South Korea is on track to surpass $700 billion in exports in 2025, the highest total in its history and a notable achievement for a trade-dependent economy. But as Robert Atkinson argues in The Korea Herald, record exports should not be mistaken for a sustainable long-term growth strategy.
Korea’s export strength reflects real competitiveness in global industries such as semiconductors, automobiles, shipbuilding, and electronics, even amid rising geopolitical uncertainty, U.S. tariffs, and intensifying competition from China. Yet Atkinson cautions that the nation's export growth has become increasingly concentrated in a narrow set of sectors. Semiconductors alone now account for roughly 28 percent of Korea’s exports, leaving the broader economy vulnerable to global downturns and rising Chinese competition.
He also challenges the assumption that large trade surpluses automatically signal economic success. Korea’s trade surplus exceeds $50 billion, but it reflects lower imports and, ultimately, lower consumption. In practice, Atkinson argues, Korean households would be better off with higher imports and stronger purchasing power.
Currency dynamics reinforce this concern. Despite persistent current-account surpluses, the Korean won has remained weak, making travel and imported goods and services more expensive. Bank of Korea data show that financial account outflows are offsetting export earnings, weakening the traditional link between trade surpluses, currency strength, and household income growth.
Export-led growth was the right strategy during Korea’s development, but Atkinson contends that the model has reached its limits. As a high-income economy facing demographic decline, slowing productivity growth, and rising trade friction—particularly with the United States—Korea must pivot toward economy-wide productivity growth.
A strategy that relies on a narrow set of export champions while limiting imports and domestic productivity will struggle to deliver durable prosperity. Korea now must focus on what comes next.
Read the full column in The Korea Herald.
