Economic Infusion Volume 1 Issue #4

Issue #4 Feburary

Editors' note

Economics is everywhere. We frequently hear the terms “efficiency”, “stagflation”, and “deflation” in the news, but as a society, we lack a thorough understanding of the implications underlying these jargons.

Today, economies around the world are expanding exponentially: the rise in GDP, the growth of employment, and the expansion of exports indicate a prospective future ahead of us. However, the issue of equity, including the inequitable distribution of knowledge, income, and opportunities, is constantly overlooked. We couldn’t help but ask ourselves: how can we, as teenagers, contribute to addressing such issues?

With the field of Economics growing and refining our current landscape at a rapid rate, we realise that it is crucial for people everywhere in the world to have a fundamental understanding of the field By paving a pathway to economics, we hope to provide everyone with the knowledge required to comprehend the workings of the world around us

This is why we created this magazine: to use economic knowledge to equip and guide everyone into a future with limitless possibilities

A message from Sunwoo Ahn and Yuxin Shi (Founders & Co-editors in Chief)

Appreciation

Thank you to all the contributing writers and editors!

Buth Khuptanon

Hye Min Lee

Sungwon Park

Wooseob Ahn

Madhava Nurmawan

Fuga Nomura

Sieun Yeom

Anukruti Maheshwari

Departmental Manager

Anvi Jain

Anukruti Maheshwari

Sieun Yeom

MONEY LAUNDERING 101

BY MADHAVA NURMAWAN

What is money laundering? At its core, it consists of three ‘phases’, placement, layering, and extraction. This is a real-world crime and I advise people not to launder money, but here’s how to do it anyway.

Placement is the art of depositing cash into somewhat legitimate businesses. We obviously have the most common example, ‘the gold shop’. Funny enough, quite recently a gold shop owner in Bangkok was arrested after allegedly being caught money laundering and having ties with gangs Now how would we turn, say drugs for example, into a gold shop? We would have to sell those drugs for gold, and then sell the gold. See how we turned a shady deal into a legitimate business? This is the face of money laundering.

But money laundering isn’t just selling demerit goods for other sorts of goods, placement has many more different forms A huge epidemic in Australia has been the ‘pokies’, gambling is now seen as somewhat trendy Now how would I complete placement using a lottery machine? Well, it’s even easier than the old method of opening your own business. You just put your dirty money in, play just a bit to avoid suspicion, withdraw all that money and play it off as ‘winnings’. The worst part about this is that money laundering has been upholding gambling so much that even investigators hired by the company could find themselves on the wrong end of a lawsuit if they dig too close to the dirty roots of money laundering.

A good example of this is whistle-blower Troy Stolz, who in 2018 informed ABC news of the statistics that his former employer ClubsNSW made a large quantity of their revenue through money laundering. ClubsNSW tried to keep him quiet but now across the past 4 years the lawsuit is still ongoing, he is still

pleading his case and even got diagnosed with stage 4 cancer along the way.

top tip I would advise to any fellow money launderers that haven’t made it big time yet is to use a combination of these two methods: False invoicing, this is when you put through fake invoices to your account that actually come from yourself. Another good one is smurfing, this is when you put small amounts of money just under the AML threshold. The AML Threshold is the minimum amount that can be deposited for which banks will have to report to the government, usually around 10000 USD. So if you are good at setting up accounts, I would recommend these two methods as they work well hand in hand

Now it’s time to rinse and repeat If you are inconsistent with your placement then this raises suspicions highly, this is layering So what is an example of layering? Well, you can’t say you opened a gold shop and input $15000 out of nowhere and have no laid-out schedule.

This goes for all the methods that I have mentioned. It is important to have a schedule. For instance, if I wanted to sell myself as a routine gambler, then I would try to deposit every week or so

Now extraction, this is usually for if others also rely on the money laundering I do So, for example, let’s say a group of people and I want to launder money and we’ve done the first 2 steps successfully, how would I distribute this money?

Fake employees, I could ‘hire’ the people I sell with and distribute the money that they made back to them. Loans, I could give out ‘loans’ to these people too, and have them never to be repaid Another good method is dividends, these people can act as shareholders and I can pay them back what they had made for me

In conclusion, money laundering is an art Don’t let people stop you from how you can money launder because it’s an art that takes many forms. I believe anybody could money launder and each have the skills to perform these methods. Make sure to try these methods out the next time you get the opportunity. pleading his case and even got diagnosed with stage 4 cancer along the way

Bibliography

Agwu, E (2022, August 4) What are the types of money laundering? https://youverify co/ Retrieved February 2, 2023, from https://youverify.co/blog/whatare-the-types-of-money-laundering

Chongcharoen, P. (2021, May 27). Gold shop owner accused of laundering drug money.

https://www bangkokpost com Retrieved February 2, 2023, from https://www bangkokpost com/thailand/general/21226 35/gold-shop-owner-accused-of-laundering-drugmoney

McGowan, M. (2022, October 26). Billions in 'dirty' money going into NSW Pokies should be addressed by Cashless Gaming Card, crime commission says. The Guardian. Retrieved February 2, 2023, from https://www.theguardian.com/australianews/2022/oct/26/billions-in-dirty-money-going-intonsw-pokies-should-be-addressed-by-cashless-gamingcard-commission-says

Mitchell, G (2022, December 9) Whistleblower Troy Stolz denies declaring 'act of war' against Clubsnsw

The Sydney Morning Herald. Retrieved February 2, 2023, from https://www.smh.com.au/national/nsw/whistleblowertroy-stolz-denies-declaring-act-of-war-againstclubsnsw-20221209-p5c551.html

Stolz, T (2022, October 3) Clubs lobby group now trying to send me to jail , organized by Troy Stolz gofundme com Retrieved February 2, 2023, from https://www gofundme com/f/clubs-lobby-group-nowtrying-to-send-me-to-jail?

fbclid=IwAR2N8qhgO0oeQVcaQEWjlbhIaENKiwJx

VZmf5WKXRWamOwtO EgNdcsyzys

Can low unemployment lead to inflation?

Sungwon Park

“People are classified as unemployed if they do not have a job, have actively looked for work in the prior four weeks, and are currently available for work.” (Hayes, 2022) The drastically high inflation was gradually subsiding as supply chain disruptions were waning along with the easing of interest rates at 15-year highs. Recently, there have been concerns that the tight labour market may lead to inflation. On the 29th of January, the Federal Reserve System has been debating whether the employment rate would lead to inflation (Timiraos, 2023)

When a market is in full employment or when the unemployment rate is low, productivity would increase since it would increase efficiency as there are more people in the workforce As people would gain higher disposable income with greater purchasing power, workers are now able to be more actively involved in economic activities, for instance, through increased consumption and investment. As consumption and investment are the AD components, an increase in these factors leads to an increase in aggregate demand, shifting the AD curve to the right from AD1 to AD2. This may promote demand-pull inflation since the price level may rise from P1 to P2, as shown by the diagram on the right Thus, this emphasises the inability of avoiding the trade-off between unemployment and inflation.

This theory of the low unemployment rate being the cause of inflation was proven by the Phillips curve by New Zealand economist William Phillips in 1958. (Krugman, 2022) The Phillips curve is a graph, in which William plotted the unemployment and wages from 1861 to 1957 in the UK after examining the correlation between the two variables. From the data he looked at, he was able to discover the inverse relationship between the unemployment rate and the inflation rate (Engemann, 2020)

From the diagram below, we can see that at point A, the inflation rate is at Ia and the unemployment rate is at Ua. At point B, the inflation rate is at Ib and the unemployment rate is at Ub. As indicated by the diagram, we can see that when the unemployment rate is low, the inflation rate is high and vice versa

On the other hand, during the pandemic era, it was the opposite of this theory. Due to the sudden spread of an unknown disease, many regulations were set by the government, which shrunk the size of many businesses. To minimise the loss, firms fired many people and did not hire new people as much as before. This resulted in a decrease in demand for labour, increasing the unemployment rate (Anon , 2021)

In the early stages when COVID-19 was out, many consumers’ main expenditure was on food and masks Panic buying was common in the fear of possible lockdowns Food is one of the most common necessities, which is a type of normal good whose demand is inelastic in income. (Nasrudin, 2020) Although masks were not a necessity pre-COVID-19, they soon became a necessity owing to coronavirus being a severe acute respiratory syndrome. (시사상식사전, 2022)

When the price level is high, people are usually reluctant to buy goods However, food being a necessity and the anxiety among people that the lockdown might last a long time caused people to bulk buy, despite the sudden drive in demand for food and masks igniting inflation around the world. (O'Connell et al., 2020)

Therefore, the Phillips curve was proven wrong during the COVID19 era. However, this does not adjudicate that the Phillips curve is wrong since economics is a social science, and the theories may not always be the case in the real world.

Bibliography

Hayes, A. (2022, December 8). What is unemployment? understanding causes, types, measurement Investopedia Retrieved February 22, 2023, from https://www investopedia com/terms/u/unemployment asp

Timiraos, N. (2023, January 29). Fed debates whether wages or employment rate will drive inflation mint Retrieved February 23, 2023, from https://www.livemint.com/economy/fed-debateswhether-wages-or-employment-rate-will-drive-inflation11674994322127 html

Krugman, P. (2022, September 1). Phillips Curve Guide: Definition and History of the Phillips Curve MasterClass Retrieved February 22, 2023, from https://www.masterclass.com/articles/phillips-curveexplained

Engemann, K. M. (2020, January 14). What Is the Phillips Curve (and Why Has It Flattened)? Saint Louis Fed Eagle. Retrieved February 23, 2023, from https://www stlouisfed org/openvault/2020/january/what-is-phillips-curve-whyflattened#:~:text=The%20Phillips%20curve%20is%20named, (i.e.%2C%20wage%20inflation). Anon (2021, December 29)

' . BBC News 코리아. Retrieved February 23, 2023, from https://www.bbc.com/korean/news59806593

Nasrudin, A. (2020, March 26). Necessities: Meaning, elasticity. Penpoin Retrieved February 23, 2023, from https://penpoin.com/necessities/

(2022, October 25) 코

-19 Retrieved February 23, 2023, from https://terms.naver.com/entry.naver?

docId=5912275&cid=43667&categoryId=43667

O'Connell, M., Smith, K., & Paula, A. de. (2020, November 4). Spending Dynamics and panic buying during the COVID-19 first wave. CEPR. Retrieved February 23, 2023, from https://cepr.org/voxeu/columns/spending-dynamics-and-panicbuying-during-covid-19-first-wave

Green Tariffs- CO2 borders

Anukruti Maheshwari

Green Tariffs have been increasing, especially when concerning the electricity industry. Tariffs are a type of barrier to entry in terms of trade It is a tax levied by a country on imported goods, which could be imposed on specific goods such as the recent carbon border tariff in the EU. The EU has introduced a carbon tariff on carbon-intensive imported goods. This tariff has greatly affected manufacturing industries since they increase the overall costs of the producers exporting to the EU, especially for the producers from China that are exporting goods to the EU, the carbon tariff has increased the overall costs for producers to trade with the EU.

With an increase in the manufacturing industry, there has been an increase in carbon and hydrogen emissions Recently, the EU has become the first leading economy to impose green tariffs on imported goods, particularly in industries that rely on goods such as heavy fossil fuels, iron and steel, aluminum, cement, and fertilizers. The government of the EU has been keen to reduce carbon emissions therefore, green tariffs are imposed to reduce CO2 emissions as well as cut down on overall greenhouse gas emissions

The imposition of carbon taxes has been a way for the government to be able to internalize the negative external costs of CO2 emissions. It is a way for producers and consumers to pay for the social cost of creating and consuming the good. The purpose of this tax is to give an incentive for firms to develop goods that are more environmentally friendly. Taxing carbon emissions would nudge people to opt for solar power or wind generators, which are more competitive than burning fossil fuels. In the long run, this may also increase investment in renewable energy, leading to technological developments. In the past few years, technology has made solar power much more reliable and effective A carbon tax could nudge producers to switch to renewable energy for production, which has relatively lower pollution costs than burning fossil fuels like carbon.

The tariff revenue earned by the government could be further reinvested in environmental initiatives, for instance, the EU government could subsidize transports that are more environmentally friendly.

However, a disadvantage of imposing green tariffs to reduce CO2 emissions could be that firms would be moving out of the EU manufacturing market to benefit from lower prices. The firms would then be able to avoid the regulations, or there could be an increase in the production of cheaper goods which would emit more carbon in the process bringing in no overall reduction in the levels of carbon emissions Moreover, it may be difficult to measure the amount of carbon emitted, which makes it difficult to measure the “right” amount of tax that should be charged.

The EU and other developed and developing countries have pledged to reach net-zero emissions by 2050. Governments all around the world have increased regulations on emitting outputs and encouraged transformation towards adapting e-transportation. Other mechanisms like the cap-and-trade system have also been adopted by countries that put a limit to the number of such goods entering the country based on the extent of emissions released into the atmosphere every year, based on their carbon credits in the US for instance. Companies like Tesla earn billions by selling their carbon credits to other companies like Toyota and Chevron.

About 27 countries have been imposing a carbon tax, some of which include, Sweden (137), Liechtenstein (101), and Switzerland (101). The EU Emissions Trading System currently imposes its CO2 tax at a rate of 62.45 euros. Countries like Russia and the USA have lodged against the proposal for imposing a carbon border, claiming that they may lose profits.

In the USA, President Joe Biden has been pushing towards cutting down emissions by half of the current emissions by 2030, as well as reach to netzero emissions by 2050 but failed to include any carbon pricing initiatives or schemes in his plan. The White House has been said to have ignored Democrats’ plan to impose a carbon border few Currently, in the USA, there have been a few initiatives implemented including the cap-and-trade program in California and ETS in Massachusetts.

Bibliography

Green tariffs: What are they and why do they matter? (2022) The Guardian Guardian News and Media. Available at:

https://www theguardian com/environment/2022/de c/13/green-tariffs-what-are-they-an

watchwire admin (2022) Green tariffs: What they are and why they matter, WatchWire Available at: https://watchwire.ai/green-tariffs-explained Sethi, M. (2022) What countries have a carbon tax?, GCCfintax GCC Fintax Available at:

https://www.gccfintax.com/articles/what-countrieshave-a-carbon-tax--4100.asp

The 1940s - a Period of Structural Change in the British Economy

Buth Khuptanon

When talking about the 1940s, most people would realise that it was the period of peace: The Second Great War had just ended and peace had finally descended upon nations It was a period of structural change in the British economy through nationalisation.

Nationalisation is the process of transferring ownership from the private sector to the public sector with the aims to benefit the public, protect employment and improve the economic condition of a country. Back in the 1940s in the UK, countless nationalisations took place in its key industries, which drastically changed the structure of its economy. Here are some of the most notable nationalisations: the coal industry in 1947, electricity in 1947, railways in 1948, and the iron and steel industry in 1949 (BBC Bitesize).

Going back in time, the public mood across Britain was in favour of nationalisation and there were high expectations for better employment, wages and working conditions. Many workers were satisfied with the Government’s actions since they felt that their previous employers were only interested in profit maximisation. Imagine if water, an absolute necessity needed in order to survive, is sold for profits. How disastrous would that be?

However, public opinions were also split between those who think that nationalisation would benefit the economy and those who think that it would not Lucky for the government, the statistics were favourable for nationalisation. For example, before nationalisation, there were labour shortages in the coal industry, however after the government took control of it, the problem was quickly fixed and many new miners were employed after new training schemes were provided. The effect of this was immediate as coal production increased drastically Not only does the output increase which contributes to economic

On the other hand, some argue that nationalisation is not actually beneficial for Britain’s economy. This is probably due to the fact that the British government would need to pay compensations to businesses as a payback for nationalising these industries. It was reported that the total cost for nationalisation was around £2700 million, which is extremely huge considering that inflation was not as high back in the day. Moreover, nationalising these key industries meant that the British government would lose some tax revenue which they would usually gain from corporation tax, and they may be unable to provide as many public or merit goods for the public Moreover, workers who work in public sector companies may be less motivated since public sector companies are less competitive and do not aim to maximise profits, unlike private sector firms As a result, productivity may decrease and the industry may be less competitive in the global market.

Overall, I think the British government made the right choice to nationalise the key industries This is because these key industries are essential for the economy and by turning the private sector into the public sector, the government would be able to assert control and make sure that as many people are able to benefit from them as much as possible. What do you think about the British government’s decision on nationalisation?

Bibliography

(no date) Academic.oup.com. Available at: https://academic.oup.com/ehr/article/136/581/950/6369662?

login=false (Accessed: March 3, 2023)

Archives, T.N. (2008) Transport, electricity, gas, iron and steel, The National Archives. The National Archives, Kew, Surrey TW9 4DU Available at: https://www.nationalarchives.gov.uk/cabinetpapers/themes/transport-electricity-gas-iron-steel.htm (Accessed: March 3, 2023)

Nationalisation of the key industries - rebuilding the country after 1945 - WJEC - GCSE History Revision

- WJEC - BBC bitesize (no date) BBC News. BBC. Available at: https://www.bbc.co.uk/bitesize/guides/zsd68mn/revision/6 (Accessed: March 3, 2023).

Universal basic income

Fuga Nomura

Basic income policy is a proposed government-guaranteed payment that each citizen receives Its purpose is to ensure all people have the means to purchase necessities and improve their quality of life by reducing their financial stress (Erik Olin Wright, 14 Feb, 2017). There are many countries that have used Universal Basic Income (UBI) including countries such as the United States, Brazil, India and many more, therefore showing that universal income is an important policy in a way of ensuring economic stability. Nevertheless, due to the fact that only around 7 countries have used or tried basic income, it shows that the policy has many drawbacks

Figure 1: Correlation between poverty and UBI

To begin with, one of the advantages of using universal basic income is that it reduces the poverty rate of the country. As the country provides money for the people to survive, the poverty level in the country will decrease. which is shown in Figure 1.After the worldwide imposition of UBI, the overall Poverty Rate decreased while the Fiscal Cost has increased.This means that it would help towards reducing the amount of poverty leading to some extent economic growth.

Furthermore, some argue that UBI could fight income inequality. The safety net UBI provides could help people increase the amount of money a person or an organisation achieves. For example, they could pursue a college degree so that they can augment their future earnings. (ProCon.org)

As the degree of income inequality and poverty are one of major components in determining economic wellbeing, UBI is necessary in terms of keeping the economy healthy and functioning. towards the economy due to the fact that when people are poor, they lack the money to sustain the necessary economic activities, such as basic health care, education, food and other basic needs. This results in a low level towards the human capital, consequently leading to low productivity and output which is a major influencing component of high incidence towards income inequality, therefore creating a poverty trap. (Livingston, 25 July, 2022)

Although UBI has benefits in reducing poverty, a major problem for this policy is that it is very costly. For instance if the country uses the policy of UBI in order for a country to provide money for everyone in the country to pay for their basic needs they will need to pay for half of their federal budget

All of this revenue is derived from the tax that residents are required to pay for the country's internal operations, such as new infrastructure, public health, education, and security. Looking at all the payments that the government has to pay, allocating half of the federal budget to UBI does not appear to be an efficient use of the tax revenue. (ProCon.org, 25 Feb 2021)

Another problem about the UBI is that it reduces the initiative to work. Economists and other critics have argued that they encourage laziness. If the government gives money to people not contributing to employment, due to low investment in capital it will lead to economic stagnation (ProCon.org, 25 Feb, 2021) The influence that economic stagnation gives to the country and their economy is flat job growth, no rise in wages, and an absence of stock market highs This indicates the great impact that economic stagnation has on the overall economic stability of the country. (ProCon.org, 25 Feb 2021)

Overall, despite several benefits that the UBI can bring, the UBI is not the most efficient way to ensure the basic needs of the people living in the country. A less extreme policy such as child tax credit or negative income tax has a better chance of passage These policies would provide the same benefits as UBI, such as reduced poverty, but at a significantly more reasonable cost.

Bibliography

Erik Olin Wright. “Can the Universal Basic Income Solve Global Inequalities? | UNESCO Inclusive Policy Lab.” Unesco org, 14 Feb 2017, en unesco org/inclusivepolicylab/news/can-universal-basic-income-solve-globalinequalities.

Livingston, Amy “Pros and Cons of Universal Basic Income (UBI).” Money Crashers, 26 July 2022, www.moneycrashers.com/pros-and-cons-universal-basic-income/.

ProCon org “Universal Basic Income - Top 3 Pros and Cons.” ProCon org, 25 Feb 2021, www.procon.org/headlines/universal-basic-income-top-3-pros-and-cons/.

Poverty cycle in the U.S.

Jaedyn Ahn

Poverty cycle is a phenomenon where poor families become impoverished for at least three generations. This cycle starts when a child is born into a poor finally with zero or limited resources to create opportunities for advancement, Statistics:

in the US, the 2021 poverty line was set appt $12, 880, or about $35 29 per day,

9.2 % of problems globally live in extreme poverty defined by surviving on $1 90 per day

In 2020, the official poverty rate in the U.S. was 11.4%, translating to 37.2 million people.

There are many ways for the poverty cycle to start. Having unequal economic conditions, such as income inequality, may lead to a poverty cycle. This is because uneven wealth allocation can cause the rich to continually prosper while the poor remain trapped in a poverty cycle. High unemployment can also initiate the poverty cycle as unemployed workers will receive less income and thus less disposable income to spend on to buy essential items

This may worsen relative poverty in a region/country. . The main cause of the poverty cycle, however, is the lack of opportunities, as evidenced by the prevalent existence of poverty cycle in underdeveloped countries

Temporary yet planned conditions such as epidemics, natural disasters (earthquakes or droughts) and war can cause poverty in parts of the country Poverty cycles may cause poverty traps, which are created when economic systems that require a significant amount of capital to earn enough to break free from poverty.

Furthermore, since underdeveloped countries rely on the primary sector for their output, climate change can make the poverty trap more persistent This is because climate change can threaten agriculture, reduce crop yield and climate livestock’s leading to decreased levels of security for farmers and people selling animals. This was worsened during Covid-19, where governments increased the economic device and the pandemic increased the poverty rate in the US. Among children, there was an increase in poverty rate from 18.7% to 21.4%.

For families who are in the poverty cycle to break the cycle, governments need to help its citizens to attain housing and homeownership, by improving housing quality can improve health and safe houses allow families with a means to build wealth, and create financial stability

Bibliography:

To resolve the issue of falling into the poverty cycle, governments around the world can invest in a child focused poverty program to stop the poverty cycle from continuing for generations. Additionally, governments can also improve access to healthcare as an increase of healthcare for impoverished individuals can help them avoid major medical expenses helping them to have more money to save For example, there is an organization that is already trying to help to reduce poverty, such as cooperative for education where it was developed to bring textbooks, computer and reading programs to impoverished Guatemalan children to help them study. For instance, food finder is an organization that picks up and delivers surplus food to food insecure groups of the community. Food comes from government restaurants, manufacturers and more.

How to break the cycle of poverty: Impact on global growth. Maryville Online. (2022, August 30). Retrieved March 2, 2023, from https://online.maryville.edu/blog/how-to-break-the-cycle-ofpoverty/#:~:text=The%20Cycle%20of%20Poverty%20and%20Socioeconomic%20Issues&text=These%2 0challenges%20can%20include%20poor,quality%2C%20and%20reduced%20healthcare%20access

BUSIN

NESS

Viral Marketing - Honey Butter Chip in South Korea

Have you ever heard of ‘Honey butter chip’ before? This is one of the South Korean chips that caused the nationwide fever between 2014 and 2015 and was rarely found in most markets. Buying this chip and reviewing it online was part of the trend in South Korea.

Surprisingly, the company that made Honey butter chip did not advertise on TV at all. The secret behind this craze was through social network services, viral marketing. Viral marketing is the spreading of information about a product or service from person to person through word of mouth or sharing through the internet or email (Kagan, 2022). After consumers have tried out the chip, they have mentioned and spread it through social media. In particular, the fact that celebrities mentioned Honey Butter Chip on their SNS had a great influence on people

However, social media advertisements were often used in other products at the time as well Then, why did Honey butter chip become so popular among the products?

The answer is ‘natural reviews’ of consumers. Unlike other businesses which intentionally provided SNS advertisements by themselves, the naturalness of consumers’ honest reviews has appealed to and attracted people. In addition, a Twitter post called ‘lists recommended by a convenience store worker’ had the last critical shot. Rather than a "taste" review, it focused on the "honey butter chip's purchase failure experience," which captured interest and curiosity about the chip (Lee Kyung-jin, 2014).

Sieun Yeom (Claire)

People were “laughing and crying over one bag of chips” as they were immediately out of stock. The situation went extreme to the point where stores were limiting the number of bags a person can buy, and some stores have even made waiting lists with signs on their doors that chips are out of stock Later on, an app called ‘Honey butter search’ was launched. This smartphone app informed people about the stock of Honey butter chip in nearby stores, within 5km. It worked by app users reporting availability of chips in the stores, which developer explained was using the power collective intelligence (Park Kyu-Tae, 2018)

The sale of Honey butter chip has been a success exceeding 10 billion won (8,025,814 U in three months of its launch (LEE SO-AH, PA EUN-JEE, 2015) The craze of Honey butter chip proved that viral marketing in South Korea h significant impact on businesses and has become of the marketing tools. The fact that South Ko smartphone penetration rate was 83%, ranking fo in the world in 2015, (Hyun Yoon-kyung, 2015) marketing could be concluded as a very effe way to promote their products in South Korea growing number of people have access to m phones

Viral marketing has several advantages, suc widespread information, rapid growth, and relat low costs, but there are also risks that compa need to be aware of Negative word-of-mouth can cause serious problems because these are negative trends or negative attitudes toward business For example, in the case of Honey butter chips, some consumers were expressing disappointment or dissatisfaction with the product.

The fact that the word of mouth online has a great impact, these kinds of negative reviews can stimulate people and hurt their businesses. Also, it is difficult to measure the results of viral marketing and to evaluate their sales results.

The Honey butter chip craze has truly shown that viral marketing works and thus, is very effective in South Korea. It has created a trend in society to buy and review the chips. These days, most businesses use viral marketing to promote their products. On the assumption that businesses are considering side effects and risks, viral marketing is truly one of the most powerful marketing methods

Bibliography

How honey butter chips sold themselves. Korea joongAng Daily. (2015, March 29). Retrieved February 4, 2023, from https://koreajoongangdaily.joins.com/2015/03/29/ industry/How-Honey-Butter-Chips-soldthemselves/3002451.html

[SNS 세상은 지금] 허니버터칩 품귀현상 만든 SNS. 매일경제. (2014, November 28). Retrieved February 4, 2023, from https://www.mk.co.kr/news/business/6431017

현윤경. (2015, July 7). "한국, 스마트폰 보급률 83.0%...세계 4위" . 연합뉴스. Retrieved February 4, 2023, from https://www.yna.co.kr/view/AKR2015070717560 0017 기자 박

등장. 여성신문. Retrieved February 4, 2023, from https://www womennews co kr/news/articleView html?idxno=79078

Kagan, J. (2022, December 31). Viral marketing: What it is, how it works, examples, pros & cons Investopedia. Retrieved February 4, 2023, from https://www.investopedia.com/terms/v/viralmarketing asp