[THE VIEW]How Did K-Culture Become an Economic Powerhouse?

Cultural Expansion Triggers a Chain Reaction in Tourism, Consumer Goods, and Exports
Structural Risks of "Star Dependence"

Just ten years ago in the United States, Korean music was a subculture enjoyed only by a small group of enthusiasts, and the only song widely recognized by the public was "Gangnam Style." There was a moment when I first truly felt that Korean culture was becoming "mainstream" in America. I live in a small city in Indiana with a population of 80,000, where most people are white. One day, I heard BTS's music playing on the radio. I could hardly believe that a Korean-language song was being broadcast on a station aimed at the general American public.

From that point on, I witnessed Korean culture permeating various aspects of American society. The secretary in my department, who is in her late 60s, became a fan of Gong Yoo and Lee Minho, and she has watched almost every K-drama available on Netflix. When I made dalgona as a baby shower favor, I received several requests asking if I could make just one more. The students I taught were excited about going to Korea as exchange students, and they proudly shared that they had attended a Blackpink concert.

So, what kind of economic value does the globalization of K-Culture generate? The economic impact of cultural exports is complex and difficult to quantify. First, the direct export value of music, dramas, films, games, broadcast formats, and concerts is estimated at about 15 trillion won per year.

When you add the brand value of individual content, such as BTS or K-Pop Demon Hunters-that is, the impact of intellectual property (IP) utilization-the scale becomes much larger. Characters and universes featured in films can be expanded into games, merchandise, and theme parks. When you combine the value of these derivative products and the manufacturing industry linkage effects, the actual export value of Korean content is estimated to have already surpassed 20 trillion won.

Content exports also have a direct impact on the tourism industry. According to research, K-Content generates an annual tourism effect of 5 trillion to 7 trillion won, accounting for about 10% of total tourism revenue. Government statistics show that each year, about 5 million to 7 million people visit Korea because of K-Content. This represents about half of all foreign visitors to Korea. Of these, about one-third are motivated to visit specifically for K-Content-such as attending performances or visiting filming locations-while the remaining two-thirds decided to travel to Korea after developing an interest in the country through exposure to its content.

K-Culture creates a sequential flow from content consumption to tourism, consumer goods purchases, manufacturing, and exports. The illustration succinctly represents the structure in which the spread of culture not only leads to direct exports but also stimulates indirect economic activities. Photo by Gemini.

Moreover, the cultural industry influences the export of products not directly related to content. As exposure to K-Pop and dramas increases the preference for Korean products, exports of consumer goods such as cosmetics, food, and clothing have also increased. One study estimates that the Korean Wave has led to an additional 2 trillion won in consumer goods exports annually. In fact, there have been reports that after the broadcast of K-Pop Demon Hunters, the popularity of gimbap and ramen featured in the show led to more than double the number of foreign purchases and gimbap sales compared to the same period the previous year.

In summary, K-Culture generates nearly 30 trillion won in annual export effects, accounting for 2-3% of Korea's total exports. Moreover, this figure does not include hard-to-quantify factors such as increased national brand awareness or improved corporate credibility.

Even excluding exports, the economic impact of the content industry within Korea is enormous. The Korea Development Institute (KDI) analyzes that the content industry's production inducement effect exceeds 100 trillion won, which accounts for about 4-5% of Korea's annual GDP. K-Culture has already become more than just a cultural phenomenon; it is now one of the core industries of the Korean economy.

However, it is difficult to be entirely optimistic that this growth trend will continue. The Korean content industry is structured so that sales are concentrated among a small number of works and stars. The media sometimes refers to this as the "BTS risk." This structure is vulnerable to external shocks. For example, if there are issues such as military enlistment or scandals, exports and sales can be significantly affected. In addition, as capital is focused only on hit works and stars, content diversity may decline and the burden of production costs may increase. For K-Culture to develop into a sustainable industry beyond a temporary trend, diversification in planning and production is necessary.

Seo Boyoung, Professor at Indiana State University, USA