The Republic of Korea (South Korea) is a high-income country, with its gross national income (GNI) per capita having risen from USD 67 in the early 1950s to USD 27,450 in 2015. South Korea is now the 15th largest economy in the world, the 4th largest economy in Asia and a key contributor to the International Development Association (IDA), a fund established by the World Bank to support the world’s poorest countries.

The country attracted foreign direct investment (FDI) of USD 23 billion in 2015, which is projected to grow to USD 94 billion in 2020. The gross domestic product (GDP) measured in purchasing power parity (PPP) was USD 1,930 billion in 2017, and is expected to increase to USD 3,539 billion by 2050.

South Korea boasts of one of the world’s most technologically advanced economies, with the world’s fastest broadband speed and a strong digital economy across commerce, education, entertainment and government. The country has a service-led economy (60.2% contribution to GDP in 2016) with electronics, shipbuilding, automotive and steel being the dominant industries.

Despite its success to date, South Korea is grappling with longterm challenges such as its ageing population (median age of 40.6 in 2015), an inflexible labour market and heavy reliance on exports. To contend with these issues and sustain growth, the South Korean government is working towards structural reforms that include: promoting entrepreneurship and creative industries, deregulating, and increasing the competitiveness of small and medium-sized enterprises.

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South Korea’s Fact File

World Giving Index Rank

2016
75 64 in 2015
  • 35%giving money
  • 18%volunteering time
  • 46%helping a stranger

Population

2016
50.92 million

GDP (PPP)

2016
USD 1.93 trillion World Rank 14

Poverty

2013
14.6%

Per capita GDP (PPP)

2016
USD 37,740 World Rank 30

Global Competitiveness Index

2016
26 26 in 2015

Number of Millionaires

2016
313,000 0.614% of population

Source: CIA, Charities Aid Foundation (CAF, 2016), Credit Suisse (2016), OECD (2016), World Economic Forum (WEF, 2016), World Bank (2017)

Economic Context for Investors

  • Favourable
  • Moderately favourable
  • Unfavourable
Factors Index Score/Rank Description
GDP Growth 2016
Index Score/Rank
2.7%
GDP grew at 2.7% in 2016. For 2017 GDP growth has been projected to range between 3% and 3.5%.
Governance 2015
Index Score/Rank
0.7
South Korea performed better than 78% of all countries in the 2015 World Bank’s Worldwide Governance Indicators.
Consumer Market 2015
Index Score/Rank
USD 744 billion
Household consumption expenditure decreased by 1% from 2014 to 2015. An important trend in South Korea is the steady rise of single-person households, which places a premium on convenience and efficiency. South Korea is Asia-Pacific’s third largest e-commerce market.
Labour Force 2016
Index Score/Rank
27 million
The Labour Force slightly increased by 0.8% from 2015 to 2016. To make the labour market more flexible, structural reforms regarding competency-based wages, quality employment for the youth and changes to the retirement age are required.
Infrastructure 2016
Index Score/Rank
6.0
South Korea ranked 10 among 138 countries in terms of infrastructure due to its highly advanced and modern infrastructure.
Financial Access 2014
Index Score/Rank
94% of the population
Access to finance increased by 1% 2011 to 2014. Owing to its high financial penetration, South Korea is leading the Global Partnership for Financial Inclusion (GPFI) launched at the G20 Summit in Seoul in 2010.
Digital Access 2015
Index Score/Rank
90% of the population
Internet penetration increased by 2% from 2014 to 2015. Today South Korea has the second highest internet penetration in Asia and the highest average internet connection speed worldwide. As of 2016, 90% of South Koreans owned a smartphone.
Ease of Doing Business 2016
Index Score/Rank
5/190
South Korea ranked 5 out of 190 countries in the 2016 Ease of Doing Business ranking. South Korea provides an ideal business environment through its world class infrastructure, intellectual property rights protection, high quality of life, FDI-friendly government policies and one-stop investment services.
  • Favourable
  • Moderately favourable
  • Unfavourable

SDG Dashboard

South Korea’s current challenges include an ageing population, poverty among the elderly, urbanisation with concomitant environmental stress, greenhouse gas (GHG) emissions and safe management of toxic chemicals.

The Third National Basic Plan for Sustainable Development for the period 2016-2030 was established through consultations with 26 government ministries and agencies and focuses on R&D and sustainable urban planning. The plan outlines 14 strategic targets around four overarching goal areas including: (i) healthy land, (ii) integrated and safe society, (iii) inclusive creative economy and (iv) global prosperity.

  • No Poverty
  • Zero Hunger
  • Good Health and Well-Being
  • Quality Education
  • Gender Equality
  • Clean Water and Sanitation
  • Affordable and Clean Energy
  • Decent Work and Economic Growth
  • Industry, Innovation and Infrastructure
  • Reduced Inequalities
  • Sustainable Cities and Communities
  • Responsible Consumption and Production
  • Climate Action
  • Life Below Water
  • Life On Land
  • Peace, Justice and Strong Institutions
  • Partnerships for the Goals
  • Sustainable Development Goals

Source: sdgindex.org (2016)

Government Focus on Development Gaps

Focus Area SDG Goals Gap Government Focus
Climate action
SDG Goals
  • Climate Action
Gap
South Korea’s GHG emissions doubled between 1999 and 2012. The country accounts for around 2% of global GHG emissions.
Government Focus
By 2030, the government is looking to achieve a 37% reduction in GHG emissions in all economic sectors, with business-as-usual (BAU) levels in 2015 as the baseline. South Korea ranks second worldwide in the carbon trading market.
Gender equality
SDG Goals
  • Gender Equality
  • Decent Work and Economic Growth
  • Reduced Inequalities
Gap
South Korea ranked 115 out of 145 countries in the 2015 WEF’s Global Gender Gap ranking,21 with a rank of 125 in the sub-category of “Economic Participation and Opportunity.”
Government Focus
The government is in the process of establishing day-care centres, putting in place systems for parental leave for women and incentivising companies to adopt women-friendly policies.
Small and medium-sized enterprise (SME) growth
SDG Goals
  • Decent Work and Economic Growth
  • Industry, Innovation and Infrastructure
Gap
South Korea had a total credit gap of USD 28.5 billion for SMEs in 2011, the second highest in Asia after China.
Government Focus
The Business Partnership Programme is a public-private partnership model implemented in collaboration with the South Korea Federation of Small and Medium Enterprises to develop inclusive business models and private finance innovations. Small companies and social enterprises receive support for up to 70% of the project cost, or up to USD 44,000 for a project period of 1 to 3 years.
Social security
SDG Goals
  • Good Health and Well-Being
  • Reduced Inequalities
Gap
South Koreans aged 65 or older accounted for 12.2% of the total population of about 50 million in 2014. The elderly population is expected to significantly increase to over 30% by 2040. As of 2011, 49% of elderly South Koreans lived in poverty, which is defined as 40% of South Korea’s median income.
Government Focus
The government has established the Plan for Ageing Society and Population (2015), the Framework Act on Low Fertility and Population Ageing (2014), and the Law for Promoting the Elderly Friendly Industries (2013).

Social Economy

South Korea’s social economy is vibrant, advanced, and supported by the government, corporates and impact investors.

There are 1606 SEs in South Korea.

Category Factor Rating Description
SPOs
Factor
Legislative environment
full South Korea is the first Asian country to have a dedicated legal structure for SEs. The Social Enterprise Promotion Act (SEPA) was enacted on December 8, 2006 and became effective on July 1, 2007.
SPOs
Factor
Government support for SEs
full The Social Enterprise Promotion Act of 2007 outlines capacity building programmes and mobilises private sector support aimed at SEs.
SPOs
Factor
SEs across sectors
three-quarter There is a diverse presence of SEs across an array of sectors including products and services by the socially vulnerable, environment, technology innovation and sustainable lifestyle.
SPOs
Factor
Presence, size, and maturity of SEs
half There were 1,606 SEs as of 2015. Many of them are at an early stage of growth.
Investors
Factor
Philanthropic contributions
half While HNWIs engage in philanthropic giving, an expressed distrust of philanthropic organisations and a lack of tax benefits impedes charitable giving.
Investors
Factor
Presence of social investors
half South Korea has 5 major impact investors – Crevisse Partners, D3Jubilee, KAIST, Root social impact and The Happiness Foundation offering grants, debt and equity. Investors play a significant role in nurturing SEs.
Investors
Factor
Corporate sector
full Large and medium-sized corporations in South Korea invest significantly in CSR.
Enablers
Factor
Incubators, accelerators, and capacity-builders
three-quarter There is a good presence of enablers, including incubators such as Crevisse Partners, KoSEA, SEEDS, Root Impact, Beautiful Foundation, Sopoong and D3Jubilee, and accelerators that provide capacity building services such as KoSEA, Work Together Foundation, SIE, and The Happiness Foundation. Partnership Opportunity
Enablers
Factor
Networks and platforms
three-quarter Notable networks and platforms include The Seoul Social Economy Centre, the Work Together Foundation and AVPN. Partnership Opportunity
Enablers
Factor
Knowledge and research
three-quarter Notable research publications have come out of KoSEA, Industry Cooperation Foundation at Yuhan College, Industry Cooperation Foundation at Kumoh National Institute of Technology, Social Enterprise Research Institute and Social Enterprise Gyeonggi Foundation, University Business School and universities such as Seoul National University. English publications, however, remain limited. Partnership Opportunity
Enablers
Factor
Partnerships
three-quarter The government, corporates and SE enablers have formed multiple partnerships such as the KSIF, YK-Work Together Foundation. The ‘One corporate, One Social Enterprise’ programme by KoSEA helps SEs gain insight into corporate operations in the fields of sales, financing and market strategies.
Enablers
Factor
Impact Measurement
half Organisations use certain indicators to determine the efficiency of their programmes; such as outreach to consumers/producers or reduction of CO2 emissions. KoSEA is working with SK Corporation to establish due diligence standards and impact metrics.

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