South Korea and India recently signed a free trade agreement. The comprehensive agreement is the first of its kind for South Korea with any of the BRIC countries, and the first of its kind for India with any major economy. The implications of the deal on the global business world are substantial:
1. South Korea is primed for growth.
The deal will pave the way for Indian computer and software experts to gain access to the South Korean labor market. The competitiveness of India's IT professionals will serve as a catalyst to increase the overall quality of South Korea's labor force, which will subsequently lead to the growth of South Korea's national economy.
2. Investors will take a much closer look at Indian and South Korean companies.
Bilateral trade between India and South Korea amounted to nearly $15.6 billion in 2008, and some project that the new trade agreement could double South Korea and India's economic relationship over the next 10 years. The deal abolishes or cuts tariffs on 85% of South Korean products imported to India, and 90% of Indian products to South Korea. This means that major South Korean manufacturers, such as Samsung Electronics, Hyundai Motors, and LG Electronics will be able to import much more of their products to a growing market of nearly 1.2 billion people. Additionally, some of India's fastest-growing industries, such as transport manufacturing and business services, will be able to provide goods and services to an economy with high demand for them.
3. The agreement could prompt other countries to follow suit.
You can be certain that other countries will be closely watching the results of the India-South Korea free trade agreement. If the results are positive, other major global business power players will take a look at their own trade policies, and see how similar trade agreements could help their own economies. Furthermore, depending on the success of the agreement, India and South Korea will likely receive more attention as being desirable trade partners. Which in turn will increase their standing on the global business playing field.