[Column] After 16 years, Korea’s ‘Okay-shaped’ financial system is again

In 2010, not too lengthy after the 2008 international monetary disaster, South Korea’s export income elevated by 30% in comparison with the earlier yr, hitting a historic new excessive. After experiencing a ten% drop in export income the yr prior, the brand new file appeared to point that the disaster had been averted. 

The principle contributor to this restoration was the chip trade. In 2010, income for chip exports elevated by round 63% in comparison with the earlier yr, main the nationwide financial system’s “chip-led” development. 

In 2010, the true financial development price was 6.8%. 

Chipmakers like Samsung Electronics and SK Hynix have emerged victorious within the recreation of rooster within the international chip market. Germany’s Qimonda, the previous No. 2 within the international DRAM market, went out of business in 2009 because it tried to make use of aggressive investments to maintain up with the competitors to provide reminiscence chips, fanned by Taiwan. 

In 2013, Elpida, the delight of Japanese chipmaking, was acquired by Micron Reminiscence within the US. This led to the present Huge 3 within the international reminiscence chip trade — Samsung, SK, Micron — dominating the market. 

Samsung Electronics raked in cash from the trade. In 2010, they recorded a whopping 17 trillion received (US$11.5 billion, as of Jan. 20, 2026) in working earnings — 10 trillion of that by way of simply reminiscence.

This was in the course of President Lee Myung-bak’s time period, when the administration started to speak about “win-win development.” This was as a result of whereas the coverage of driving the trade price up generated immense earnings for chipmakers, vehicle producers, and different key export companies, there was no trickling-down impact. 

Reasonably, there was mounting criticism {that a} rising trade price brought about the costs of imports to go up and exacerbated wealth disparities. Throughout his speech to commemorate Liberation Day in 2011, Lee pitched “ecosystemic growth” as a brand new pillar of nationwide governance. This was seen by many as a last-ditch effort to shore up waning assist among the many working class. 

In newer instances, South Korean President Lee Jae Myung and Financial institution of Korea Governor Rhee Chang-yong have expressed worries in regards to the nationwide financial system following the mannequin of “Okay-shaped development” this yr. A Okay-shaped financial system refers to an imbalanced scenario wherein the already well-off accumulate extra wealth — as an illustration, main chipmakers raking in earnings from a semiconductor tremendous cycle — whereas each different a part of the financial system, from different industries to home consumption, native economies, the working class and younger individuals undergo a downturn. 

The present administration’s slogans of development, pragmatism and “KOSPI 5,000,” are regurgitations of the pledges of previous administrations. 

The financial development technique introduced by the federal government in the beginning of the yr pledges to beat polarization, advocating for insurance policies that use phrases like “development for everyone,” which appears to be all present and no go. 

As time goes on, home consumption continues to stagnate, whereas indices of redistribution go downward. To belatedly affirm these tendencies and to out of the blue announce a brand new coverage initiative on Liberation Day might be a day late and a greenback brief. 

The administration might want to make larger efforts to make sure that everybody can profit from development.

By Park Jong-o, financial system and trade reporter

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