Assessment Economics Australia and South Korea

Economies General Regardless of nationality, all people have a set of wants and needs. In order to provide for the wants and needs of a community an effective economy needs to be in place. The Australian economy and the South korea economic both aim to provide for the needs and wants of people in various ways. Both economies are mixed market economies with various government control and individual influence allowing for productive growth in economies.

Economic Growth and the quality of life:

In terms of Australia, we are regarded as a medium sized mixed economy leaning towards a market economy. Our Mixed economy status has provided Australia with many benefits such as competitive yet controlled and regulated business, income compensations such as social welfare and a relatively stable economy. It has a relatively small population compared to South that has 50.22 million with Australia having 23 million. The GDP of Australia being $1.56 trillion and $1.30 trillion for Korea gives us an insight to size of the economies. Another major indicator the size of an economy is its relations with other major economies in the world such as the US and China. Both Australia and South Korea have now become a part of the G20 that is the worlds most important gathering of economies; meeting annually.

Unlike Australia South Koreas development over the last half century has been nothing short of spectacular. Fifty years ago, the country was poorer than Bolivia and Mozambique; today, it is richer than New Zealand and Spain, with a per capita income of almost $23,000. When the Korean War came to a cease-fire in the summer of 1953, Food was scarce; their largest cities had been reduced to piles of rubble the general population struggled to find adequate shelter. South Koreas initial rapid growth was characterized by both political authoritarianism and extensive state intervention in the economy. In the 1970s and 1980s, Seoul channeled massive amounts of capital through subsidies and low-interest-rate loans into trusted family-led corporations. These favored firms also enjoyed trade preferences and monopoly rights, among other indulgences extended by the government. Such preferential treatment enabled the cooperations, which today include Hyundai and Samsung, to grow into massive business empires whose brands are now recognized and envied around the world. Also around the Vietnam War the South Korean economy received billion dollar injections from the US due to the military assistance the Koreans gave. Around 300,000 soldiers were sent to the war. To put it into perspective Australia sent only around 40,000. The increase in money South Korea had and its new competitive strategies that relied on competitive labor costs and growing export markets particularly for manufactured goods achieved rapid industrialization. However in recent times the Economic growth for South Korea has slowed down similar to Australias slow growth.For Australia however the process of growth was different to South Koreas, it was more stable and growth occurred slowly over many years. Australia had already achieved industrialization and high living standards therefore its hasnt experienced the exponential growth the South Koreans experienced. Australia has had an average 3.2 percent growth over the recent decades. Although this growth is very slow compared to the other Countries in Asia pacific. Australia's economy is dominated by its services sector, yet its economic success is based on abundance of agricultural and mineral resources. Unlike many other economies Australia was left unaffected by the Asian Financial crisis in the late 1990s, showed how Australia was integrated with the rest of Asia and this was further highlighted in recent global economic crisis with Australia being left unturned.

The quality of life and the living standards of country determine how individuals live their lives and the amount of wants they are able to satisfy. The GDP is a measure of living standards that takes financial value of all goods and services produced by a nation in a year divided by the population. With this in mind, out of the Asia Pacific Australia GDP is the highest with next being South Korea. However ever the quality of life is a measure of welfare based on more then just economic output per capita. Other factors include the quality of health care, educational opportunities and climate. Australia is amount the top when taking all these factors in mind. The HDI rates Australia as second with a score of 0.933 and with Korea not far behind at 0.891.

Employment and unemployment: In 2012 Australias unemployment rate of 5.1 percent was similar to some of the economies in Asia such as Japan. However when compared to South Korea this is comparatively high, South Koreas being 3.91 percent in 2015.From this we are able to deduce that trend in unemployment is quite different for the two countries. Although South Korea has a much lower unemployment rate , the rate is on an gradual increase after the Asian financial crisis in the late 1990s the unemployment rate sharply rose while Australias been on gradual decrease after the early 1990s. Employment patterns of a country varies on the on the wealth of the economy in that country. Australias employment sector is much like other well-developed nations. In 201011, 11.4 million people were employed across all industries. From an industry perspective, the Health care and social assistance industry employed the greatest number of people (11.4% of total employment). The next largest industry was Retail trade (10.9%), followed by Construction (9.1%) and Manufacturing (8.6%). Up until the early 1960s, Korea was an agricultural economy with 63% of the labour force employed in the primary sector. Transformation to export-oriented industrialisation occurred over the next three decades was led by the state. The Korean model of government-led economic development included the following: * Goals and policies for economic development were set by the authoritarian government* the government dominated the allocation of capital and industrial technology * the government assisted the growth of chaebols business conglomerates which are still dominant in Koreas economic structure todayToday, however, South Korea has moved towards industrialization and the agricultural sector is shrinking. Nowadays, it contributes only 2.7% to the total GDP. South Koreas industries have become a major source of income. They have pushed the economy towards growth since the 1980s. Today, they contribute 39.8% to the GDP. With the largest industries being electronics, automobiles, telecommunication equipment, and shipbuilding. This change in employment is all related to the economic growth of the country. People in the country can now afford to live in more urbanized areas and thus apply for more white-collar jobs, increasing the productivity of the nation. This similar change happened to Australia but on a more gradually time period.

Distribution of Income: The distribution of income in a country signals wether the country has actually experienced economic growth for the whole country or just a handful of induviduals. South korea is prime example of this the distribution of income in south kore is much like steep pyramid. A small middle class also exists but the gap and disparity between them and the top is huge. This gap started to form by the mid 1990s when the Asian financial crisis hit South Korea in 1997. It had devastating consequences for the economy and for the livelihoods of the working population. A huge number of people suffered from layoffs, early retirements and business failures, and many middle-class people experienced downward mobility. But the consequences of the financial crisis were uneven. While the majority of working people suffered tremendously, those who possessed financial resources took advantage of credit-scarce market conditions and came out of the crisis richer than before. So, economic inequality increased noticeably during and after the crisis. A trend in income distribution can be seen as the share held by the top 10 per cent of income holders divided by that of the bottom 10 per cent has increased from 3.30 in 1990 to 4.90 in 2010. The income share of the top 1 per cent of the income pyramid was 16.6 per cent of national income in 2012. This ongoing problem of increasing income disparity results in detoriation in the quality of life of many individuals it not only makes ones life harder, but also brings about conflicts between people of different economic classes. For the last 30 years, Korea has experienced rapid economic growth. Korea is ranked at 15th in the world in terms of GDP, and has top leading companies including Samsung and Hyundai. The life of common individuals, however, is miserable and unfortunate due to unequal distribution of wealth. 1 out of 6 people live with less than 10 million won per year, and 1 out of 4 households is more often in the red than in the black. The poverty rate of people over 65 years old is 48.5% which is 3.4 times higher than that of the OECD average. Moreover, the suicide rate is among the highest in the world. On the other end of the spectrum Australia is starkly and marginally different in terms of income distribution when compared to South Korea. Australia is truly on of the lucky countries in terms of income inequality. The most recent figures for OECD countries, from around 2010, show that Australia is the 11th most unequal of the 34 OECD members. Australia has only ever briefly been below the OECD average Gini coefficient: just as the mining boom started in 2003. The generally trend that can be seen over the years with Australia is that distribution of income is closing at very slow gradual rate. The average Asutralian can offered some the luxury most people in east Asian countries couldnt dream of. A three bedroom house, a car, going out for dinner. All these things are seen as luxuries. Although wealth is seen to be distributed equally there is still some disparity with in Australia. When the ABS ranks households by their incomes, the 20% with the lowest incomes have an average net worth of around $437,000, while the 20% with the highest incomes have about $1.3 million in net worth. This means that the poorest one-fifth of households, measured by income, hold 12% of net wealth, while the richest one-fifth hold 36%, a ratio of about 3 to 1. This still isnt as bad as south korea though. This equal distribution of wealth ties back into the livings standards of a country the more wealth the general population have the higher the living the standards of the country.

Envrionmnetal sustainability. When looked at face level Australia seems to be very environmentally friendly, compared to the pollution and smog in South Korean mega cities Sydney can very well classed as environmentally friendly. In Australia however we tend to see less of the damage we are doing to the environment due to our small population. We have a very poor record of persevering biodiversity, we dont make good use of our water resources and we rely heavily on fossil fuels. All these factors add up in the years and damage our environment. Australia needs to create more environmentally sustable econmy in order for us to preserve our nation. In terms of water resources as measured by water productivity According to recent estimate by the World Bank, AUstralias water productivity of $24 per cubic metre of water is well below that of South Korea at $30 (US).Showing us that we are ineffective in our use of water. In terms of energy use, 95% of it comes from fossil fuels such as oil and coal which nonrenewable. IN terms of actual production China may come to mind as its the biggest producer of Coal. But another measure is production of Coal per capita. In terms of Capita Australia is the largest producer of coal producing 12 tonnes per capita. Astonishingly Australia produces almost eight times more coal per-person than China, and produces three times more than any other country. The continual use of these fossil fuels leads to air pollution and climate change. Climate change occurs due to the warming of the Earth from the green house effect. Many coastal based economies such as Australia ( Where nearly all the population lives on the coast) will experience the effect of rsing seas levels first hand. But also the increased temerpartures leads to unpredictable weather events, melting of ice caps, and the extinction of many animal species. Although action has been taken to ensure we dont see expotiential rise in temperature from continuall use of fossil fuels. We havent come to one that works effectively and balances the need for economic growth via fossil fuels and environmental sustainability. This is that same for South Korea and many other countries as well. Presently there is no binding international agreement to reduce greenhouse gas emsiions as the kyotoprotocol, an agreement first reached in 1997 expried in 2012. However Australia is implementing domestic polices to counter the effects of climate change. Under the Labour government, lead by Julia Gillard Asutralai indrotuced the Carbon tax. A tax on the emission major manufacturing, mining companies made to encourage the reduction in emsiions of Carbon. Hoever this is quickly dismissed as ineffective and damaging to the economy. Australia should invest more in the develpomnet of renewable resources such as effective solar and wind farms. Highlighting Australias struggles South Korea also faces a very similar challenge.

The role of the government: Both South Korea and Australia have to consider the role their governments play in their economies. Currently in our world most major economies are mainly market economies with various amounts of government influence. This type of physilophy has also been taken up by both the countries of Australian and South Korea. They play their hand in the economy through less direct actions such as Taxes, subsidies and other measures to encourage resources from some sectors in the economy to others. Their role in the economy is measure by the services they provide and the things they regulate such as providing health care social welfare and education and regulating the operation of companies in the economy to allow for a fair go.

The amount of Government influence in an economy has effects on many aspects of it, such distribution of income and wealth. Form this we can see how much of a role the governments of South Korea and Australia play in their economies. The distribution of wealth and income is evenly spread according the roles induviduals play in society. However we do not see this even distribution in South Korea. Signalling the government dosent play a heavy role in redistributing the wealth of the nation to the poor to raise living standards. Also Australia provides a lot of Social welfare provides much greater assistance than most other Asian countries specifically South Korea. The purporpose of welfare in Austrlia is to ensure a minimum standard of living for people who are unable to work or are looking for work. Welfare benfits include unemployment benefits, the age pension diability support payments, family payments and paid maternity leave. Compared with South Korea this system is quite extensive. Also Australias public expenditure on elderly and disabled pensions is high by regional standards. At 4.7 percent of GDP, this spending is higher than in economies as diverse as Korea at 1.7 percent. The trend howver in Australias Social Welfare is one opposite to that of Korea , as Korea continues to become more developed its spending social welfare will increase however for Australia, we are towards restricting social welfare, by tightening eligibility. Giving lower payments using the money to spend elsewhere.

Australia and Both South Korea are Market economies primarily. Another way of measureing government involvement is to take into consideration the amount of money spent and colleted. Higher levels of government spending generallt indicate a greater role for government in the economy with Australia spending 36% of their GDP. Although Australia pays more tax this money is spent by the government to increase living standards. With Australia, we have well developed medicare system much like Canadas. This involves the essentially paying for medical treatment allowing families to undergo treaments and operations without paying thousands of dollars like in America. Spending on Health is at 5.9% comparatively high compared to which is at 4.1%. This funding of Health has also lead to greater livng conditions for the general population. As we have sanitary water, the male smoking rate has dropped from 22 percent csince 2006 and have less risk of lifestyle diseases. Also in terms of education we have a similar trend. As we spend more on education the population becomes more skilled leading to a better workforce producing a greater economic growth. Australia spends about 5.1% of their GDP on education which is the highest amoung the Asia pacific. Our primary and secondary education is free, with higher education being mostly paid by the student. Kore is not far behind spending 5.0% of their GDp on education leading to high level of education which is culturally significant in many of the Asian countires.

How much a government plays its hand in maintaining the economy of its countries much be kept at a balance. Both Australia and South Korea are primarly Market economies hoever the role their goervnent plays in the conomies is still stilghtly different as explained above.

The influence of globalization The definition of globalization is essentially that because of technology, people around the world can now interact faster and less expensively than ever before. It is not the actual phenomenon of globalization that causes conflict; rather, it is the organizations and treaties set up to regulate and promote it. In the late 1980s, South Korea got its first taste of globalization.South Korea today is Asias fourth largest and the worlds 15th largest economy and is the worlds ninth largest trading country. South Korea has grown into a global hub of free trade with full access to two-thirds of the worlds markets, representing about half the global population.Globalization has been a huge factor in South Koreas growth and economic success. Modern South Korea is a leader in many industries, from technology and automobiles to music and entertainment. Its what lead to its exponential growth. In comparison to Austrlia though There is quite a difference. Ausrlia has always had its connections with the outer world especially with America in terms of both economics and military support. Recently austrlia has made bilaterial agreemenst with many o fteh Asai Pascific Coutnries to expanding its trading. The influence of globalization in Australia has a varied effect on our society. For example we have a more diverse culture now, immigration allws for more skilled workers in the workforce, also trading partners increases injections with the obvious flipside of leakages but this is also a good thing. Alll these advantages influence our economic growth rate increasing it. However We can see the effect of Globalization more on South Korea than Australian. Although I have explained abve that globalization leads to an increase in growth, there is howver a downside to it. Too many argue that lobalisation dilutes ones culture and identity it also leads to the xplotation of others such as employing cheap labour making the farmers or workers in the home country jobless and pennyless as companies are producing the crop cheaper. A prime example of this is what happened in South KOre with the rice farmers. Although Globalisation has it dwonsides it leads to an overall better economy if managed correctly with the right blance of opening up to other countries.