Political Risk in South Korea Research

Only available on StudyMode
  • Download(s): 108
  • Published: August 21, 2013
Read full document
Text Preview
2013 RISK

For the past decade, the main drivers of regional risk have been North Korea’s nuclear provocations and tensions around the status of Taiwan. These issues were well-defined, and risks were offset by regional commercial integration and shared economic growth. The good news is that North Korea and Taiwan no longer loom as major sources of tension. North Korea has been somewhat less provocative, but at least as importantly, cooperation among other regional actors--along with the United States--on how to manage Pyongyang has actually deepened considerably, lowering the risk of an escalation scenario.


7) East Asian geopolitics: For the past decade, the main risks in this region have been North Korea’s nuclear provocations and tensions around the status of Taiwan. Now new risks have taken their place. China has veered away from its “charm offensive” approach to Southeast Asia, and the United States is stepping into the void. Tensions between the two powers could put decades of economic growth at risk, as I’ve written about in past columns.

Global Post

SEOUL, South Korea — We've heard a lot of talk in recent weeks about the military side of the North Korea threat. Today, the Pentagon's Defense Intelligence Agency is reporting that North Korea could have the capabilities to build a nuclear warhead small enough to fit on a missile — even though there's a lot of disagreement over that part. But how does the threat of military action play for foreign investors in South Korea? Today, President Park Geun-hye met with foreign investors from Google, Citibank and Siemens — to name a few corporations — in her administration's Blue House, reported the JoongAng Ilbo newspaper. She tried to assure them that her administration would create a stable investment environment despite North Korea's bluster. South Korea is home to the 12th largest economy in the world, but consultancies frequently cite the geopolitical risks of instability in the North and the potential costs of a Korean unification — which could cost 7 percent of GDP — as prime threats to doing business in Seoul.

Blue house – south koreas presidential mansion


The popular perception is of a successful country that is stricken with economic inequality, excessive power in the hands of the chaebol conglomerates, and a lack of decent jobs for young graduates. Ms Park won power having promised to relieve these ills, while expanding the welfare state. Troubled ties with China and Japan could prove to be difficult trading partners ssistance is to be regarded as conditional on good behaviour. Nuclear tests and rocket launches, it must be noted, do not fall within anyone's definition of good behaviour.


* Problems regarding transparency of the chaebols, characterised by family control and hereditary succession - Unpredictability of North Korea's regime
- After the artillery attack by North Korea on the South Korean island of Yeonpyeong in November 2010 - Households will, however, remain significantly indebted (at 135% of their disposable income) - oreover, there are still important issues in terms of corruption and the transparency of the chaebols, characterised by family control and hereditary succession. - However, borrowing by state-owned enterprises needs watching as the aggregated debt of the country’s seven largest companies represents 25% of GDP. But despite this high ratio, the state-owned enterprises still posted satisfactory profitability and capitalisation ratios in 2012. - Moreover, South Korea’s banks are still highly exposed to foreign currency funding.

“In the past, North Korea-related events had little impact, or the markets recovered quickly,” the South Korean vice finance minister, Choo Kyung-ho, said at a meeting of top finance officials on Friday. “But recent threats from North Korea are stronger, and the impact may therefore not disappear quickly.” Financial jitters could worsen if the...
tracking img