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developing nations, is still in transition Combining elements of European civil law systems and Anglo-American law Korea s constitution was drafted with the help of American diplomats its legal system differs in several areas It does not incorporate the use of a jury, as appointed judges are left to interpret all the facts and testimony of a given case The competence of Korea s judges has also come under re in recent years With many eeing to the more lucrative private sector, the pool of quali ed judges is greatly deteriorating This problem, long known to foreign investors, is also a growing concern of of cials inside Korea In recent years, the Korean government has intensi ed its efforts to improve its legal system, mainly by encouraging its brightest students to study law There are currently over 150 law schools in Korea, and competition for admissions is steadily increasing As uncertain as the legal system presently appears, there is substantial hope

for improvement, as a generation eager for further democratization will eventually take the reigns in government and other leadership positions Though Korea s legal apparatus is poor by Western standards, it ranks above most of the BRIC+2 nations Investors that have anxiety over the lack of transparency should consider the fact that the Korean government, with intense lobbying from the United States and various international organizations, is dedicated to improving these conditions to attract further foreign investment

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Korea has one of the world s most educated workforces The Korean education system has a deep cultural foundation, and as such, it is regarded as one of the most advanced systems in the world Education is free and mandatory to all children ages 6 to 15, and the number of students pursuing secondary studies now stands at 75 percent Curriculum is notoriously exhaustive, and entrance into Korea s 10 major universities is extremely competitive Korea was the rst nation to provide its entire student body with Internet access, an expected accomplishment given the nation s propensity for technology This commitment to education can also be seen in the amount of funds allocated for education each year Korea presently devotes 42 percent of its gross national product (GNP) to education, with only four nations providing a higher percentage Korea ranks number one for all Asian countries in terms of student teacher ratio, at 36 to 1, and as mentioned, has one of the highest literacy rates of any country on the globe Korea is also the world leader in scienti c literacy, slightly edging out Japan in that category This commitment to education will likely keep Korea in a position of great strength, as the global market increases its demand for skilled labor As the nation continues to improve its technological capability, its students will likely remain the driving force Innovations, therefore, will likely continue to come from within Korea s own borders This self-reliance on research and development, for a nation already leading in technology exports, should be viewed as a positive sign for investors

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The aftermath of the Asian nancial crisis in 1997 saw Korea implement a number of economic reforms to restore stability to its markets Though many, including the privatization of its larger banks and the restructuring of chaebols, are as of yet incomplete, Korea is indeed moving away from a centrally planned economy to a more free-market approach, as evidenced by the KORUS FTA Trade with China gures to rise, and some experts believe that trade with Japan will steadily evolve in the coming years

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remaining public account for an overwhelming percentage of holdings in the country The Deposit Insurance Corporation (DIC), a government-controlled bank, owns almost 70 percent of the Industrial Bank of Korea, the nation s fourth largest bank The DIC also owns nearly 79 percent of Woori Financial Holdings of the Woori Bank, the second largest in Korea Though foreign banks are permitted to establish branches and subsidiaries, they are subject to a number of restrictions, including provisions on individual loans and foreign currency transactions Also, foreign banks are required to allocate a certain percentage of their portfolio to Korean companies, and these companies do not normally include the more established organizations, such as a Samsung or Hyundai Yet, in spite of these and other restrictions, foreign investors, as of 2005, held almost 40 percent of stocks on the Korean stock exchange (KOSDAQ) According to the Joint IMF World Bank Financial Sector Assessment program, Korea s nancial sector was vulnerable prior to the nancial crisis in 1997 1998 for a variety of reasons Foreign borrowing by domestic banks outstripped net foreign currency assets by a signi cant margin Reforms instituted after the crisis dramatically improved Korea s ability to withstand nancial crises that might arise elsewhere around the world (see Figure 162) In recent years, Korea has engaged in sizable exchange rate interventions in an apparent effort to maintain an undervalued won, the Korean currency unit The resulting current-account surpluses have enabled Korea

As second in command by law, Putin became acting president and wasted little time in pushing through several major changes After being inaugurated on May 7, Putin restructured the Russian political landscape into 85 districts of equal representation Though supposedly equal, Putin signed a law allowing him to remove the leadership of any districts at his whim, eliciting cries of authoritarianism among critics Putin would come to be

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