South Korea's economic expansion

Beginning in the late twentieth century, South Korea’s economy rapidly expanded, thanks to industrial development and income from such resources as semiconductors. In a single generation, the country moved from one of the world's poorest countries to one of its richest. Because South Korea lacks sufficient metal and mineral resources, government and business representatives seek agreements with North Korean officials to extract and use resources from that country’s abundant deposits. However, this growth rate leveled by 2019, and the country slipped to one hundred seventeenth globally in GDP growth rate.

The Country

South Korea, an East Asian country, is located on a peninsula divided by the Korean Demilitarized Zone (DMZ) that separates South Korea from North Korea. As of 2023, South Korea’s real gross domestic product (GDP) was valued at $2.615 trillion, with a 1.36 percent GDP growth rate, which was a recovery from the slight economic downturn in 2020. This estimation placed South Korea fourteenth in the world and fourth in Asia in real GDP, and forty-first in the world in real GDP per capita ($50,600).

South Korea’s landscape is characterized mostly by mountains, plains, and valleys, with the Han, Nakdong, Yeongsan, and Geum rivers representing main interior water resources. South Korea includes approximately three thousand islands of varying sizes and distances from the peninsula. Busan, the country’s biggest port as of the early 2020s, provides access to the Korea Strait along the southern coast, while the port city of Incheon lies on the western coast along the Yellow Sea—also called the West Sea in Korea. The country is divided into nine provinces and seven metropolitan cities. The DMZ contains diverse natural resources and has become an unintended refuge for wildlife due to restricted civilian access, though it remains heavily militarized and subject to security controls.

As late as the 1960s, the South Korean economy was at the level of developing nations elsewhere in Asia and Africa. A major government push for modernization and industrialization in the second half of the twentieth century helped spur decades of rapid economic expansion. During this period, the public was encouraged to work hard, save, and invest rather than enjoy consumer goods. A heavy emphasis on developing technology and importing necessary raw materials, as well as significant cooperation between government and business, was critical to the growth that came to be known as "the Miracle on the Han River."

South Korea's success was threatened by an Asia-wide financial crisis in the late 1990s, but by the year 2000, the economy had largely recovered. Reform policies attempted to correct underlying economic weaknesses and boosted the amount of foreign investment in the country. The economy continued to grow, and by 2004, South Korea was one of only a few economies globally valued at one trillion or more US dollars. The 2008 global financial crisis provided another challenge, but the country mostly recovered by 2010. The next year, South Korea signed a free trade agreement with the United States helping to sustain slow but steady growth through 2015.

In the mid-2010s, the South Korean economy remained one of the strongest performers in the developed world and served as a major global hub for consumer electronics, automobiles, telecommunications technology, and shipbuilding. Entering the 2020s, South Korea continued to demonstrate economic resilience, supported by globally competitive firms in semiconductors, batteries, and advanced manufacturing, as well as rapid adoption of digital technologies. The country also benefited from strong infrastructure, a highly educated workforce, and significant investment in research and development.

At the same time, structural challenges became more pronounced during this period. The dominant role of family-controlled conglomerates, known as chaebols, continued to shape corporate governance and market competition, raising concerns about economic concentration and barriers to small and medium-sized enterprises. South Korea’s heavy reliance on exports left it vulnerable to global supply chain disruptions and fluctuations in international demand, particularly amid trade tensions and economic slowdowns in key partner countries. In addition, demographic pressures intensified as low birth rates and population aging increased strains on labor markets, social welfare systems, and long-term growth prospects, prompting renewed policy efforts aimed at productivity gains, automation, and labor-force participation. In the mid-2010s, the South Korean economy remained one of the developed world's strongest performers and was a key hub for consumer electronics, automobiles, telecommunications technology, and ship construction.

Coal

South Korean government officials encourage extraction of indigenous coal resources in an attempt to decrease imports of oil and other fuels to generate energy. Among the world’s top oil importers at 3,034,400 billion barrels per day in 2018, South Korea relied on oil for 50 percent of its energy needs in the early twenty-first century and also purchased large amounts of natural gas. Coal provides almost one-fourth of South Korea’s energy resources. South Korean coal reserves, mostly in the form of anthracite, consisted of 326 million metric tons in 2022, with only a portion of that reserve considered accessible for extraction. Korean coalfields occur in provinces stretching from the southwestern to the northeastern regions of the country. Sites that produced significant amounts of coal include fields at Mungyeong, Danyang, Samcheok, Honam, Boeun, and Yeongwol. Additional places with coal deposits are Gimpo, Yeoncheon, and Chungnam.

South Korea’s coal industry has functioned since the 1920s, with elevated oil prices in the 1970s resulting in its highest production rates in the twentieth century. Approximately 350 mines produced 21.77 million metric tons (24 million tons) annually until the late 1980s, when lower oil prices, higher incomes, and consumers’ preferences for natural gas and clean energy sources resulted in the South Korean government’s demanding the closure of most mines. The field at Samcheok continued to supply coal in the 1990s despite economic fluctuations.

In the early twenty-first century, South Korean officials emphasized that coal was an abundant native resource that could reinforce that country’s security by providing energy that could not be accessed or controlled by foreign nations. They prioritized this resource instead of focusing on developing renewable solar, hydropower, and wind energies. The government’s Korea Mining Promotion Corporation (KMPC) improved mines with technology and machinery near coal-rich fields. Investors also established private mines at Dongwon and Samchuk in Kangwŏn Province.

Despite these efforts, South Korean industrialization dramatically increased energy needs and resulted in South Korean power companies importing coal from China, Australia, and the United States. Korean coal supplied merely 3.2 million metric tons (3.5 million tons) in 2004, approximately 4 percent of the 82.2 million metric tons (90.6 million tons) of coal-generated energy in South Korea that year. In 2022, coal consumption at 136.4 million metric tons (150.3 million tons) far exceeded production in South Korea, with only 16.364 million metric tons produced domestically.

Tungsten

The South Korean tungsten deposit at Sangdong in Kangwŏn Province provided approximately 90 percent of the country’s tungsten for domestic and export uses in the late twentieth century. Tungsten is a useful industrial metal, and aerospace technology often incorporates tungsten because it is not altered in extreme heat situations. Tungsten is found in deposits of several compounds, such as wolframite and scheelite, located in the mountainous regions of South Korea.

Operating since 1947, the Sangdong mine has supplied a large percentage of tungsten available to international markets. The Chongyang mine is another source of South Korean tungsten. Both mines also extract molybdenum. South Korean manufacturers use tungsten for electronic components such as lightbulb filaments, wires, and tubes in appliances and machines and mix tungsten with carbide to create effective cutting devices and industrial tools. Jewelry, particularly wedding bands, is often crafted from tungsten because of the metal’s durability.

South Korea led the world in exports of tungsten until China began exporting large quantities of that metal in 1993, resulting in prices dropping. Unable to profit from tungsten, South Korea ceased extracting ore containing tungsten in the early 1990s. In 2006, the Sangdong mine resumed operations when it was bought by the Canadian company Oriental Minerals (later known as Woulfe Mining). The government’s Korea Resources Corporation (KORES) estimated reserves totaled 85,700 metric tons (94,468 tons) of tungsten trioxide and 63,500 metric tons (about 70,000 tons) of molybdenum. In an effort to regain sovereignty over natural resources and rely less on Chinese imports, South Korea announced it would reopen the Sangdong mine to support domestic means of energy production.

Molybdenum

Molybdenum is a crucial resource incorporated in stainless steel manufacture at steel mills. South Korea, ranking fifth in global steel production in 2007, sought to extract indigenous sources of molybdenum in an attempt to stop importing that resource from rival molybdenum producers Chile and China, which have the largest molybdenum deposits internationally. China stated it would limit exports and licenses regulating that market, intensifying South Korean efforts to mine molybdenum domestically. South Korean government officials also envisioned exporting surplus molybdenum to steel mills in Taiwan, Japan, and other countries to generate income as the value of that resource rose.

In 2006, KORES and KTC Korea Company, which trades metals, cooperated to finance and build South Korea’s initial smelter for molybdenum at Yeosu. That facility, which began operating the following year, was capable of processing 6,000 metric tons (6,613 tons) of molybdenum annually. At that time, South Korea’s molybdenum smelter was the seventh biggest internationally. The Yeosu smelter provided 35 percent of molybdenum needed by South Korean steel mills.

South Korea’s molybdenum mine at Uljin, containing approximately 3.7 million metric tons (about 4 million tons) of molybdenum, shipped 607 metric tons (670 tons) of that resource yearly to the Yeosu smelter with plans to increase the amount of ore extracted so production could double. KORES stated that representatives would seek additional molybdenum deposits in South Korea, and build mines, in addition to those at Sangdong and Chongyang, to extract that resource. In 2007, Metal Bulletin reported international prices for molybdenum had risen 25 percent from the previous year and expected global demand to increase 5.2 percent annually, offering South Korea a lucrative export opportunity.

With primary destination countries of China, Malaysia, Hong Kong, Japan, and Thailand, South Korea was the world’s ninth largest exporter of molybdenum, at $20.4 million. Additionally, the country imported the fourth largest amount, $52.9 million, globally, consistent with a trending decrease in the country’s export of molybdenum to the United States and Japan.

Graphite

South Korean miners extracted approximately 2 million metric tons (2.2 million tons) annually from graphite deposits south of the DMZ at the beginning of the twenty-first century, including seams in the Kyongsang district. This resource enables South Korea to be the top producer of graphite in the world, seventh in 2020. Because this graphite has minimal carbon, South Korea sells most of it to Japanese foundries instead of supplying it to domestic manufacturers. Seeking better-quality graphite sources, South Korean representatives secured agreements with North Korean officials regarding graphite deposits above the 38th parallel.

In 2003, KORES contracted for a 50 percent share with the North Korean Kwangmyung Trading Company, investing $5.77 million and supplying equipment to operate a $10.2 million graphite-processing plant near the Jeongchon mine in South Hwanghae Province, which held 5.67 million metric tons (6.25 million tons) of graphite ore and could produce 2,721 metric tons (about 3,000 tons) yearly. South Korea’s half of that amount would fulfill 20 percent of the country’s domestic needs for graphite over a fifteen-year period.

The South Hwanghae factory started producing graphite in 2007. In November 2007, North Korean representatives shipped approximately 180 metric tons of graphite from the North Korean port at Nampo to Inch’ŏn. The joint graphite-mining effort stalled the next year for several reasons, including stricter policies regarding North Korea enacted by South Korean president Myung-bak Lee in 2008. Insufficient electricity in North Korea to power graphite mining, the north’s restrictions involving transporting goods across the border, and their nuclear missile tests disrupted resource-mining agreements. However, by 2020, advancements in technology allowed the country to export $18.5 million in graphite and import $113 million, making it one of the world’s top importers and exporters of graphite.

Semiconductors

South Korea expanded its economy with technology and electronics exports and has consistently been a global leader in the production of semiconductor resources. Semiconductors are South Korea’s most valuable export; the country ships more semiconductors internationally than televisions and automobiles. The companies Samsung, Hyundai, and GoldStar (now LG) dominated semiconductor manufacturing in the late 1980s. Those manufacturers worked with the government’s Electronics and Telecommunications Research Institute to create a semiconductor with a four-megabit random access memory (RAM) chip, enabling storage of four million binary units, revolutionary at that time, matching semiconductor achievements in the United States and Japan. By 1996, South Korean semiconductor companies manufactured 17 percent of dynamic RAM semiconductors in the world. South Korea’s semiconductor resources generated more than $10 billion annually during the 1990s.

By the early twenty-first century, South Korea was producing the greatest quantity of semiconductors globally, with Samsung’s semiconductor plant at Kiheung and Hynix Semiconductor manufacturing most of the world’s memory chips. South Korean engineers seek to improve semiconductor design, speed, and capacity to compete with regional rivals Japan, China, and India and secure electronics markets worldwide. Since 2004, the Consortium of Advanced Semiconductor Research has focused on enhancing this technology in South Korea and expanding production of semiconductors designed specifically for vehicles. By 2005, Samsung Electronics was credited with producing 20 percent of South Korean exports.

The economic recession of 2008 and 2009 impacted South Korea’s semiconductor industry. Starting in July 2008, South Korean exports of semiconductors decreased as the result of several factors, including a surplus of semiconductors and economic problems in the United States and Europe, which are both major markets for South Korean computer products. South Korean officials suggested the country could regain its international status for exporting semiconductors within two years by improving the quality and capabilities of South Korean semiconductors. In 2021, Samsung Electronics produced 1.76 trillion units of semiconductors, and in 2022, the company reached $601.69 billion in semiconductor sales revenue globally. Hynix is also a large producer of semiconductors and ranks in the top three manufacturers consistently.

South Korea’s dominance in semiconductor manufacturing—particularly in memory chips—paralleled its rise as a global leader in mobile devices and wireless technology during the 2010s, led by firms such as Samsung Electronics and LG Electronics. The country also became a key test market for advanced mobile networks, supported by early adoption of high-quality telecommunications infrastructure and government-backed technology incentives.

Entering the 2020s, intensified global competition and geopolitical tensions reshaped the semiconductor industry. The United States increased domestic chip production through large-scale subsidies, while maintaining leadership in chip design and advanced logic manufacturing. Although South Korea retained a dominant share of the global memory semiconductor market, concerns about export dependence and market volatility prompted renewed government and industry efforts to diversify into non-memory semiconductors. The term “chip wars,” widely used in early 2023, continued to describe an ongoing strategic competition rather than a resolved conflict, which reflect long-term shifts in industrial policy, supply chains, and global technology governance in the twenty-first century.

Other Resources

South Korean gold and silver deposits and mines are located on Muguk and Gasado Island. Several hundred thousand metric tons of copper are refined annually at Onsan and Changhang smelters. Fisheries had represented 1 percent of South Korean exports until a shift in focus to technology exports occurred, resulting in less commercial fishing. In 2009, South Korea invested $17.8 billion in a river restoration project to improve water resources. Programs to replenish forests damaged in twentieth century wars contributed to increased timber resources for economic gains.

Because South Korea’s native resources for energy are limited, the country relies on nuclear and thermal plants to produce power. As of 2022, nuclear power plants produced approximately one third of the nation's electricity. South Korea was actively pursuing increased production of nuclear energy, with the construction of new plants as a strategic priority. A tidal power plant built in 2009 at the lake near Sihwa produced the same amount of power annually as obtained from 862,000 barrels of oil. In 2021, the Sihwa Tidal Power Plant's energy generation capacity was 254 MW, or approximately enough power to supply 500,000 households and a 552 million kWh production annually. South Korean officials encourage photovoltaic cell manufacturing and power plants to supplement energy resources and export for profit. By 2008, South Korea was ranked fourth globally in photovoltaic technology. By 2023, South Korea produced the third most power in Asia and was ranked eighth in global power production.

In the early 2020s, South Korea’s electricity generation remained heavily dependent on fossil fuels and nuclear power. In 2022, approximately two-thirds of electricity generation came from coal and natural gas, while nuclear power accounted for roughly 28–30 percent, with renewable sources supplying a much smaller share.

Efforts to expand renewable energy included municipal initiatives such as the Solar City Seoul project, launched in the late 2010s, which sought to increase rooftop solar installations on government buildings and residential properties. While the program contributed to greater public awareness and localized deployment of solar power, it did not fundamentally alter the national energy mix.

At the national level, South Korea’s energy policy in the 2020s emphasized a balanced approach combining expanded nuclear generation with gradual growth in renewables. Under revised government plans, renewable energy is targeted to account for approximately 21–22 percent of electricity generation by 2030.

Economic Interaction with North Korea

South Korea lost direct access to approximately 90 percent of the Korean Peninsula’s mineral resources when the 1953 armistice divided the peninsula at the 38th Parallel after the Korean War. Prior to the division, most mining and industrial activity had occurred in the northern half of the peninsula, where the majority of Korean natural resources were located. Geologists have stated that there are approximately 220 mineral types in North Korea, ranging from coal to uranium, which total, according to 2022 estimates, between $1.5 billion and $10 billion. North Korean mineral resources included 2.7 billion metric tons of iron ore, 1.08 million metric tons of nickel, and 907 metric tons of gold, almost twenty-five times greater than South Korean mineral resources. South Korea spent $13 billion in 2006 importing minerals to fulfill manufacturers’ needs, and in 2022, the country spent $18.7 billion on mineral products and $5.94 billion on machinery and mechanical appliances.

Despite political differences, officials from North and South Korea discussed the possibility of South Korea providing North Korea with money if South Koreans could invest in North Korean mines to acquire magnesite, zinc, and other specified mineral deposits. North Korea did not have sufficient mining expertise and technological devices to extract those resources. In the early twenty-first century, the Kaesong Industrial Park was built north of the DMZ. South Korean businesses invested in manufacturing at that facility’s factories. Industrial representatives from both countries met several times at P’yŏngyang, North Korea, regarding South Korea’s desire to receive northern natural resources.

In 2007, Han-ho Lee, representing KORES, and Un-up Chung, director of the North Korean Inter-Korean Economic Cooperation Association, discussed an agreement involving the North Korean South Hwanghae Province lead mine. The two Koreas arranged to extract black lead resources, of which 725.6 to 907 metric tons would be shipped to South Korea and distributed to buyers by Wonjin Corporation. The representatives approved another lead-mining collaboration to acquire that mineral resource located in Pungcheon. They also discussed a mutual project in South Hwanghae Province at Shinwon to start extracting limestone from a mine located there.

By December 2007, the South Korean Ministry of Commerce, Industry and Energy had requested surveys of North Korea’s geological resources to aid South Korean investors interested in northern minerals. South Korean officials noted that mines in western North Korea in the Haeju-Nampo area had phosphate, limestone, and graphite deposits. In the eastern part of North Korea, South Hamgyong Province’s Dancheon mines and power plants interested South Korean companies. North Korea sent 500 metric tons of zinc to the Inch’ŏn, also spelled Incheon, port in 2007 and another shipment of the same amount in 2008, for a total of $2.4 million worth of the north’s minerals to compensate South Korea for its economic assistance.

Despite efforts at cooperation and economic interaction between South Korea and North Korea, political tensions between the two frequently interrupt progress. During the Korean crisis of 2013, the Kaesong Industrial Park was essentially closed down when North Korea blocked access and removed its workers. The industrial region reopened later that year. However, after North Korea tested a nuclear weapon in 2016, South Korean officials announced another shutdown of the industrial park. Though this shutdown was anticipated to be temporary, the closure proved to be much more permanent. Only in 2018 was water supply restored to the region with the opening of an Inter-Korean Liaison Office; however, this office was destroyed by North Korea in 2020 as tensions between the countries peaked. Though mysterious activity in the region was reported in 2022, operations remained suspended at the close of the year. Additionally, South Korea offered North Korea economic aid in August 2022 in exchange for denuclearization. This offer was refused. By the mid-2020s, animosity between the two countries was again high. North Korea continued to develop its nuclear program while South Korea expanded its military operations with the United States and Japan in response to North Korea's threats.

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