Korea most dependent on trade in OECD

By Cho Jin-seo

South Korea ranked the highest among OECD member for in its dependence on international trade, data showed.

Korea’s exports amounts to 43.4 percent of its gross domestic product (GDP), which is much higher than any other country in the organization.

Germany followed South Korea with its exports accounting for 33.6 percent of GDP.

The result, compiled jointly by the OECD, IMF and other international organizations, reconfirms that Korea’s economy is built on international trade, and thus is vulnerable to the economic conditions of other countries.

“Activity in emerging and developing economies remain dependent on demand in advanced economies, particularly in emerging Asia,” the report said.

During the recent financial crisis, Korea’s GDP growth rate fell to 0.2 percent in 2009, despite the fact that the country’s banking sector was relatively safe.

In most other OECD countries, the export-to-GDP ratio was around 10 to 20 percent. In the United States, it was only 7.5 percent.

Mexico followed Korea and Germany with a ratio of 26.2 percent, followed by non-OECD states China and Russia, with 24.5 percent and 24.4 percent, respectively.

Korean firms are the world’s leaders in shipbuilding, electronics, construction, steel making and automobiles. On the other hand, the country imports most of the necessary raw materials such as oil, iron, coal and natural gas, as well as precision machinery and electronics components.

The export-to-GDP ratio has been on a continuous ascent since 2005, when it was 33.7 percent. It surged to 45.3 percent in 2008.

Imports to GDP were also highest in Korea, which overwhelmed other countries by a large margin. Again, the economies of Japan and the United States have a relatively low dependence on imports as well as exports.

The government has been trying to reduce the nation’s economic dependence on international trade by nurturing services-related industries such as finance and hospitality. It also believes the policy will help in job creation.

According to the World Trade Organization, the value of world merchandise trade rose around 25 percent in the first six months of 2010 up strongly from the same period of 2009. Many large Korean exporters are also expecting record-high revenue in the second half of this year.