Economic Essay 1

1011 words 5 pages
Economic Essay 1 Although the people of North and South Korea speak the same language, they have many different ideas and cultures that have developed after the two countries split apart. The market economy of South Korea has done a lot to improve the overall economy of the country, and the gross national product has been on the rise. The economy of North Korea has had many challenges, largely due to the self-reliant and closed economic system that they use. Overall, the government and economy of South Korea has been more prosperous and successful than North Korea. Much of this is due to the fact that in North Korea, they have a completely closed and centrally planned economic system which tends to inhibit their growth. The fact …show more content…

Import goods is machinery, electronics and electronic equipment, oil, steel, transport equipment, organic chemicals, plastics. Gross external debt is $333.6 billion (2009). For public finances, Public debt is 23.5% of GDP (2009). Revenues is $199.9 billion (2009 est.). Expenses is $213.7 billion (2009 est.). Economic aid is ODA, $900 million (donor) (2009) aid to North Korea excluded. Credit rating is Aa2. Foreign reserves is $270.9 billion (November 2009).

(*Based on purchasing power equivalencies to the U.S dollar. Source: CIA World Fact Book, 2008,

Diseconomies of scale occur when a business grows so large that the costs per unit increase.
Diseconomies of scale occur for several reasons, but all as a result of the difficulties of managing a larger workforce.
Poor communication
As the business expands communicating between different departments and along the chain of command becomes more difficult. There are more layers in the hierarchy that can distort a message and wider spans of control for managers. This may result in workers having less clear instructions from management about what they are supposed to do when.
In addition, there may be more written forms of communication (e.g. newsletters, notice boards, e-mails) and less face-to-face meetings, which can result in less feedback and therefore less effective communication.
Lack of motivation
Workers can often feel more isolated and less appreciated in a larger business and so their


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