Lee Jong-Wha, professor of economics and Director of the Asiatic Research Institute at Korea University contributed a thoughtful piece to the Gulf Times that outlines the challenge Korea faces to find new sources of economic growth. It notes that Korea's GDP growth averaged 3.6% over the past ten years, a significant drop from the 8.1% annual growth rate from 1965-2005.
One problem is that South Korea's economic policies have made it excessively dependent upon exports for growth. Professor Lee notes that "Exports accounted for about 56% of South Korea’s gross national income in 2013, compared to 34% in 2002 and just 15% in 1970.
As a result, South Korea’s economy has become highly vulnerable to changes in external demand – a fact that became starkly apparent during the 2008 global economic crisis." Another is "...the wide imbalance between South Korea’s manufacturing and services sectors. Though services account for 76% of employment, its contribution to overall economic growth is small, owing to low productivity."
Professor Lee goes on to argue that South Korea" ...must also confront the huge, family-controlled chaebols – such as Hyundai, LG, and Samsung – that contributed significantly to rapid industrialisation and technological advancement but also block competition from start-ups and SMEs, stifling dynamism and innovation."