Map of Korea Today
Area - Total 99,646 km² (108th) Capital: Seoul Population: 49,024,737 (25th) GDP: $1.180 trillion (11th) Per capita: $24,200 (34th) Currency: South Korean won
From Nobody to a World Leader
Korea was one of the least developed countries in terms of industrial development in early 60s.
It has been transformed into one of leading industrial countries in the world during the last 40 years.
A poor country just after Korea war (1950~53)
1960
GDP per capita (in US$) 82
Share of Manufacturing (in GDP(%)) 14.4
Major Industries
Wigs
Eyelashes
Clothes
Plywood
5
Korea’s Economic Miracle
Average Nominal Growth Rate: 20%!!!
1960’s : 26% 1970’s : 31%
1980’s : 17%
1990’s : 13%
• US$79 (1960) US$ 24,200 (2006)
0
2000
4000
6000
8000
10000
12000
14000
16000
60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
Financial crisis
Miracle that make Korea an Asian Tiger
2006
Per Capital: 24,200$
Shipbuilding (world no.1)
Automobile (world no.5)
Semiconductor (world no.3)
Steel (world no. 5)
Overview of the talk
Three Milestones towards Miracle Export-Oriented Economy IT Flattener through Globalization IFRS: Opportunities and Challenges
Implication on current translation Prospective and Challenges Conclusion
Export-Oriented Economy
Korea's industrial development has been achieved through export-oriented strategies.
During 1960s and 1970s, the period when Korea accomplished the development of major industries, export growth outpaced GDP growth.
South Korea's GNP vs. Export Growth Rates
-20
0
20
40
60
80
100
1962 1964 1966 1968 1970 1972 1974 1976 1978 1980
GNP Growth
Export Growth
A clear indication of export-oriented economy
IT Flattener through Globalization
At the start of the 21st century, South Korea predicted that the IT industry would boom and become very important in the 21st century.
Surf CommunicationRunn com(Israel)
Telstra (AU)
PTIT(Vietnam)
CPqD (Brazil)
NotelSimon Fraser U.(Canada)
CRL
JSAT
NTT RITE
Yokosuka Park
(Japan)
ZNISS
Radiophzika
(Russia)
Ericsson
(Sweden)
• HHI• Siemens• Fhg-IIS (Germany)Univ.of LondonTNOI
• Tsinghna U.• Sountheast U.• Beijing U. Posts &
Telecommunications• Peking U.• NRSC• HIT (China)
• Wi-LAN• Motorola• SCO• Syracuse U.• NCGIA
(USA)
• INRIA• CNRS• INSA
Korean’s commitment to R&DTotal R&D Expenditure (PPP, 1996)
Russia
Japan
USAustraliaDenmark
CanadaUK
NetherlandKorea
SpainItalyPoland
Austria
Sw itzerland
FinlandFrance
Germany
Turkey
China
IndiaBrazil
0
1000
2000
3000
4000
5000
6000
0 0.5 1 1.5 2 2.5 3 3.5R&D expenditure as % of GNP
Sci
enti
sts
& E
ng
inee
rs (
per
mill
ion
p
eop
le)
Success Story of IT in Korean
No.1
No.4
No.7 No.7
No.15
No.1
Internet penetration
Mobile Internet (ITU)
on-line stockInternet subscriber
IT industry competitive(OECD)
e-government
1.3 Million
70% of total household
2.4 Million
5.1%
68%
Population : 48 Million
GNP : 9,700$ (No. 13)
IFRS: Opportunities and Challenges
Exported-Oriented
Economy IT Globalization as
a flattener
International Financial Reporting Standards
Two Driven Forces Towards
Brief introduction of IFRS in Korea
Korea Accounting Standards Board (KASB) is largely consistent with IFRS.
The Korean Financial Accounting Standards (KFAS) are largely consistent with IFRS.
The accounting standard-setters need to make further efforts to remove discrepancies between the local accounting standards and the IFRS.
Efforts towards IFRS (briefly)
In light of the 1997 Asian financial crisis, South Korea's corporate culture increases the transparency
The government is realizing that partial adoption of the IFRS standard is inadequate to ensure confidence in South Korea’s system
Financial reporting under IFRS will be made mandatory for all listed companies, annouced on March 15, 2007
Implication on Currency Translation
Money is called Won Exchange rate is about
1000 to 1
Exported-Oriented
Economy IT Globalization
Currency Translation impose high influence
Implication of Appreciation
Won appreciated 15% against the USD in 2004, followed by 2.3 percent in 2005
Appreciation in currency is a good sign of competitiveness and strength.
The appreciation of Won hurts the exports from South Korea. A sharp deceleration in export growth (31% to 12% in 2005)
Discourages the investment from South Korean to foreign countries .
However
Prospects for Harmonization
To embrace the globally accepted accounting standard, South Korea should establish comparable, reliable and the transparent corporate financial reporting.
The IFRS also requires fully-aligned, harmonized and consistent rules for consolidated financial reporting accounting.
Final Remark
Korea emerges as a “tiger” of Asia Three milestones cultivate the need for IFRS
adoption in Korean. Influence of current translation amplifies with
globalization and flattening
“History is the driving force of the future”
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