Surviving in the World: The revival of South Korea’s economy

South Korean refugees in the mid-1950s. (Source: Wikimedia)

 

Although people seldom discuss the Korean diaspora's role in developing Korea, its significant impact in revitalizing the Korean economy and its contribution to shifting Korea’s status from a ‘developing’ to a ‘developed’ country are difficult to ignore.

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• The Korean diaspora has always been a part of Korean history, ranging from the displaced and separated families from the Korean War to the Korean laborers who left during industrialization.

• A study conducted in 2020 by South Korea's Ministry of Foreign Affairs indicated that about 7.5 million ethnic Koreans reside outside the Korean Peninsula, highly concentrated in the United States, China, Japan, and Central Asia.

• After the Korean War in the 1960s, the diaspora's impact on Korea's poor economy can be categorized in three ways.

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The diaspora impacted the flows of trade involved in South Korea

 

The diaspora networks formed between the people residing in and outside South Korea transferred information regarding trade opportunities. Through this network, Korean suppliers could base their exports on the consumer preferences of a given country.

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• Thanks to the international networks created by the Korean diaspora and the ever-increasing diaspora population, Korea more effectively comprehended the foreign market and increased its exports accordingly.

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According to Inbom Choi, chief economist at the Federation of Korean Industries, a gravity model was used to calculate the successful economic impacts.

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The calculations included Korea's bilateral trade with its 171 trading partner countries and the number of ethnic Koreans in those countries.

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• The results reflected a positive (+0.18) coefficient on the number of overseas Koreans and a 99 percent confidence level in the total trade volume equation, confirming the successful trading opportunities opened by the diaspora.

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Korea was unsuitable for economic growth

 

After the Korean war, Korea no longer seemed suitable for gaining employment; all the businesses and companies were gone.

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• Hence, the Korean diaspora was centered around countries with higher wages (the U.S, Japan, and European countries) or industrial countries like New Zealand.

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The overseas ethnic groups with increased earnings from these higher-wage countries sent money to their families back in Korea.

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Consequently, the people residing in the higher-wage countries naturally transferred funds to Korea, which significantly revitalized Korea's shattered economy.

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The diaspora affected Korea's human resources and labor market

 

After enough Koreans were exposed to the higher-wage countries, Korean science institutes began recruiting from the diaspora to revitalize Korea's economy.

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The knowledge of the overseas ethnic Koreans contributed to South Korean scientific technology development.

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• However, the diaspora has been doing far more than bringing foreign scientific technologies into modern Korean society.

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• Currently, countless Korean industries are recruiting members of the Korean diaspora of varying expertise, such as financial services.

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These recruitments have been contributing to the rapid economic development of South Korea, and even after the country's status as a thriving economy in 2022, diaspora-based advancements continue to boost South Korea's development.

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