GRM 2010 GRM 2011

Abstract Details

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Interests of South Korea in the Gulf:
Paper Proposal Text :
Korea and the Gulf have enjoyed a cooperative economic relationship during the last 40 years. Korea nowadays imports about 70% of all crude petroleum, 46% of all natural gas, and 49% of Naphtha from the Gulf. And the GCC is Korea’s 4th trade partner and Korea’s largest EPC market overseas. Over 60% of Korean EPC contracts abroad are from GCC countries, and the size of the contract reached 43.4 billion dollars in 2010. Korean firms took up approximately 50% of total EPC market share in the Gulf, mostly in such projects as petrochemicals, desalination, and energy.
Especially construction projects and services in the Gulf have enabled Korean to overcome the national crisis caused by the oil shock and to use the crisis as the basis for the next leap forward economic development. Access to the Gulf, which provided invaluable experience to Korean companies, allowed Korea not only to become a global construction powerhouse but also to emerge as an exporter of plant industries.
However, Korea has gradually shifted her focus from the economic interests based on construction and plant industries to more strategically important areas like nuclear energy sector, political partnership, and military cooperation. The previous economy-oriented exchange has been transformed to a so-called ‘strategic partnership building.’ Three variables such as war against terrorism, diversification of exports or industries in both sides, and the change of business environment in the Gulf, have affected this phenomenon.
First, the US-led war against terrorism has pressured the Korean government to dispatch its troops to Iraq and Afghanistan. Since then, Korean military operations have been expanded to Lebanon and UAE. With this military engagement, Korea is eager to strengthen its military relationship with the Gulf and the Middle East. Second, Korea has endeavored to diversify her exports and plant contracts into more sophisticated industrial sectors like nuclear plant construction while almost all Gulf countries have tried to diversify the oil-based industries into other sectors, especially services and manufacturing. Thus, new areas of cooperation between the both have emerged. Finally, the business atmosphere in the Gulf has become fiercer with the growth of domestic entrepreneurs and the participation of China making inroads into the Gulf market. This has encouraged the Korean firms to find a higher value-added business.
This research attempts to explain the interrelationship between the three variables and the change of Korea’s approach to the Gulf market. Though the historical analysis, this paper would follow the transformation process of government’s and companies’ policies toward the Gulf region.