South Korea's international trade began in the 1960s when it started its export-led growth development strategy, exporting mainly light and consumer goods and labor-intensive products (toys, footwear, and clothing). Since the 1990s, it has reduced the exports of such items in favor of heavy-industry, capital-intensive, and high-tech products. This has come about for 2 reasons: light and labor-intensive products have lost their competitiveness in international markets where they now face cheaper products from the other Asian nations; and South Korea's industrial growth has enabled it to produce competitive heavy-industry products like automobiles and ships and high-tech products like memory chips and computer products. It is now a major exporter of telecommunications and computer equipment and devices. South Korea's shipbuilding industry now sells ships to Japan, a major global shipbuilder in its own right.
Since the early 1960s, South Korea has targeted developed markets (the United States, Japan, and Europe) for its exports. Since the 1990s, it has also added the growing Pacific market (China, including Hong Kong and Taiwan) to its target list.
South Korea's exports totaled US$143.7 billion in 1999, a growth of 8.6 percent from 1998 (US$132.3 billion) and of about 11 percent from 1995 (US$125.1 billion). An increasing demand for South Korea's semiconductors and telecommunication products pushed the share of semiconductors in total 1999 exports to 13.1 percent, slightly higher than its 1998 share of 12.8 percent. Vehicle exports also rose by 12.3 percent to US$11.1 billion, but textile exports increased only by 6.8 percent to US$5.8 billion. However, its labor-intensive steel exports declined by 13.4 percent to US$7 billion. In 1999, South Korea's major export destinations were the United States (20.5 percent), the European Union (14.1 percent), Japan (11 percent), China (9.5 percent), and Hong Kong (6.3 percent).
South Korea's imports in 1999 totaled US$119.8 billion, a 28.4 percent rise over the 1998 levels of US$93.3 billion. South Korean export industries heavily depend on foreign capital goods (machinery and equipment) for their production. In 1999, South Korea's main sources of imports were the United States (20.8 percent), Japan (20.2 percent), the European Union (10.5 percent), China (7.4 percent), Saudi Arabia (4.7 percent), and Australia (3.9 percent). In the 1990s, its largest trade deficit was in 1996 (US$20.6 billion), while its largest trade surplus was in 1998 (US$39 billion).