
planning and implementation capacity, the Economic Planning and Planning
Committee develops five-year plans (1962 - 1992), through cooperation with USAID
and the World Bank (in the following years). 1960); High savings, investment and
relative price stability; Construction of north-south expressway, development of
industrial parks, investment in electricity; Developing rural areas, stabilizing food
security through increasing rice self-sufficiency rate, mobilizing rural construction
through the new rural movement; Construction and development of national forest
projects.
IV. Stages of South Korea's economic development

Export-Oriented Phase (1960-1970):

Agriculture:
In the 1960s, South Korea faced chronic food shortages. The agricultural policies
during this period focused on ensuring a sufficient rice supply. Strategies implemented
included:

Investment in Modern Elements: Development in the fertilizer and pesticide industries

played a crucial role in improving agricultural productivity. From 1965 to 1969, rice
production in South Korea increased by 30%. Agricultural machinery such as tractors
and small combine harvesters were also invested in to support the mechanization of
agriculture. High-yield rice varieties were cultivated.
Irrigation Projects: In the early 1970s, irrigation projects were implemented to
improve the irrigation system and reorganize farmland.
Rice Subsidy Model: Starting in 1969, a rice subsidy model was applied to encourage
increased rice production and support farmers' incomes.
Industry:
Choosing a growth strategy based on export-oriented industrialization and considering
the specific conditions of the country, South Korea's industrial policy during this
period focused on developing industries primarily relying on foreign loans and
promoting exports.
First Five-Year Plan (1962-1966): The government focused on developing
infrastructure (roads, bridges, hydroelectric power) while preparing the foundation for
boosting exports. During this plan, industrialization began with light industries. The
main development areas included fertilizers, electricity, textiles, and chemicals. South
Korea mainly focused on the domestic market, particularly developing chemical fibers
and refining oil through joint ventures with foreign countries, primarily relying on
American capital.
Second Five-Year Plan (1967-1971): The main goal was to modernize the industrial
structure towards export orientation. Import substitution policies were replaced by
strategies to promote export based on labor-intensive industries. The main export
sectors included synthetic fibers, petrochemicals, electrical equipment, and light
industries such as textiles, rubber, and plywood.
Low-Interest Credit and Subsidized Loans: The government provided low-interest
loans and bore lower borrowing costs compared to market rates for companies. This
credit subsidy policy helped exporters secure the necessary capital, meet business
needs, and rapidly increase exports. By the late 1960s, exports grew by an average of
30.8%.
Currency Devaluation and Floating Exchange Rate: In 1964, the government devalued
the national currency by 100% and adopted a floating exchange rate.

Priority on Heavy and Chemical Industries (1970-1979):

During this period, the government decided on a strategic shift to improve the
industrial structure, focusing on developing heavy and chemical industries to supply
materials and equipment for new industries, gradually reducing dependence on foreign
countries
Low-Interest Credit Programs: These policies provided capital advantages for
prioritized industries, enabling rapid development. Key development sectors included
steel, machinery, transport equipment, household electronics, shipbuilding,
petrochemicals, and industrial equipment.
Third Five-Year Plan (1972-1976): New industries emerged, such as the construction
of the Pohang Steel Plant (producing 1 million tons of steel in 1973, and 21 million
tons by 1994), petrochemicals, shipbuilding, transport equipment, and household
electronics.
Fourth Five-Year Plan (1977-1981): The government continued to pursue economic
growth, aimed at creating a self-sufficient economic structure, improving technology,
and increasing efficiency.

Structural Adjustment and Economic Liberalization (1980-1989):

During this phase, the main policies focused on economic stabilization, encouraging
private sector initiatives and competition, enhancing national welfare, social equity,
and international liberalization. Thus, the government implemented structural
adjustments to develop high-tech industries.
Industrial Structure Adjustment: The government adjusted the industrial structure,
liberalized and opened the economy, gradually privatized industries, expanded
markets, and promoted competition.
Trade Policy Reforms: From 1979 to 1988, import liberalization increased from 68%
to 95%, and all industrial products were free from non-tariff barriers. The average
tariff rate decreased from 25% to 17%. Alongside trade liberalization, South Korea
also liberalized foreign direct investment (FDI), encouraging domestic firms to invest
abroad, especially in Southeast Asian markets.
Monopoly Regulation and Competition Promotion Act (1981): This law reduced
monopolies and promoted competition across all industries. Another reform direction
was financial liberalization, reducing government deficits, and restructuring industrial
incentives. In 1981, the Ministry of Finance privatized a large number of domestic
banks. In 1988, the Foreign Investment Act was revised to further open the economy
to foreign investors.
Implementation of "New Economy" and "Globalization" Policies (1990-1996):
Early 1990s Economic Context:
In the early 1990s, South Korea experienced high inflation (about 9% in 1990-1991),
real wages tended to decrease, consumer prices increased, and the budget showed a
deficit trend. Therefore, the government introduced measures to control the money
supply and financial targets, as well as measures to stimulate sector-specific
investments. Wage mechanisms were also reformed.

1992-1996 Social Development Plan:

The government issued a social development plan that included the following
components:
Enhancing the international competitiveness of industries.
Improving social welfare and balanced development.
Liberalizing and internationalizing the economy.

Agriculture:
In April 1989, the "Comprehensive Master Plan for Rural Development" was
announced to improve the agricultural structure and raise the living standards of
farmers. In 1991, the "10-Year Plan for Rural Structure Improvement" was
established:
Diversifying Agricultural Production: This was achieved by promoting the
industrialization of rural areas to enhance the competitiveness and sustainability of
agriculture both domestically and internationally. The government invested in modern
agricultural machinery, high-yield technologies such as genetic engineering, and
automated facilities.
Restructuring Rural Workforce: This involved attracting young people to participate
in agriculture. The government launched support programs for young farmers
committed to farming, including training in advanced farming techniques. Low-
interest loans were provided to invest in infrastructure (roads, schools, healthcare).
Expanding Farm Sizes: This was facilitated by relaxing legal restrictions on maximum
farm ownership and providing long-term special credits.
Investment Commitment: The government committed to investing 42,000 billion won
(USD 52.5 billion) to develop rural areas from 1992 to 1998. This budget was divided
into two categories: compensation income (for rice subsidies, income and living
support for farming households) and actual investment (for projects like land
improvement, agricultural mechanization, marketing, and rural infrastructure).

Industry:
The industrial development strategy focused on products with high technical and
technological content, replacing capital-intensive products:
Enhancing Comparative Advantage: Continued development of industries using
skilled labor and high technology, such as electronics, information equipment,
automobiles, aerospace, microelectronics, biotechnology, and advanced chemistry.
Key Policies Focused on:
Innovating Labor Productivity: Accumulating technology and improving quality.
Advanced technology sectors such as semiconductors and engine mechanics were
emphasized.
Market Expansion: Promoting industrialization aimed at the private sector. The
government established an import liberalization board, reduced monopolies, promoted
competition, and encouraged the growth of Chaebols (family-owned industrial
conglomerates) through credit policies.
Attracting Skilled Personnel: Encouraging investment in research and development
through tax reductions, special pricing, subsidies, and low-interest loans.
Identifying Priority Sectors: Transitioning from a "smokestack economy" to a
sophisticated, modern economy. Ensuring sustainable, excellent, and environmentally
friendly industrial development.

Period from 1997 to Present:

To overcome the 1997 financial crisis, South Korea sought assistance from the
International Monetary Fund (IMF). The country borrowed USD 57 billion, which
was only 37% of the total debt South Korean companies owned abroad, but it helped
prevent further economic decline. To obtain this loan, South Korea had to meet
several IMF requirements:
+ Restructuring the Financial Sector
+ Reorganizing Enterprises
+ Labor Market Reform
+ Capital Market Liberalization
+ Trade Liberalization
Additionally, internal economic reforms were necessary to overcome the crisis:
+ Financial System Reform
+ Corporate Restructuring
+ Creating a Flexible Labor Market and Ensuring Employment
Encouraging foreign direct investment (FDI), the government introduced several
measures to facilitate foreign investment, expand financial support, reduce business
taxes, and make it easier for foreign investors to find locations and areas for
investment. The scope of investment was also broadened. The time required to
establish foreign enterprises was reduced to 45 days (from April 1, 1995), compared
to the previous 200 days.
To address the current global crisis, the South Korean government has introduced
measures aimed at four major goals: implementing emergency measures to counter the
economic crisis, deploying support programs to improve public welfare, promoting
reforms to integrate South Korea into the group of developed countries, and
accelerating preparations for future "green growth." The government has selected 17
industrial sectors as economic growth drivers in three main areas: green technology,
high-tech industries, and high-value-added services.

IV. Achievements of the South Korean economy

South Korea, a country with scarce resources, was still a developing country before
the 1960s. However, starting from the 1960s, the South Korean economy began to
grow rapidly, and by the mid-1980s, it had become a newly industrialized country
(NIC) with a mixed economy: a market economy with state regulation. Today, South
Korea is a wealthy nation with the 8th largest economy in the world. After the Korean
War, South Korea quickly developed from one of the poorest countries in the world to
one of the richest.

Late 20th Century Economic Growth:

By the late 20th century, South Korea had one of the highest economic growth rates in
modern world history. From 1960 to 1980, South Korea’s GDP per capita showed a
modest increase, but starting from the 1980s, it soared significantly. This leap
indicates the substantial success of the policies implemented by the South Korean
government. In 1996, South Korea became a member of the OECD, marking an
important milestone in its economic development. The service sector grew rapidly,
accounting for about 70% of GDP. Additionally, the quality of life for the population
improved quickly, even surpassing that of some developed countries in Europe and
North America. Currently, South Korea's income and wealth are partly increasing due
to high-tech investments and exports to developing countries like China, Vietnam, and
Indonesia. Recently, the South Korean government has been boosting semiconductor
exports and attracting foreign investment into its free economic zones.

Establishment of Free Economic Zones:

The establishment of free economic zones (FEZs) not only attracts FDI but also
facilitates the transfer of technology and production know-how, enhancing
competitiveness and developing new industries. On August 5, 2003, the South Korean
government designated Songdo, Yeongjong, and Cheongna as the country's first free
economic zones. This initiative was part of an effort to create an "international
business hub city" to attract more foreign investment and stimulate economic growth.
South Korea is currently the leading investor in Vietnam, with 9,863 projects and a
total registered capital of USD 85.865 billion, accounting for 25.1% of total FDI
projects and 18.3% of total registered FDI in Vietnam.

Foreign Direct Investment:

Foreign direct investment (FDI) in South Korea surged in early 2008 (up 69.8% in the
first quarter compared to the same period the previous year) due to numerous large-
scale investment projects. Investment in the service sector rose by 94.9% to USD 1.93
billion, with realized capital increasing by 24.4% to USD 725 million. New brand
investments in South Korea increased by 58% annually to USD 1.73 billion. South
Korea's FDI primarily comes from the United States, the European Union (EU), and
Japan. However, in the first quarter of 2008, South Korea's economy grew at its
slowest pace in three years, as consumer spending decreased and companies limited
investments (GDP growth was only 0.7% compared to 1.6% in the previous quarter).
South Korea’s development justifies the name "Miracle on the Han River": from a
poor, underdeveloped country with scarce natural resources and the aftermath of a
civil war, it rose to become an Asian Tiger in just over 20 years. This success is
something many countries aspire to and learn from in their own efforts to develop.

Social Stability and Improved Quality of Life:

With strong economic growth, South Korea's GDP per capita increased, leading to
higher living standards and an improved quality of life. Political and social stability
have been maintained, making South Korea one of the safest and most desirable
countries to live in. Slums have disappeared, replaced by apartment complexes and
high-rise buildings. Large bridges now span the Han River, connecting the northern
and southern parts of Seoul, and a comprehensive subway system has been developed
throughout the city center.

Cultural Impact:
The 1986 Asian Games and the 1988 Olympics in Seoul marked significant
milestones in the "Miracle on the Han River." The South Korean government began
actively promoting the country's image to the world. South Korean cultural products,
such as movies, TV shows, music, and art, have penetrated deeply into many
countries. The "Hallyu wave," characterized by pop music and TV dramas, has gained
widespread popularity, becoming a famous trend across Asia.

V. EXPANSION

1. US-Korea Relations: The Springboard for South Korea's Rapid Economic

Development
South Korea's transformation from a war-torn wasteland to one of the world's largest
economies, known as the "Miracle on the Han River," is a testament to its resilience
and effective development strategies. This journey was significantly supported by the
United States, which played a crucial role through various forms of assistance and
cooperation.

Post-War Recovery and Economic Aid

In the aftermath of World War II and the Korean War, South Korea was devastated
and impoverished. From 1953 to 1961, South Korea received approximately $2.3
billion in aid from the United States and other countries. This aid was instrumental in
South Korea's recovery and development.
The United States provided crucial economic support through several programs:
- The Korean Economic Recovery Aid Program (ECA): This program provided
capital and technical support to help South Korea rebuild its economy.
- The Public Law 480 Program (PPL): This initiative helped South Korea develop its
agriculture and increase food production.
- The Social and Economic Development Program (SEDP): This program focused on
developing South Korea's infrastructure, education, and healthcare, laying a solid
foundation for long-term growth.
Economic Growth and Industrialization
By 1961, South Korea's per capita national income was only $93.8, ranking it 91st in
the world. However, the substantial U.S. aid played a pivotal role in boosting the
country's economy. South Korea's heavy industries began to gain prominence, and
numerous organizations were created to promote U.S.-Korea trade, such as the U.S.-
Korea Business Council in 1987.
During the late 1980s and early 1990s, Korea underwent full-scale industrialization. In
1995, Korea became the world's 11th largest economy and joined the World Trade
Organization (WTO), enhancing its ability to engage in international trade.

Trade Relations and the U.S.-Korea Free Trade Agreement

The trade relationship between the United States and South Korea deepened over the
years. By 2006, South Korea had become the United States' seventh largest trade
partner, and bilateral trade reached a record $75 billion. The U.S.-Korea Free Trade
Agreement (KORUS) was negotiated, further eliminating tariffs and trade barriers,
facilitating the entry of Korean goods and services into the vast U.S. market.
In 2022, the United States surpassed China to become South Korea's number one
goods export trading partner for the first time in eighteen years. This relationship is
particularly strong in specific sectors, such as automotive and agricultural products.
Korea is a major export destination for U.S. beef, while the United States is a key
market for Korean vehicles.

Technological and Industrial Collaboration

South Korea continues to attract significant investment from American companies.
Major corporations like General Motors, Ford, and Samsung have invested heavily in
South Korea, boosting industrial development and creating numerous jobs. American
companies have also transferred technology to South Korea, enhancing its
manufacturing capacity and international competitiveness.

Military Assistance and Stability

Beyond economic support, the United States has provided crucial military assistance
to South Korea. The American military presence has helped protect South Korea from
North Korean aggression, creating a stable environment for economic growth. This
stability has been a key factor in enabling South Korea to focus on economic
development without serious security threats.

Continuing Economic Partnership

Since the early 2000s, U.S. trade with South Korea has continued to grow, with new
areas of cooperation emerging annually. Notable sectors include technological
cooperation, battery manufacturing, and energy. Following the repeal of the U.S.
crude oil export ban in 2015, the United States has become South Korea's number two
crude oil supplier, marking a new era in energy partnership that now also includes the
production of solar panels and electric vehicle batteries.The US and Korea are major
economic partners. South Korea benefits by selling more goods to the US thanks to
KORUS, attracting US investment that creates jobs, and gaining valuable technology
from US companies. This strong partnership has been a key driver of Korea's
impressive economic growth.

2. Hallyu - Korean Wave

Hallyu's Economic Boom: Quantifying the Korean Wave's Impact
The Korean Wave, or Hallyu, is more than just a cultural phenomenon; it's a multi-
billion dollar force driving South Korea's economic growth. Let's dive into the data
and see how Hallyu's global influence, particularly through K-pop, translates to real
economic impact.

Content Exports: A Cultural Juggernaut: Hallyu's influence is undeniable. In 2021,

Korean content exports, including K-pop, reached a staggering $12.45 billion,
according to the Korean Foundation for Cultural Industry Advancement. This figure
reflects the international demand for Korean dramas, films, and music, generating
significant revenue for content creators and boosting Korea's cultural footprint.

Music Mania: A Lucrative Mix of Digital and Physical: South Korea boasts a unique
music market. While digital streaming platforms like Melon and Bugs (with a total of
13 available) offer convenient music access, physical CDs remain surprisingly
popular, generating $1.5 billion in revenue in 2022. Fans view them as collector's
items, often packed with photobooks and photocards, further fueling sales. This focus
on physical sales, coupled with strong fandom culture that encourages buying multiple
copies to boost music show rankings, propels K-pop album sales to impressive
heights.

Beyond Music: Hallyu's Ripple Effect in Numbers: Hallyu's impact extends far
beyond music, generating additional revenue streams:

Media & Broadcasting Boom: Korean dramas and shows, once primarily domestic
hits, now enjoy international audiences thanks to subtitles. This dedicated viewership
translates to advertising revenue and sponsorships for Korean media companies.
According to a 2019 survey by the Korea Tourism Organization, 55.3% of all inbound
tourism was linked to Hallyu, highlighting its role in attracting foreign viewers.
Fashion & Beauty Flourish: K-pop idols are trendsetters, with their fashion sense
inspiring fans worldwide. This has led to lucrative collaborations between K-pop
artists and fashion brands, creating special collections and brand ambassador roles.
The Korean beauty industry has also benefited immensely, with a report by
Euromonitor International suggesting the global K-beauty market reached a value of
$10.8 billion in 2023.

Marketing Magic with Star Power: As K-pop idols gain global fame, their influence
extends to advertising and marketing. Their strong fandoms and trendsetting image
make them ideal brand ambassadors, attracting young consumers for a wide range of
products and services. According to a 2021 study by Hyundai Research Institute, the
K-pop merchandise market alone was valued at $4.9 billion. Collaborations with
international brands like Gucci and Chanel further illustrate K-pop's growing
influence in the marketing world, reaching a wider audience and generating significant
brand value.

In conclusion, the data paints a clear picture: Hallyu's impact on the Korean economy
is substantial. From the massive revenue generated by content exports and music sales
to the flourishing derivative industries in fashion, beauty, and marketing, Hallyu is a
cultural and economic powerhouse valued in the tens of billions. It's a testament to the
power of Korean creativity and innovation, propelling the nation's growth on the
global stage.

3. Hallyu's Economic Boom: Quantifying the Korean Wave's Impact

The Korean Wave, or Hallyu, is more than just a cultural phenomenon; it's a multi-
billion dollar force driving South Korea's economic growth. Let's dive into the data
and see how Hallyu's global influence, particularly through K-pop, translates to real
economic impact.

Content Exports: A Cultural Juggernaut: Hallyu's influence is undeniable. In 2021,

Korean content exports, including K-pop, reached a staggering $12.45 billion,
according to the Korean Foundation for Cultural Industry Advancement. This figure
reflects the international demand for Korean dramas, films, and music, generating
significant revenue for content creators and boosting Korea's cultural footprint.

Music Mania: A Lucrative Mix of Digital and Physical: South Korea boasts a unique
music market. While digital streaming platforms like Melon and Bugs (with a total of
13 available) offer convenient music access, physical CDs remain surprisingly
popular, generating $1.5 billion in revenue in 2022. Fans view them as collector's
items, often packed with photobooks and photocards, further fueling sales. This focus
on physical sales, coupled with strong fandom culture that encourages buying multiple
copies to boost music show rankings, propels K-pop album sales to impressive
heights.

Beyond Music: Hallyu's Ripple Effect in Numbers: Hallyu's impact extends far
beyond music, generating additional revenue streams:
Media & Broadcasting Boom: Korean dramas and shows, once primarily domestic
hits, now enjoy international audiences thanks to subtitles. This dedicated viewership
translates to advertising revenue and sponsorships for Korean media companies.
According to a 2019 survey by the Korea Tourism Organization, 55.3% of all inbound
tourism was linked to Hallyu, highlighting its role in attracting foreign viewers.
Fashion & Beauty Flourish: K-pop idols are trendsetters, with their fashion sense
inspiring fans worldwide. This has led to lucrative collaborations between K-pop
artists and fashion brands, creating special collections and brand ambassador roles.
The Korean beauty industry has also benefited immensely, with a report by
Euromonitor International suggesting the global K-beauty market reached a value of
$10.8 billion in 2023.
Marketing Magic with Star Power: As K-pop idols gain global fame, their influence
extends to advertising and marketing. Their strong fandoms and trendsetting image
make them ideal brand ambassadors, attracting young consumers for a wide range of
products and services. According to a 2021 study by Hyundai Research Institute, the
K-pop merchandise market alone was valued at $4.9 billion. Collaborations with
international brands like Gucci and Chanel further illustrate K-pop's growing
influence in the marketing world, reaching a wider audience and generating significant
brand value.
In conclusion, the data paints a clear picture: Hallyu's impact on the Korean economy
is substantial. From the massive revenue generated by content exports and music sales
to the flourishing derivative industries in fashion, beauty, and marketing, Hallyu is a
cultural and economic powerhouse valued in the tens of billions. It's a testament to the
power of Korean creativity and innovation, propelling the nation's growth on the
global stage.

VI. KEY TAKEAWAYS AND POLICY RECOMMENDATION FOR

VIETNAM

Within just two decades, through targeted and selective investment along with the
high determination of the government, the breakthrough in science and technology has
led to the miraculous accelerated development of South Korea, astonishing and
earning the admiration of global powers with the growth of leading world companies
such as Samsung and Hyundai.
The South Korean economy has reached the limits of the "catch-up strategy" that has
driven national economic growth for over 40 years, due to global economic crises and
the pursuit by emerging industrial economies (NICs). In Vietnam, the Party and the
State have recognized the role of innovation in economic development, as affirmed in
Resolution No. 52-NQ/TW dated September 27, 2019, by the Politburo, on some
guidelines and policies to proactively participate in the Fourth Industrial Revolution.

So that improving the operational mechanisms of the state management apparatus on

science and technology, creating an appropriate social environment and institutions is
crucial. The government needs to clearly delineate the powers and duties of the state
management agencies on science, technology, and innovation. From South Korea’s
experience, it is possible to establish the Ministry of Science, Technology, and
Innovation based on the current Ministry of Science and Technology to further
promote innovation activities, in line with global trends.

Vietnam can also learn from South Korea in utilizing foreign support. The
government should play an active role in distributing funds based on national
objectives. With an export-driven economy, Vietnam can learn from South Korea’s
method of sectoral distribution, capital management, and project supervision based on
aid funds. As the second largest in total ODA and the first in FDI value in Vietnam,
South Korea can transfer its experience through various channels: seminars, research
projects, and technology transfer processes.

From the model of economic conglomerates like South Korea's chaebols, Vietnam has
drawn many lessons to build state-owned economic groups. The essence of chaebols
is that they are private conglomerates but play a significant role in the national
economy and enjoy many government incentives. Experience from South Korea
shows that it is necessary to restructure and decisively eliminate weak links through
mergers and acquisitions of these conglomerates.

VII. CONCLUSION
South Korea has achieved significant milestones in its economic development, but the
future remains full of challenges and opportunities.

The South Korean economy is expected to continue growing, although the growth rate
may slow compared to the past. This slowdown can be attributed to an aging
population, increased competition from other countries, and global economic
uncertainties. However, South Korea will continue to push forward with digital
transformation, applying advanced technologies across all sectors, particularly in
artificial intelligence, the Internet of Things, and big data. Additionally, with a
commitment to achieving net-zero emissions by 2050, South Korea will focus on
developing a green economy, renewable energy, and electric vehicles.

The future of South Korea's economy depends on its ability to adapt to global
changes, innovate, and address domestic challenges. With its strong foundations and
immense potential, South Korea is expected to maintain its position as the "Asian
tiger" and achieve even greater success in the future.
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