IntroductionA decade has passed since the global economy entered one of the worst economic crises in modern economic history . With the exception of the Great Depression of the 1930s and the global crude oil shock of the 1970s, there are no examples where the global economy faced such a crisis. The 2008 global financial crisis began with the subprime mortgage crisis in the U.S. banking system and later spread to the rest of the world. Most economies, including East Asian economies like Japan and South Korea, went into recession after 2008. India was one of the few economies in the world that did not face recession. a recession, but nevertheless suffer a prolonged slowdown. A detailed analysis of the reasons and events that led to such a crisis and its impact on South Korea and India has already been discussed by the author in another article. Say no to plagiarism. Get Custom Essay on “Why Violent Video Games Should Not Be Banned”?Get Original Essay South Korea was exposed to risky securitized instruments issued by US financial institutions in 2008. Thus, when the prices of real estate and other assets fell In the United States, the value of securitized instruments linked to these assets also fell and South Korea also faced a parallel decline in the prices of these assets. The crisis then spread to their banking sector, drying up credit flows and increasing interest rates. South Korea, being an export-driven economy, faced a further decline in GDP growth after a drastic drop in global export demand in the wake of the global crisis. Foreign investment was also heavily invested, leading to a collapse in stock markets and a depreciation of the won. The immediate impact of the crisis was relatively less severe on the Indian economy. One reason for this was the lack of exposure to US risky securitized instruments due to better regulation of the open economy by the Reserve Bank of India. India is also not as dependent on exports as South Korea. However, exports of modern services to European countries and the United States declined after the crisis, thus leading to lower GDP growth. Furthermore, being a popular destination for foreign investments, India has also faced large outflows of foreign capital from the stock markets, leading to a fall in stock prices and a depreciation of the rupee. Performance of the South Korean economy after 2008. Like most developed economies after the 2008 crisis, South Korea also responded with a number of expansionary monetary and fiscal policies to revive GDP growth. With a drastic drop in interest rates from 5.25% in October 2008 to around 2% in February 2009, South Korea recorded the lowest real interest rates among all developed economies like the United States , the United Kingdom, the Eurozone and Japan. Thanks to a combination of government spending and tax cuts, South Korean fiscal policy was three times more expansionary in 2009 than in 2008. GDP growth, which was already decelerating from 5.5% to 2 .8% between 2007 and 2008, was further reduced after the crisis to only 0.7%. The above expansionary policies recovered strongly to achieve growth of around 6.5% in 2010, the highest economic growth the Korean economy has experienced in the past decade. However, after 2010, growthAverage GDP remained around 3% per year between 2011 and 2014. It fell below 3% per year after 2014, reaching only 2.7% in 2014. The paper attempts to find some reasons behind the economic slowdown of the last decade in general and the last three years in particular. Exports have been the mainstay of Korean economic growth since the 1960s. In 2008, before the impact of the crisis, about half of GDP came from South Korean exports. After the crisis, in addition to the decline in exports, the share of exports in GDP also fell to around 47.5%, reaching almost the same level as before the crisis in 2010. This share reached its peak of 56% in 2014 and then fell to 44%. % in 2018. Exports fell in value during 2014-2016 even as GDP grew, albeit at a slower rate during this period. There is therefore still an overall positive correlation between exports and GDP of the South Korean economy. However, after 2014, we can observe a slight gap between the evolution of GDP and that of exports. Among the many reasons for South Korea's relatively stable export growth is the change in the nature of China's economic growth. Once the fastest growing economy is fueled by both consumption and investment spending, China's economy gradually matures. Its demographic structure is also gradually shifting a significant portion of its population toward the elderly age group. Thus, its demand for imports has slowed. It is worth noting that China is South Korea's largest trading partner, accounting for more than 26% of Korean exports. Furthermore, the growing share of these exports is linked to investment rather than consumer demand. As China scales back its investment spending, it reduced Korean exports to China after 2014. The trade war between the United States and China has exacerbated this situation. In this context, the United States has increased customs duties on many imports from China. This has reduced Chinese exports to the United States in these sectors as well as investments in these sectors. This is likely to further reduce Korean exports to China. China's retaliation in the trade war by raising tariffs on many imports from the United States has also hurt some types of domestic investment, affecting demand for some products from South Korea. Korean exports have also been affected by Japan's restrictions on shipments of materials related to chip and display production to South Korea. This is linked to a diplomatic dispute between the two countries regarding compensation for forced labor during World War II. However, to measure the impact of international trade on economic growth, net exports or trade balance are often considered a better conceptual solution. indicator. The trade balance turned slightly negative for South Korea in 2008, meaning the value of the economy's exports was lower than the value of its imports, a rare phenomenon for the economy. It then became positive and, with the exception of 2011 when it declined sharply, it increased steadily until 2016 despite moderate GDP growth. It declined in 2017 and 2018, although it did not vary significantly, and will be a crucial indicator to watch for the economy going forward. It can be deduced from the above conclusions that the importance offactors other than exports in determining South Korean market growth is increasing, although it is very marginal. Standard macroeconomic theory classifies demand-side GDP into four basic indicators, viz. consumption expenditure, investment expenditure, government expenditure and net exports. If despite the improvement in the trade balance until 2016, South Korea faced an economic slowdown, this indicates a negative impact on the remaining three indicators. South Korea's economic growth depends largely on government and household consumption spending, aside from exports. In particular, household final consumption expenditure represents almost 50% of GDP, including spending on imported goods. Despite some reduction in this share, it remained slightly above 50% until 2014. But after 2014, its share fell to around 48% in 2018. One of the reasons for this decline is the overall decline in share of national income devoted to national income. in the hands of households over the last decade. When a greater proportion of income is pocketed by businesses, this reduces the marginal propensity to consume in the overall economy, as households are expected to spend a greater proportion of their income. Even if this decline is not very significant, the distribution of these expenses has been unbalanced over the last decades. Demographic developments in South Korea have had an impact on income distribution. With the increase in life expectancy over the decades, the share of the elderly population has increased significantly. However, the age up to which the population is economically active has not changed much. This has led them to place more emphasis on saving while employed so that they can use these savings after retirement, thereby reducing their current marginal propensity to consume. Another factor that has limited the consumption potential of households is their growing debt. South Korea has one of the highest household debt-to-GDP ratios in the world. It was already close to 70% in 2007, then steadily increased to over 80% in 2015 and over 90% in 2019. Besides these long-term structural reasons behind the decline in consumer spending, it has also been impacted after the Sewol ferry disaster. in April 2014, during which more than 300 people lost their lives, including around 200 students and teachers. This has had a significant negative impact, not only on the social and political aspects of the country, but also slowed down the economy, mainly through a decline in consumer spending as well as investment spending. However, there was only a temporary reduction in investment spending in 2014, after which it remained stable and even increased during 2016-2018. Interestingly, South Korean investment spending did not decline much even after the 2008 crisis, except in 2013. In the electrical and electronics sectors, South Korea invested more in 2010-2011 to emerge from the crisis. Due to excess capacity built during this period, demand for equipment in these sectors declined after 2012. Despite this, fixed capital formation in the country remained around 30% of GDP and has recently exceeded this level. Government final consumption expenditure also remained stable. As expected during the past two years of downturn, this spending has increased to support the economy. As this document is in its final revision, the entire world is facing a new downturn that could lead to a global recession in..