1. Alleviates macro problems e.g. Inflation rate, Unemployment rate
1.1. Example: Fall in unemployment rate from 4.4 to 3.2%, from 2000 to 2007.
2. Costs
2.1. Structural Unemployment in less favoured industries
2.1.1. Eg. % male employees involved in agriculture fell from 10.9% in 1998 to 6.7% in 2007, as compared to % male employees in service sector which has increased from 54.8% to 59.9% in 2007
2.2. Income inequality due to difference in growth
2.2.1. Evidence: Gini coefficient increased significantly from 0.298 in 1998 to 0.325 in 2008 (highest ever since 1990)
3. Benefits
3.1. Increase in consumption rate due to higher income per capita
3.1.1. Leads to an increase in SOL
3.1.1.1. Evidence: Rise in GDP from 533billion $US to 1 trillion $US, from 2000-2007
3.1.1.2. High SOL can also be seen with South Korea's 100% urban development over the years.
3.2. Lower poverty rate due to increase in income
3.3. Greater environmental awareness for South Korea
3.3.1. Example: South Korea's involvement in the Kyoto protocol, Antarctic Treaty, Biodiversity Treaty, e.t.c
3.3.1.1. Efforts have also been put into place to reduce the impact rapid development placed on the environment
3.3.1.1.1. Example: Nationwide bike network, alternative energy like wind and biofuel to reduce dependence on polluting fossil fuels
4. Evidence: Current account balance BOP fell nearly 2 times from positive value in 1998 to a negative value in 2008 during recession
4.1. Shows that South Korea heavily reliant on exports for its economic growth which may have adverse effects
5. According to the Korean Financial Service Commission (FSC), South Korean investors’ foreign exchange margin trading activity increased 594% from 2007 to 2008, reaching 454 trillion won in 2008 compared to 65 trillion in 2007. In 2009, an estimated 361 trillion won was traded in the first five months of 2009 alone, with retail investors accounting for 99% of all transactions.
6. BOP current account deficit
6.1. brought about by increase in imports but little revenue earned from exports of goods
7. Actual growth
7.1. Definition: Annual percentage increase in national output, i.e. the rate of growth in actual output.
7.1.1. Actual growth due to fuller use of resources.
7.2. Factors affecting Actual Growth
7.2.1. Level of development
7.2.2. Openess of economy to free trade
7.2.3. Government Policies
7.2.4. Level of infrastructure available
8. Potential growth
8.1. Definition: Speed at which the economy could grow,i.e the rate of growth in potential growth.
8.1.1. Depends on supply side factors, i.e the capacity of the economy to produce
8.2. Factors affecting Potential Growth
8.2.1. Affected by: Quantity (eg labour & land) of available resources
8.2.1.1. Capital Accumulation
8.2.1.1.1. The collection of durable assets that help generate output of goods and services.
8.2.1.2. Labour, which is calculated by:
8.2.1.2.1. Size of working population
8.2.1.2.2. Cultural factors (female participation of labour force)
8.2.1.2.3. Demographic factors, Economic factors
8.2.2. As well as Quality (affects productivity of resources)
8.2.2.1. Technological Progress
8.2.2.1.1. Improves the productivity of production