This case study is concerned with the position of the Gold Star Co. Ltd. in the United States in 1984. The focus questions in this case study are as follows:
1. Is the concept of comparative advantage relevant to the Gold Star decision to site television manufacturing in the United States?
2. Do changes in production processes reflect pressures for a rationalization and processes and markets by Gold Star?
Gold Star's position in the United States in 1984 was affected more by the state of the American economy and by the state of international economic relations between Korea and the United States than it was affected by factors and issues such as comparative advantage, production processes, and market rationalization. During the first half of the decade of the 1980s, South Korea emerged as a middle industrial power. In the structure employed by The World Bank, Korea is grouped in the upper middle income sub classification of the middle income economies classification, along with such countries as Argentina, Brazil, Greece, Hong Kong, Mexico, Singapore, South Africa, and others.
Real per capita gross national product (GNP) in Korea grew at an average annual rate of 9.8 percent during the first half of the 1980s. Although this rate of growth was higher than that
recorded in the 1970s, it is of even greater significance because it proceeded from a much higher base point.
Rapid growth in exports was a salient feature of the Korean economy in both the 1960s and the 1970s, and this trend continued in the first half of the 1980s. Gold Star's exports were a major component of this effort. The average annual rate of growth of Korean exports in the first half of the 1980s was 17.2 percent. While this growth rate was approximately two thirds of the level attained in the 1970s, and about one half of that attained in the 1960s, the export volume upon which growth rates were based were enormously higher in the first half o...