Why South Korea ?

Dec .2011

Historical Comparison-Export of Goods :

Israel & South Korea (in B$)

Source: IMF

5.5

51

17.5

466

0

50

100

150

200

250

300

350

400

450

500

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Israel

South Korea

Leading Economies in Asia – Main Indicators

Annual average growth rate in

imports of goods and services 2011-

15

Imports of goods and

services 2010 (B$)

Average growth rate 2010-2007GDP B$ (2010)Population MCountry

10.8% 1,521 10.8% 5,926 1,313 China

5.6% 768 -0.3% 5,460 127 Japan

6.3% 503 3.5% 1,015 50 Korea

11.3% 427 8.2% 1,721 1,184 India

7.7% 408 6.0% 223 5 Singapore

3.1% 286 3.9% 430 23 Taiwan

7.5% 204 3.3% 319 68 Thailand

6.9% 189 4.2% 278 28 Malaysia

12.2% 162 5.8% 706 243 Indonesia

13.3% 94 6.7% 104 88 Vietnam

5.9% 73 5.1% 200 100 Philippines

Korea, Rep.Israel

GDP - composition by sector

2.6%2.4%Agriculture

39.3%32.6%Industry

58.2%65%Services

Labor Force - by sector

7.3%2%Agriculture

24.3%16%Industry

68.4%82%Services

Gross Domestic Product by Sector of Origin

South Korea & Israel

2.6%

39.3%58.2%

7.3%

24.3%

68.4%

2.4%

32.6

%

65%

2%16%

82%

*Source : CIA, factbook

Rank Country/Region Population Area (km2(Density

(Pop per km2)

1 Singapore 5,183,700 707.1 7,331

2 Bangladesh 142,325,250 147,570 1,069

3 Mauritius 1,288,000 2,040 631

4 Republic of China (Taiwan) 22,955,395 36,190 640

5 South Korea 48,456,369 99,538 487

6 Lebanon 4,224,000 10,452 404

7 Netherlands 16,740,000 41,526 403

8 Rwanda 9,998,000 26,338 380

9 Israel 7,697,600 20,770 371

9 Most Densely Populated Countries(population above 1 million )

Source: CBS, The World Bank

2015 201020152010

IsraelIsraelKorea, Rep.Korea, Rep,

Health

886.76.1Healthcare spending (% of GDP)

3,0712,2942,0511,250Healthcare spending (US$ per head)

Consumer goods in use (per 1,000 population)

331277420358Passengers cars

357412182375Telephone main lines

1,3431,3091,1541,016Mobile phone subscribers

453410772673Television sets

881817805656Personal computers

Social Indicators and Living Standard

*Source : The Economist

The Enabling Trade Index - ETIGCI – The Global CompetitivenessDoing businessCPI 2011

South Korea and Israel – Indexes Comparison

KoreaIsraelIndex

2726Enabling Trade Index

2224GCI

834Doing Business

4336Corruption Perception Index

Leading GCI Indicators

Israel vs. South Korea

Source :Global Competitiveness Index

0

1

2

3

4

5

6

7Institutions

Infrastructure

Macroeconomic

environment

Health and primary

education

Higher education

and training

Goods market

efficiency

Labor market

efficiency

Financial market

development

Technological

reainess

Market size

Business

sophistication

Innovation

South Korea

Israel

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011*

Israel

South Korea

Labor cost per hour

)in U.S$ (

Av. Change in Exchange Rate

)Base = 2000(

Source: The Economist

80.0%

85.0%

90.0%

95.0%

100.0%

105.0%

110.0%

115.0%

120.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

NIS WON

Expenditure on R&D (as % of GDP,2008(

Source: Ministry of Finance

GCI – The Global Competitiveness

South Korea and Israel –

Innovation Sub Index Comparison

KoreaIsraelIndex

206Capacity for innovation

251Quality of scientific research institutions

118Company spending on R&D

257University-industry collaboration in R&D

316Gov’t procurement of advanced tech products

2310Availability of scientists and engineers

54Utility patents granted/million pop

Economic IndicatorsIsrael V.S S.Korea

Source: The Economist, The World Bank

% GDP Israel S.Korea

Exports of Goods & Services 36.9 52.4

Budget expenditure 31.7 21.7

Budget Balance 3.7- 1.4+

Public debt 74.6 23.1

Gross national savings ratio 18.9 31.9

Military expenditure 6.9 2.9

Public Debt (%GDP)

200%

119%

84% 83% 82%76% 75%

63%

51%

23%

0

50

100

150

200

250

Japan Italy Canada Germany France UK Israel USA India South

Korea

Investments

South Korea vs. Israel

*Source : The Economist

Av. 2005-2010 Israel Korea, Rep.

Gross fixed investment (% of GDP) 17.6 28.9

Inward FDI flow/GDP (%) 4.78 0.3

Inward FDI stock/GDP (%) 33 12.2

Productivity Rate

Av. 2005-2010 Israel Korea, Rep.

GDP (% real change) 4.25 3.87

Labour productivity growth (%) 0.8 2.87

Total factor productivity growth (%) 1.15 1.8

*Source : The Economist

Exports of Goods by Countries, 2010

Source: Central Bureau of Statistics, GTIS

Israel South Korea

China

25%

United States

11%

Japan

6%

Hong Kong

5%

Singapore

3%

Taiwan

3%India

2%

Germany

2%

Vietnam

2%Indonesia

2%

R.O.W

38%

USA

28%

United Kingdom

5%

Netherlands

4%

China

4%

India

4%

Germany

4%

Turkey

3%

Italy

3%

R.O.W

40%

*Excluding Diamonds

Unlike Israel, South Korea’s big advantage lies in the fact that it still enjoys rapid

growth of surrounding states and less influenced by problems in Europe.

The PISA 2009

PISA

Math Score Science Score Reading Score

Korea Israel

Israel – South Korea Trade 2003-10 (M$ , ex diamonds(

410437

639

732

809834 844

635

532

760

853894

945

1,103

871

1,101

805

1,145

50.61%

6.46%

46.24%

14.64%

10.56%

3.01%1.25%

-16.22%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

0

200

400

600

800

1,000

1,200

1,400

2004 2005 2006 2007 2008 2009 2010 1-9/2010 1-9/2011

Exports Imports Exports Growth

Israel Exports to South Korea –

Main Sectors, 2010-2009

SECTOR M$ % change 10/9 % of total

Electronic Components 255 -45% 30%

Devices for Measurement, Testing and Navigation

241 177% 29%

Basic Metal 90 135% 11%

Chemicals 84 29% 10%

Telecommunication 47 30% 6%

Machinery and Equipment 41 -18% 5%

Other 86 10%- 9%

Total Export 844 1% 100%

Israel Exports to South Korea – Main Sectors, 01-09.2009-2011

SECTOR2009 (M$)

2010 (M$)

2011 (M$)

Change 09/11 (%)

% of Total 2011

Devices for Measurement, Testing and Navigation

49 195 129 162% 24%

Electronic Components 341 189 111 -68% 21%

Basic Metal 21 63 80 282% 15%

Chemicals 43 62 64 50% 12%

Machinery and Equipment 39 30 40 2% 7%

Telecommunication 27 35 22 -18% 4%

Other 73 65 91 25% 17%

Total Export 592 639 536 -9% 100%

IEICI- Countries Attractiveness Score Model

Germany

Brazil

Hong Kong

Singapore

Korea

Japan

Mexico

Canada

UKTaiwan

Indonesia

France

Australia

Russia

Turkey

SwedenPoland

Netherlands

Malaysia

Switzerland

Spain

Thailand

Austria

Belgium

Chile

Italy

UAESaudi Arabia 0

20

40

60

80

100

120

140

160

20 30 40 50 60 70 80

Isra

el’

s S

tatu

s

Market Attractiveness

China

India

USA

NTDB

South Korea–

Potential Sectors Market Size (B$)

20112010Index

3635Automotive Parts and Accessories

1513.7Drugs and Pharmaceuticals

8.88.5Pollution Control Equipment

8.78.1Defense Industry Equipment

6.64.6Renewable Energy

43.6Healthcare Technology and Medical Devices

2.82.6Computer Software

0.50.5Wireless Broadband Equipment and Services

NTDB

South Korea–

Potential Sectors Total Imports(B$)

20112010Index

4.24.1Automotive Parts and Accessories

2.52.2Drugs and Pharmaceuticals

0.80.8Pollution Control Equipment

21.9Defense Industry Equipment

1.51.4Renewable Energy

2.22Healthcare Technology and Medical Devices

0.60.6Computer Software

0.20.2Wireless Broadband Equipment and Services

Main Barriers in Doing Business World Bank, Doing Business Report

* Source : world bank

IsraelKorea, Rep.

4324Starting Business

13726Dealing with Construction Permits

9311Getting Electricity

14771Registering Property

88Getting Credit

579Protecting Investors

5938Paying Taxes

104Trading Across Borders

942Enforcing Contracts

4513Resolving Insolvency

Main Barriers in Doing Business Global Competitiveness Index

From a list of 15 factors, respondents were asked to select the five most problematic for doing business in their country

and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according

to their rankings.

Israel Korea, Rep.15.3

15.3

15.2

12.7

8.1

7.7

5.9

5.5

3.9

3.7

2.4

2.4

1.5

0.3

0.2

Access to financing

Inefficient government bureaucracy

Policy Instability

Restrictive labor regulation

Tax regulation

Inadequately educated workforce

Corruption

Inadequate supply of infrastructure

Tax rates

Inflation

Foreign currency regulation

Poor work ethic in national labor force

Government instability/coups

Crime and theft

Poor public health

14.4

10.1

10.0

8.9

7.8

7.8

7.0

6.4

5.7

5.3

3.6

2.9

1.6

1.4

0.1

Inefficient government bureaucracy

Inadequate supply of infrastructure

Tax rates

Inadequately educated workforce

Policy Instability

Restrictive labor regulation

Access to financing

Poor work ethic in national labor force

Tax regulation

Government instability/coups

Foreign currency regulation

Corruption

Inflation

Crime and theft

Poor public health

44.644.343.7

41.540.740.5

39.738.537.937.536.8

35.2

28.928.428.127.926.7

25.9

World Population by Age Median

Source: CIA,World Factbook

Opportunities- South Korea

•15th among world largest economies.

•rapid growth of Southeast Asia: 6.2% growth In 2010 And 4% average

forecast growth rate in 2011-15.

•World’s 11th largest Importer: Ahead of the Canada, India and Russia.

•The Korean government has announced several plans

to develop future industries, including telecommunications and IT,

environmental technology and life sciences.

•Great interest in technology and innovation.

•World’s largest shipbuilder: including world’s largest shipyard run by

Hyundai Heavy Industries.

•World’s 5th largest automobile manufacturer: including world’s largest

automobile assembly plant (Hyundai Motors).

• Largest electronics manufacturing firm: Samsung Electronics.

Thank you.

shauli@export.gov.il