Week 4 - Friday (Blog Assignment Part Four)

1. International Trade of South Korea:

An export oriented economy, South Korea's imports and exports are reported by the Ministry of Knowledge Economy. Historically, from 1966 until 2013, South Korea Imports averaged 9939.54 USD Million reaching an all time high of 45565.95 USD Million in March of 2011 and a record low of 38.61 USD Million in January of 1966. On the other hand, from 1966 until 2013, South Korea Exports averaged 10364.59 USD Million reaching an all time high of 48950.11 USD Million in July of 2011 and a record low of 14.75 USD Million in January of 1966.

a) What?

Import: Oil (23%), Semiconductors (6%), Natural Gas (5%), Coal, Steel, Iron Ore

Export: Semiconductors (9% percent), Machinery (9%), Automobiles (9%), Ships (7%), LCD devices (5%), Wireless Communication Devices (4%), Steel (7%), Petrochemicals (10%)

b) How Much?

Import: $44,139,000,000 USD (as of March of 2013)

Export: $47,496,000,000 USD (as of March of 2013)

c) To Whom/ From Whom?

Import: China (16%), Japan (12%), the United States (8%), Saudi Arabia (7%), the European Union (9%), ASEAN (10%), Australia (5%)

Export: China (25%), ASEAN (14%), the United States (10%), the European Union (9%), Japan, India, Brazil, Paraguay

2. Exchange Rate:

The USDKRW spot exchange rate indicates how much one of each American Dollar is worth in terms of Korean Won. The USDKRW spot exchange rate is quoted and exchanged in the same day; the USDKRW forward rate is quoted today but for delivery and payment on a specific future date.

a) Current Value:

During the last 30 days, the USDKRW spot exchange rate appreciated 1.3200 or 0.12 percent.

b) Recent History:

From 1981 to 2013, the USDKRW averaged 984.9900 reaching an all time high of 1962.5000 in December of 1997 and a record low of 667.2000 in July of 1989.

3. Immigration:

Most immigrants are not eligible for citizenship or permanent residency, unless they are married to a South Korean citizen or have invested more than five million USD in the local economy.

a) Korea as a Sending Country: in the past, Korea was a sending country, which sent laborers to the United States, Germany and the Middle East.

*Number of Korean People Around the World: 6.8 million (2.3 million in China and 2 million Korea Americans)

b) Korea as a Receiving Country: especially after the 1988 Seoul Olympics, Korea increased exchanges with foreign countries. In 2007, Korea was declared an official receiving country by the United Nations.

*Number of Foreigners in Korea (as of 2007): 1 million (63% were temporary workers, 10% were marred to Koreans, 23% were illegal immigrants)

*The nationalities of immigrants: Mostly from China, Vietnam, Mongolia, the Philippines, Bangladesh. Some from Nigeria, Ghana, Russia and the United States.

4. Relations with Other Countries

a) Recent Conflicts:

*2010 March 26th: South Korean warship Cheonan sinks, killing 46 sailors (Pyongyang denies involvement)

*2010 October 29th: Troops from North and South Korea exchange fire across the border

*2010 November 23rd: North fires on island of Yeonpyeong killing four South Korean marines.

b) Historical Conflicts:

1. Korea under Japanese Rule

*Starting with Japan-Korea Treaty of 1876, Japanese Empire sought to subjugate Korea both politically and economically as a protectorate.

*In 1905, Korea was declared an Imperial Japanese protectorate and officially annexed in 1910.

*Japanese rule continued until its defeat at the end of World War II at which time Korea became an independent nation albeit divided under two separate governments and economic systems.

*Crimes and indignities committed against the Korean people during the Japanese administration of Korea continue to be the subject of controversy between these two nations.

2. The Korean War (25 June 1950 – 27 July 1953)

*It was a war between the South Korea supported by the United Nations and North Korea supported by China and the Soviet Union.

*The North established a communist government while the South established a right-wing government.

*The 38th parallel increasingly became a political border between the two Korean states.

*The situation escalated into open warfare when North Korean forces invaded South Korea on 25 June 1950.

*The South was pushed back for two months until a rapid U.N. counter-offensive then drove the North Koreans past the 38th Parallel.

*China then entered the war on the side of North Korea which forced the Southern-allied forces to retreat behind the 38th Parallel.

*The fighting ended on 27 July 1953, when the armistice agreement was signed.

c) Allies

1. The United States of America

*The two have strong economic, diplomatic, and military ties.

*After World War II, the United States aggressively engaged in the decolonization of South Korea from Japan.

*Upon the onset of the Korean War, U.S. forces were deployed to fight for South Korea against North Korean invasion.

*During the Vietnam War in 1967, South Korea sent a large combat troop to assist the United States.

*Currently, the U.S. Eighth Army, Seventh Air Force and U.S. Naval Forces Korea are stationed in South Korea.

*A free trade agreement (KORUS FTA) was signed between them in 2007 and went into effect in 2012.

2. European Union

*South Korea and EU are important trading partners.

*Two signed FTA, which was approved in 2010 and went into effect in 2011.

*South Korea is the EU's eighth largest trade partner, and the EU has become South Korea's second largest export destination.

3. China

*Historically, Korea has had close relations with China before World War II began.

*The diplomatic relationship between South Korea and China almost completely ceased after China assisted North Korea with manpower and supplies during the Korean War.

*Relations gradually improved when South Korea and China re-established formal diplomatic relations in 1992.

Week 4 - Wednesday (News Assignment)

            South Korea's supply of LNG (liquefied natural gas) is under long-term contracts that bonds the price of gas to that of oil. The contracts ensures security of supply delivery and helps finance huge investment for gas projects. However, the contract also keeps the Asian gas prices much higher than in elsewhere in the world: gas price in South Korea is four times that of the United States. The pricing system in Asia can restrict the expansion of natural gas when it is more environmentally friendly than either oil or coal.

            The IEA (The International Energy Agency) recommends that a trading hub to be built in Asia in order for natural gas prices to better reflect gas market in Asia. This will bring about a more integrated natural gas market in Asia; efficient prices will bolster the region's competitiveness. This plan can be put into action if and only if regional governments let the "invisible hand" to work its magic. South Korea, as the world's second-largest LNG importer, can play a vital role in this regard. With Southeast Asia and Australia being the main suppliers, the region's dependence on Middle Eastern oil and its vulnerability to oil price shocks decrease.

            More gas suppliers are being discovered in Asia, along with increase in facilities that ships LNG to regional consumers. In addition, rise of shale gas in the U.S. will reduce American demand for LNG. These trends will be factors that ease price pressure and will bring on change in LNG's status as a marginal and high-cost fuel.

            Next challenge that will remain after pricing concern is competition against cheaper coal as Asia's main fuel. Coal is well-known for destruction of its users' environments; its biggest consumers (China and India) will be forced to turn away from coal and embrace LNG sooner or later.

            Given these circumstances, the outlook for LNG in Asia looks promising as long as conditions for a competitive natural gas market in Asia are established especially pricing reforms. LNG supply chain such as shipping and facilities must be improved as well to support the program. There are encouraging developments in this regard, with plans to build more than 50 LNG terminals in Asia over the next decade. All these improvements will take time, but it will give Korea with a change to assist Asia in adapting to global trends in the natural gas sector.

Bibliography:

"Could Korea Become an Asian Gas Trading Hub?-The Korea Herald." Could Korea Become an Asian Gas Trading Hub?-The Korea Herald. N.p., n.d. Web. 22 Apr. 2013.

Week 3 - Friday (Chapter 4 Questions)

a. Choose a passage from the reading that you found particularly interesting. Why was it interesting.

"The search for information is the central experience of life in the bazaar," said Geertz. It is "the really advanced art in the bazaar, a matter upon which everything turns (McMillan 41)." Nowadays with advancement of the internet and many possessions of computers or laptops, students can easily have access to information. Information can be prices of goods, information on stores that you buy from, and even education. Anything can be done online. It is interesting that search for information in bazaar is such a challenge. With such imperfect distributed information, the suppliers much have easier time raising the prices or tricking their consumers.

b. What does the author mean by transaction costs? Give examples.

A transaction cost is a cost that occurs while making an economic exchange. "The search for information is the central experience of life in the bazaar." The time, the effort, and possibly some money that was spent on attaining information are all part of transaction costs. Transaction costs still exist in today's world for K College student when we shop, only perk is that our transaction cost is very minimal thus easy to disregard. When we shop for something online or look up prices online, our only transaction cost would be time spent on looking things up.

c. Simple economic model often assume perfect information (everyone knows everything, everywhere). What effects arise from imperfect information? Who gains and who loses when information is unevenly distributed?

From the assumption that everyone is close to omniscient arises problems: winners and losers. Winner are people with more information. "Knowledge is power" quoted Francis Bacon. Truly if you know more about certain product, you will benefit. Take for example a headphone. Let market price for our product be $200, when suddenly there is an end of the year sales bringing down the price down to $150. Person who attains that piece of information will seek out stores with the offer, thus gaining extra customer satisfaction because of low price! On the other hand, the losers are those who fails to receive the same information. Unknowingly, they will spend more money on the same product.

Week 3 - Wednesday (Blog Assignment Part Three)

1. Importance of Tourism to South Korea

            The number of foreign tourist arrival in South Korea annually is around 9.5 million. International tourists come primarily from nearby Asian countries; 75% of the total number of international tourists consist of Japan, China, Hong Kong and Taiwan.

Even with threats from North Korea, in 2012, tourism revenues hit a record $13.1 billion and more than 10 million people visited according to WTTC (World Travel Tourism Council). HSBC estimates that the tourism industry contributed about 5.4 percent to South Korea's GDP in 2012.

            While not the biggest factor in Korean economy, for every extra job created directly related to tourism, it generates 1.6 jobs indirectly; for example at restaurants or hotels. Tourism should support Korea's labor market and put a floor under domestic demand while export growth gradually recovers.

2. Major Tourist Attractions

Bulguksa: located on the slopes of mount Toham, it is a head temple of the Jogye Order of Korean Buddhism. It encompasses seven National treasures of South Korea and is classifed as number 1 historic and scenic site of Korea by its government. In addition it was added to the UNESCO World Heritage List in 1995.

Seokguram Grotto:  is a part of the Bulguksa temple complex, which lies 4km east of the temple. It is classified as National Treasure No. 24 by the South Korean government. In 1995, along with Bulguksa, it was added to the UNESCO World Heritage List. It is one of the best example of Buddhist sculptures in the world.

3. National Parks, Wildlife, or Nature Preserves

Seorak Mountain: third highest mountain in South Korea; it is located in a national park near the city of Sokcho.

Jiri Mountain: located in southern region of South Korea. It is the highest mountain in the country.

Jeju Island: one of the nine provinces of South Korea; it is situated right below Korean peninsula. It is nation's largest island.

4. Important Museum

*National Museum of Korea: is the most famous and prestigious museum in South Korea. It considered a cultural organization that best represents Korean history and art. Since its relocation, the Museum attracted an attendance of 20 million visitors.

Week 3 - Wednesday (A Fez of Heart - Travels Around Turkey in Search of a Hat)

a. Choose one passage from the reading that you found particularly interesting. Why was this interesting?

"By law, you could go topless in this Middle Eastern and almost exclusively Muslim country, but you could not wear a fez (Seal 14)." In America, the opposite statement would be true: by law, you could wear any hat you want much less a fez. However, especially if one is a girl, she could not go topless for even a second without prompting a glare from angry parents or a very hearty stare from general male population.

b. Use examples from this reading to illustrate the interaction between economics and culture.

            One of the most predominant interaction between economics and culture described in this book was "turizm (tourism in Turkish)." On page 6 of the book, it described the rise of tourism in Pomegranate when "some visitors started to wander back from the beach in their bikinis." Their arrival and behaviors were met with disgust and hate at first by conservative townspeople. Nevertheless eventually their coming was turned into a profitable business; it was "predicated on the astounding discovery that foreigners seemed happy to pay for the things - accommodation, meals and even visits to ruins - that the local people had always marked down under hospitality."

            With hordes of tourists that flooded the area, Pomegranate's housing service expanded manifolds along with their profit. With more tourists the demand for food and other necessities probably increased leading to further profit. However, the key idea here was not the sale of tangible goods, but of intangible one: Pomegranate's culture. The main attraction for the tourists was the town's beauty, and visits to ruins not its meal or accommodation. Tourism ties economics and culture into a nice bond of business.

c. Choose a couple of tourist destinations from your Country Profile blog post.  What draws people to those specific places?

Bulguksa and Seokguram Grotto are both highly popular tourist location for foreigners as well as Korea natives. The beauty and the awe the places inspire is rather secondary for drawing of people to these places. The foremost reason for the visit is usually their history and representation of unique Korean architecture at the time. In a big city like Seoul, such monuments cannot be seen; everything in the city is very modern and new. Bulguksa and Seokguram attracts tourists by offering something just more than pretty to look at.

Week 2 - Friday (Blog Assignment Part Two)

South Korea

1. GDP:

$1.116 trillion (as of 2011)

2. GDP Per Capita:

$32,100 (as of 2011); ranked 40 in the world

3. Life Expectancy:

*Overall Average: 80.

*Male: 76.5

*Female: 83.25

4. Poverty Rate (People below poverty line):

15% (with the United States being 12%)

5. Literacy Rate

*Overall: 99.9% (with criteria that age 8 and over can read and write)

6. Unemployment Rate:

*3.2% (as of January 2013)

7. Inflation:

*March 2013 ~ February 2013: -0.19%

Country's Resources

1. Natural Resources:

*List of natural resources: coal, tungsten, graphite, molybdenum, lead, hydropower potential

*a temperate climate with four distinct seasons

*Land use:
65% forests and woodland

19% arable land

10% rivers and lakes

2% permanent crops

1% permanent pastures

13% other

2. Labor:

*Size of labor force: 25.18 million (as of 2012)

3. Capital:

*Main Industries:

Samsung

LG

Hyundai

Kia

Week 2 - Wednesday (News Summary Blog Assignments)

            Escalating tension on the Korean Peninsula between North Korea and South Korea has raised the possibility that the situation could downgrade South Korea's credit rating. Credit rating evaluates the credit of a debtor of a government in our case depending on the debtor's ability to pay back the debt and the likelihood of default (in which a debtor is unable to pay back). With bad credit rating comes decrease in demand for stocks distributed by Korean companies. With decrease in demand curve comes drop in price and quantity of Korean stocks.

            The tension stems from North Korea's re-launch of nuclear plant operation, which negatively impacts South's credit standing. The news of restart of production of weapons-grade plutonium at the Yongbyon nuclear complex was startling to the South and America. The situation is not sudden or unexpected. This situation can go way back to Cold War and rivalry between Soviet Union and the United States. Thus there is no solution to this situation that would fix everything. However, the best policy would be to prepare for the attack that might come from the North.

            The actual credit rating, which is set at “Aa3 stable,” has not changed, but many are in agreement that the situation is unpredictable and beyond mere talk. South's companies employ over 50,000 North Korean workers, but with the North preventing South Koreans from crossing the border to the Gaesong industrial zone, the rating firm also took the stalled inter-Korean business operations seriously. The counterpart also argue that Seoul’s economic fundamentals are strong and have proved resilient to past provocations by Pyongyang. However, the Korean currency continued to lose ground against the U.S. dollar, falling to the lowest in about nine months. The Korea Composite Stock Price Index also lost further to close at 1,918.69, down 8.54 points from the previous trading session. Deputy Prime Minister and Finance Minister Hyun Oh-seok issued a warning that the North Korean risks could not be downplayed this time, stressing that the Korean government will strengthen risk management to better insulate the Korean economy from external and internal shocks.

Bibliography:

"N.K. Risks May Harm Seoul Rating: Moody's-The Korea Herald." N.K. Risks May Harm Seoul Rating: Moody's-The Korea Herald. N.p., n.d. Web. 09 Apr. 2013.

Week 2 - Monday (Blog Assignment Part One)

South Korea, located in East Asia below China and left of Japan, has population of 50 million. It is lower half of Korean peninsula that roughly the size of Indiana state. Although small in size, it is Asia's fourth largest economy and the world's 15th largest economy based on GDP (indicator of country's standard of living).

1. Popular Sports

- The most popular sport in Korea is soccer. The popularity of the sport spurred in 2002 when Korea and Japan co-hosted FIFA World Cup during which Korea placed 4th place.

Baseball is another sport that gained much popularity over years and Korea won the Gold Medal in baseball at the 2008 Olympic Games.

Basketball has been recently gaining much popularity as well.

*A huge crowd cheering on during 2002 World Cup

2. Music

The most popular and mainstream music in Korea is pop (more commonly known as K-pop). Unlike America where solo artists are more common, most of popular pop artists form a group; mostly boy-band or girl-group. The popularity of these K-pop group reached its peak around 2010. Just last year, Psy had his mega-hit around the world, becoming the first artist in Korea to spread his fame all around the world rather than just Asia.

*SiStar

*Girl's Generation

*JYJ

*2PM

3. Food (Traditional Food/Popular Food)

1) Bibimbap: literally means mixed rice. It is a signature Korean dish; rice mixed with

various vegetables, sliced meat, fried egg and chili pepper state.

2) Bulgogi: grilled marinated beef.

3) Kimchi: fermented Korean dish made of vegetables with a variety of seasonings. It contains variety of ingredients such as radish, scallion or cucumber.

4. Major Religions:

*Irreligion: 46%

*Buddhism: 24%

*Christianity (Protestantism): 18%

*Catholicism: 10%

*Other religion: 2%

5. Korean National Holidays and Traditional Customs

Name	Date	Description
Shin-jeoung (New Year)	January 1st	New year celebration
Seol-Nal (Korean New Year's Day)	1st day of lunar month	One of the most important Korea holidays
Independence Day (Sam-Il-Jeol)	March 1st	Commemorates the March 1st Movement (1919), Korean nationalists declared independence in Seoul to the world
Children's Day (Eorininal)	May 5th	The day on which to esteem the personalities of children.
Buddha's Birthday (Seok-ga-tan-shin-il)	8th day of 4th lunar month	Celebration of Buddha's birthday
Memorial Day (Hyun-choong-il)	June 6th	Commemorates the people who died during independence movement
Constitution Day (Je-heon-jeol)	July 17th	celebrates the promulgation of the Constitution of Republic of Korea in 1948
Liberation Day (Gwang-bok-jeol)	August 15	Celebration of liberation from Japan in 1945
Midautumn Festival (Chu-seok)	15th day of 8th lunar month	Celebration for good harvest. Koreans visit their hometown and have a feast of Korean traditional food
National Foundation Day	October 3	The day celebrates the foundation of Go-jo-seon, the first state of the Korea nation
Hangul Day (Han-geul-nal)	October 9th	The day commemorates the inventio and the proclamation of hangul, the native alphabet of the Korean language.

6. Popular TV Shows and Movies

1) Infinite Challenge

*most popular TV show among Korean teens and early 20s. It starts seven comedians who are considered "below average" for various reasons. They take on different challenge each week.

2) Gag Concert

*most popular comedy program that has lasted over ten years in Korea. It stars various comedians who come up with different programs. Programs change over time. It is popular among Koreans of all age.

3) Old Boy

*A very famous Korean movie based on Japanese comic. The story revolves around a man who is imprisoned without a cause for 15 years and suddenly he is released.

4) Jae-seok Yoo

*Known in Korea as MC of the nation, he is comedian and comedy show host. He is widely considered as one of the most popular comedian for all age group (from children to very old audiences). His popularity stems not only from his comic personality but his good behavior and his manner; this shows that Korean audiences desire public figures who display have good reputation and behaviors.

7. Online News Sources

1) Chosun-Il-Bo (조선일보):

http://www.chosun.com/

2) Hangook-Il-Bo (한국일보):

http://www.hankooki.com/

3) Dong-Ah-Il-Bo (동아일보)

http://www.donga.com/

8. Online Forums for Expatriates

1) The Korea Times:

http://www.koreatimes.co.kr/www/index.asp

2) The Chosun Ilbo:

http://english.chosun.com/

3) The Korea Heald:

http://www.koreaherald.com/

9. Type of Government

- Korea closely follows United States government structure in that it has semi-presidential (government has both a prime minister and a president), democratic republic. The president is the head of state and of multi-party system.

- Major Political Parties, Korea consists of two major parties (NFP and DUP) and numerous small parties.

1) Saenuri Party (New Frontier Party): conservative; 152 seats

2) Democratic United Party: liberal; 127 seats

3) Progressive Justice Party: progressive; 6 seats

4) Unified Progressive Party: progressive; 6 seats

*Park Geun-hye, South Korea's 11th, current and the first female president of Korea

Week 1 - Friday "Chapter 1 of Reinventing the Bazaar"

1. What does the author see as the defining characteristics of a market?

One of author's defining characteristic of a market is autonomy; "Decision-making autonomy is key (McMillan 5)." Participation is voluntary and people have power to turn down offers. "Competition, while not defining feature of a market, is usually present and adds to the autonomy (McMillan 6)." Competition keeps any one person from impacting the outcome of the market. Remember "no one is in charge of a market - or, rather, everyone is in charge."

2. McMillan writes, "Markets provoke clashing opinions. Some people revile them as the source of exploitation and poverty. Others extol them as the font of liberty and prosperity." Have you observed these kinds of opinions? What might cause some people to distrust markets? What might cause other people to distrust non-market action? Do you personally lean one way or the other?

Some people distrust market, because it is driven by an "invisible hand." People have always been skeptical of things they cannot see or touch. Market has no tangible force that drives it, and skeptics  blame the system for poverty and its failures.

Some people on the other hand distrust non-market action such as government intervention. Government is ran by people; people are essentially self-centered and make mistakes thus untrustworthy. It is easy to see why some would hate non-market action.

I personally lean towards both. I trust market with some non-market actions. Neither of them are perfect own their own but together they can make up for their downsides.

3. What market rules would you say are important for modern markets? Why?

"On November 9, 1989, the people of Berlin joyously tore down the wall that for thirty years had divided their city. As the wall fell, so did communism and the planned economy. On April 30, 1995, the U.S. government ceased controlling the internet. As entrepreneurs devised procedures for online buying and selling, electronic commerce burgeoned. These two dates denote the beginnings of what has become, for good or for ill, the age of the market."

I believe that free market (fall of communism and planned economy) as well as access to the internet are important for modern market. Without free market, people would not be able to compete and innovate. With access to internet, one can have an access to almost anything online.