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Over the past four decades, Korea's impressive economic growth was part of what has been described as the "East Asian miracle." Intensive growth transformed Korea into the 12th largest economy and trading partner in the world. It was driven by high savings rates and investment and a strong emphasis on education, which boosted the number of young people enrolled in a college or university to one of the highest levels in the world (82.1% in 2005).

During those years, Korea's industrial structure was drastically reshaped. Major industries were diversified to include automobiles, petrochemicals, electronics, shipbuilding, textiles and steel products. By applying lessons from centuries of development in the West, Korea was able to make a similar transformation from an agricultural to manufacturing and on to a service-centered economy in just 50 years of time. The GDP growth posted 9.5 percent in 1999, 8.5 percent in 2000, 3.8 percent in 2001, 7.0 percent in 2002, 3.1 percent in 2003, 4.6 percent in 2004 and 4.0 percent in 2005. Thanks to the GDP growth driven by brisk export and sizeable investment in plant and facilities, Korea emerged as the world's 11th largest economy in terms of GDP, which reached US$887.4 billion in 2006.

Export surged to US$325.46 billion on a customs clearance basis in 2006, a 14.4 percent increase from US$284.44 billion in 2005. At the same time, import rose 18.4 percent to US$309.38 billion. The trade surplus was US$16.08 billion in 2006.

Since 2004, Korea's semiconductors, automobiles and wireless telecommunications devices have accounted for more than 30 percent of total exports.

Export of information and communications technology amounted to US$46 billion in 2002, up 20.2 percent from the previous year, while import posted a year-on-year increase of 10.5 percent to US$30.7 billion, resulting in a trade surplus of US$15.3 billion in the sector. Export of IT products, which has grown every year since 1998, accounted for 29 percent of total export in 2005, or US$82.5 billion.

Major export items in the Korean IT industry include memory semiconductors, mobile telephones, computer monitors, liquid crystal displays (LCDs), personal computers and satellite broadcast receivers, while major import items include nonmemory semiconductors, transmission equipment and large computers. Korea's semiconductor industry has shown remarkable growth in the past 20 years and now ranks third in the world in terms of total production. Korea has been the largest D-RAM producer in the world since 1998 and has emerged as the world's largest manufacturer in memory semiconductor production, of which D-RAM constitutes a major portion.

The proliferation of wireless Internet services and the introduction of third-generation mobile communications services are contributing to the rising domestic sales of mobile phones. As of the end of June 2006, there were 39.38 million mobile phone subscribers out of a total population of 48.5 million.

Already one of the major cathode ray tube manufacturing countries in the world, Korea has recently come forth as a global supplier of flat panel liquid crystal displays (LCDs). LCD exports have seen an average annual growth rate of more than 80 percent since 1995. In particular, LCD exports witnessed a phenomenal increase in 1999, rising over 100% and positioning LCDs as one of three major IT export items, along with semiconductors and mobile telephones. LCD monitor sales by Korean manufacturers grew from US$17.7 billion in 2004 to US$21.6 billion in 2005, posting a 22 percent increase.

The number of automobiles exports stood at 1,814,938 units in 2003, 2,379,563 units in 2004 and 2,586,088 units in 2005.

In the shipbuilding industry, Korea recaptured the world's no.1 title in 2004, with exports of US$15.66 billion and a ship manufacturing volume of 8.34 million compensated gross tons. In 2005, Korea held fast to the first place with exports jumping to US$17.7 billion and shipbuilding volume reaching 10.24 million compensated gross tons.
And, in 2006, the shipbuilding industry recorded exports of US$ 22.1 billion.

Foreign exchange reserves were US$102.8 billion in 2001, US$121.4 billion in 2002, US$155.4 billion in 2003. They amounted to US$199.6 billion in 2004, taking the fourth place in the world, and to US$210.39 billion at the end of 2005. In 2006, they had reached US$ 238.9 billion.

Foreign direct investments (FDI) in Korea posted a net inflow of US$11.23 billion in 2005, on the back of increased investment in car parts, communications devices, aviation and an overall rise in FDI flows from developed to developing countries. In October 2005, Korea successfully issued foreign currency-denominated (USD & Euro) sovereign bonds amounting to US$1.0 billion.

Science and Technology

Korea's prowess in science and technology has been growing steadily since the 1980s, as the country's rapid economic development created demands for more advanced and dynamic research and development activities across all sectors.

Investments in R&D have increased 45-fold from US$430 million in 1981 to US$23.58 billion in 2005, while technology investment per gross domestic product has soared from 0.62 percent to 2.99 percent during the same period.

This growth has led to a growing number of international patent applications and research papers published in the Science Citation Index. In addition, Korea ranked fifth in the world on the science and technology
achievement indicator developed by the UN Development Program which takes into account patent registration, technology exports and overall education levels. The number of people working in the field of science and technology surged from 18,500 in 1980 to 234,702 in 2005.

In order to maintain this upward momentum in science and technology, the Government elevated the status of the Minister of Science and Technology to Deputy Prime Minister in October 2004 and launched the Science and Technology Innovation Office as a center for establishing the nation's science and technology innovation system.