Highlights

Spain and Korea are strategic peninsulas that have been repeatedly exposed to external influences, peaceful or otherwise. Since the 1980s, the two countries have sought to play a greater role in the global stage but have chosen to do so through different pathways.

Spain pursued a path that emphasized integration in the European Union and foreign direct investment. Korea chose a pathway that prioritized autonomy from external powers and technological autonomy and self-sufficiency. However, the country is heavily dependent on exports.

Spanish services firms in complex industries such as retail banking, and telecommunications services have become globally competitive, expanding their footprint across Europe and Latin America.

By contrast, Korea's upgrading was built on the back of complex manufacturing industries such as electronics and automotive. Many service sectors have remained atomized and underperforming .

In Korea, where public welfare provisions are relatively underdeveloped, career-track jobs increasingly scarce, and corporate retirement happens early , the atomized service sector has become for many a source of subsistence employment.

Spain and Korea managed to overcome the middle-income trap to become advanced economies but today they face a number of challenges both socially and economically.

Many Spanish and Korean firms reached the efficiency frontier in complex industries that operated within the context of stable industry paradigms. As new paradigms emerge, firms will need to shift gears to sustain competitive advantage. At stake is the ability of these countries to maintain their current standards of living .