Just after the Korean War ended in 1953, Korea's trade volume amounted to a paltry US$385 million. Exports totaled just $39.6 million, while imports amounted to $345.4 million, and aid shipments from the U.S. and the UN accounted for 60 percent of imports. The only goods Korea was able to sell abroad were minerals such as tungsten and iron ore, and seafood. It manufactured very little in a few primary industries, which is typical of poor countries.
As part of rebuilding, Korea sought to build factories to supply its own flour, sugar and cotton rather than relying on imports. That led to the country meeting its own needs, but there was hardly anything left over for export. In 1959, Korea's exports actually decreased to $19.2 million compared to the war period.
The top objectives during the 1960s were to increase exports by expanding factory output and building more factories if there were not enough goods to ship abroad. From 1965 until 1979, President Park Chung-hee convened 152 meetings to come up with ways to boost exports. As a result, exports rose from $100 million in 1964 to $1 billion in 1971 and $10 billion in 1977, paving the way for Korea's rapid economic growth.
There seems to be less importance placed on exports these days, but the fact remains the same that they continue to be the main pillar supporting the economy. They were the main reason why Korea was able to emerge faster than expected from the impact of the Asian financial crisis in 1997 and the global financial crisis in 2008. Last year, the country exported $467.4 billion and imported $425.7 billion, leading to a trade surplus of $41.7 billion. Exports, imports and the trade surplus were at record highs last year, and Korea now ranks seventh in the world in terms of exports and ninth in terms of trade volume.
This year, exports are expected to rise above $500 billion, leading to a trade volume of $1 trillion. In just 58 years since the end of the Korean War, trade volume has grown 2,600 times. On the other hand, 90 percent of Korea's GDP is reliant on exports, causing the country's economy to be highly vulnerable to external conditions. Other problems are Korea's persistent trade deficit with Japan, increasing reliance on exports to China and decreasing the proportion of exports by small and mid-sized companies.
Korea needs to come up with a new economic, industrial and trade strategy so that it can grow from an export powerhouse to a true economic powerhouse.
By Chosun Ilbo columnist Kim Ki-cheon