[비즈한국] Last year, as Korea became the sixth country in the world to surpass $700 billion in exports, President Lee Jae-myung made headlines by treating staff at the Ministry of Trade, Industry and Energy, the lead agency, to pizza. Even though difficulties were anticipated due to tariff policies from U.S. President Donald Trump, the President personally offered encouragement after the nation achieved the record-breaking feat of exceeding $700 billion in exports for the first time in history.
While this milestone of $700 billion in exports was reached, many point out that it is an illusionary effect caused by price increases resulting from semiconductor shortages. In particular, concerns are being raised that this could be a castle built on sand, given that semiconductors and automobiles, which were the top two export items 30 years ago, remain in those positions today, and six of the top 10 items have remained unchanged for the past three decades. Experts advise that we must treat the struggles of Japan and Germany—who surpassed $700 billion in exports before us but are now facing difficulties due to failing to keep pace with global changes—as a cautionary tale.
On the afternoon of December 30th of last year, about 20 pizzas sent by President Lee were delivered to the Trade Policy and Investment Policy bureaus of the Ministry of Trade, Industry and Energy at the Government Complex Sejong. The President treated the staff after receiving a report from Minister of Trade, Industry and Energy Kim Jung-kwan at a cabinet meeting the previous day that exports had exceeded the $700 billion mark to reach an all-time high, along with a request to personally encourage the employees.
According to the Ministry of Trade, Industry and Energy, cumulative exports last year surpassed $700 billion at 1:00 PM on December 29th. The total export volume for last year was tallied at $709.4 billion. Korea has become the sixth country to reach $700 billion in exports, following the United States, Germany, China, Japan, and the Netherlands.
Considering that Korea's export volume was $19 million in 1948, the first year of the Republic of Korea's government, this represents a growth of approximately 36,000 times in 77 years. After breaking the $100 billion mark in 1995, Korea increased its exports by $100 billion every two years: $200 billion in 2004, $300 billion in 2006, and $400 billion in 2008. Subsequently, it took three years to reach $500 billion in 2011, and seven years to reach $600 billion in 2018.
The time taken to climb from $600 billion to $700 billion was slower compared to other nations. It took the U.S. four years to go from $600 billion to $700 billion, while Germany and Japan each took only one year. In the case of China, it reached $700 billion in the same year it achieved $600 billion, which was 2005. Only the Netherlands, which engages in entrepôt trade, took 10 years.
Although the $700 billion mark was reached with such difficulty, a thorny path lies ahead. This is because Korea's exports are heavily skewed toward certain items and are intertwined with the effects of rising semiconductor prices. Last year, semiconductor exports reached $173.4 billion, a 22.2% increase compared to $141.9 billion in 2024. However, it is frequently pointed out that some of this growth is an illusion caused by a sharp rise in semiconductor prices.
In fact, the average price of semiconductor DRAM rose from $1.35 in the first quarter of last year to $2.12 in the second quarter, then soared to $5.30 in the third quarter and $8.13 in the fourth quarter. The price increased sixfold in less than a year. Furthermore, only semiconductor exports increased, while exports of other items, excluding semiconductors, decreased from $541.7 billion in 2024 to $536.4 billion last year.
Despite the achievement of $700 billion in exports, there is growing concern over weakening industrial competitiveness as the top 10 export items remain little different from 30 years ago. Semiconductors have held the No. 1 spot since 1992, and automobiles have consistently maintained the No. 2 position since 1995. Along with semiconductors and automobiles, items like shipbuilding, steel, synthetic resins, and computers, which were among the top 10 in 1995, remain in the top 10 even after 30 years.
The stagnation of the top 10 export items signifies a decline in the dynamism of Korean industry. A lack of dynamism leads to weakened international export competitiveness. Indeed, while Germany achieved $700 billion through automobiles and machinery, and Japan through automobiles and electronic components, both faced crises later when they could not keep up with the shift to digital and eco-friendly technologies. Conversely, the United States, having reached the $700 billion mark with advanced IT technology like software and aerospace, along with financial services, has continued to lead recently by leveraging artificial intelligence (AI).