SEOUL, KOREA ― The Ministry of Strategy and Finance diagnosed the relative strengths and weaknesses of the Korean economy. Continuing from the report issued in 2010, the ministry released a report on Korea’s national competitiveness in 2011 on January 4 in order to establish strategies to improve Korea’s competitive edge.
National competitiveness refers to the overall capacity of a nation that continuously improves the standard of living of citizens and the quality of life.
The report utilized 259 statistical indicators, 247 statistics, and twelve types of surveys to compare Korea with 34 OECD member countries focused on social integration and environment fields. It especially analyzed technology innovation, small and medium-sized enterprises, and foreign human resources of Korea. The report divided the structure of national competitiveness can into economy, social integration, infrastructure, and environment.
First, the economic competitiveness of Korea showed satisfactory results in 2011. Compared to the average growth rate of 2.4% from OECD member countries, the growth rate of Korea was 6.2% along with a potential growth rate of 4.1%. The trade volume recorded USD 891.6 billion which also surpassed the average of USD 581.5 billion from the other OECD nations.
In terms of technological innovation, Korea was analyzed to actively invest in R&D and has satisfactory infrastructure, yet the quality aspects including export of telecommunication services were insufficient.
Internet users in Korea accounted for 83.7 out of every 100 citizens while the OECD’s average was 73.2. In other related matters like the ratio of households that have Internet access and the number of users of high speed broadband Internet, Korea ranked top among the OECD countries.
However, Korea showed low grades when it comes to social integration compared to the OECD nations. Because of the low ratio of elderly people and the short history of the pension system, Korea showed a low level of government spending on public pensions. However, Korea’s spending for personal pensions was relatively high among the OECD nations. Although Gini's coefficient of 0.315 was higher in 2010, Korea still showed a higher score compared to other advanced countries among the OECD members, which proves the inequality of the nation.
An increasing rate of carbon emissions per person and insufficient utilization of renewable energy were analyzed as areas that Korea must improve. However, its urban recycling rate ranked top among the OECD nations along with great scores in infrastructure investments for water management. The ratio of the nation’s spending for environmental preservation out of the total budget was 3.16% which was much higher than the average of 1.74% from other OCED countries.
Korea ranked second on spending for public education among the OECD nations and showed a 35% completion rate for higher education. Although it has great human resources thanks to the nation’s high interest in education, the number of excellent universities worldwide and the number of foreign students in higher education programs showed that the nation still needs to improve educational conditions and environments.
For financial capital, the size of the financial market in Korea was measured highly along with its satisfactory asset soundness which includes the non-performing loans ratio and BIS capital adequacy ratio.
In addition, the report pointed out that the Korean economy showed a similar status with advanced countries yet its social integration and corporate environment are relatively insufficient. It also showed that Korea has worked to develop into an advanced country through a quantitative growth in such a short period.
In order to leave the ranks of the developed countries and join the advanced nations, the internal factors of the Korean economy need to be improved, the report said. It said that such factors like the business environment and infrastructure need to be improved along with the eased regulation, increased input of capital, and improved quality of labor.
Moreover, such endeavors for social integration and formation of social capital are also necessary, the report said. It said that fairness, reinforced equity, established constitutionalism, and noblesse oblige can help the nation to improve social integration and capital.
Although the number of small and medium-sized companies and employees is fine, the report pointed out that their quality aspects including the capacity of creating additional value are insufficient. An atmosphere of cooperation needs to be formed between those small enterprises and large corporations, the report concluded.
