SOUTH AND NORTH KOREA

South and North Korea

South and North Korea

Introduction

The countries follow various types of economic systems. Each and every economic system has its advantages as well as disadvantages. There are some countries that follow a combination of more than one economic system. This assignment is focused on analyzing the economic systems of North and South Korea. This will be achieved by comparing both countries according to the data provided in the case study.

Discussion

Collectivist Economy

The other name for collectivist economy is socialist economy. The other two examples of collectivist economy are Taiwan and Venezuela. In Taiwan, the focus of the people is towards group orientation. It is considered as a very important feature of their culture (Wong 2001, p. 03.). The government of Venezuela has also been following the collectivist culture for some time (Pedersen 2010, p.02).

Economic System in South Korea

The economic system that is being operated in South Korea is market economy system. In the market economy system, the means of production are owned by individuals and private firms and the decision to produce is based on the demand for the particular good (Anonymous n.d., p. 01). This market economy system in South Korea has resulted in vast improvements in its economy in terms of making it a rapid and fast developing country from a less developed country that had negative savings, unemployment and lack of exports (Kwak n.d., p. 01). The gross domestic product and the gross national product of South Korea have grown rapidly ever since it has followed the market economy system. This change has been due to the vast development in industries. There has also been a change in South Korea's class structure. A new middle class was formed which included journalists, doctors, professors and engineers.

Comparison between South and North Korea's Economic Performance

The real GDP of North Korea if analyzed independently shows that it has increased over the past three years, whereas the real GDP of South Korea has been declining. When both of these countries are compared with one another, it can be seen that real GDP of North Korea is lower than that of South Korea. In terms of Per Capita GDP, South Korea has higher Per Capita GDP than North Korea which shows that the South Korean economy has been moving towards growth and there has been an increase in productivity. The per capita GDP of South Korea also shows that it has a higher standard of living as compared to North Korea.

The major contributing sector in North Korea's GDP is Industry, whereas in South Korea, it is services. The labor force in South Korea is also almost double the labor force in North Korea. This shows that more people are employed in the market system economy of South Korea as compared to North Korea. The major occupation of the labor force of North Korea is services and industry, while in South Korea it is services. The budget of North Korea has faced a deficit which means that the spending of ...