Korea’s Long-Term Trade Prospects and Policies to the Year 2000

Abstract

Since 1986, the benchmark year in which Korea made the first trade surplus in its history of economic development, Korea has turned into a surplus economy. Not only has it entered an era of surplus but it has also surfaced as an eye-catching country in the world economy, emerging as the 12th biggest trading country of the world by recording a hundred billion dollars of combined import and export trade in 1988. Owing to the cumulative surplus in trade since 1986, Korea is also expected to become a net creditor country from 1990. Underlying this surprising performance in trade are’ many factors, both internal and external. The relatively favorable world trade environment during the last quarter of a century, except for recent protectionist tendencies among industrialized countries, has contributed to the success of the Korean economy. World import volume increased on average by 5.1% a year from 1970 to 1987. The GATT system worked fairly well with only occasional minor modifications up to the 1980s, although the world economy was suffering from stagflation sparked off by two consecutive oil shocks in the 1970s. This rather favorable world environment was well matched internally by government support for an outward-looking policy.