Korean Economic Indicators Stagnating

When the OECD committee agreed on Korea’s joining the OECD, Korea was in a buoyant mood. Everyone was optimistic about the future of Korea’s economy. However, the party did not last long. In the following year, Korea was wracked by an economic crisis. This year is the 10th anniversary of becoming a member of OECD, which is usually referred to as a ‘club of developed countries.’

On September 22, the government held the ‘OECD 10th Anniversary Conference’ in the Lotte Hotel, Sogong-dong, Seoul, after inviting relevant officials, including the Secretary-General of the OECD, Angel Gurria.

Stepping backward in rankings-

During the last 10 years, the Korean economy has been at a standstill according to some major economic indicators. Although Korea did make progress in terms of absolute figures, it fell behind when in the rankings of the OECD.

GDP, which indicates the scale of economy, went up one step from 10th in 1996 to 9th in 2004. If non-affiliated nations are included, however, Korea only ranked 11th in 2004, following China and India. In addition, in the last year, Korea has fallen to 12th, outstripped by Brazil.

Based on GDP with PPP applied, the GDP of Korea has increased from $13,843 in 1996 to $20,907, but decreased from 22nd to 23rd in rank.

Prices, which affect people’s living the most, went up.

Setting its rate in 2000 as 100, the consumer price index has increased from 86.4 in 1994 to 114.7 in 2004 over the last ten years. Among other member countries, Korea also ranked 7th for consumer price index, which skyrocketed from 23rd.

Korea has never lost its first place in working hours per year since it entered into the OECD, which means Korean workers still work for the longest hours.

Song Won-ho, a vice director of the Korea Institute for International Economic Policy (KIEP), attributes Korea’s backwardness in economic indicators to the aftermath of the economic crisis in 1997. The gap between the economic crisis was so huge that Korea is now barely on its way to return to its original pace.

Gain And Loss-

It is difficult to evaluate the gain and loss of entering into the OECD only with some economic indicators.

It is the benefits that we have authorities when we voice for diverse international issues, with increased national credibility whereas Korea had to give up some advantages allowed to developing countries and also took a risk of having an economy vulnerable to international factors.

Bae Sang-geun, a researcher of Korea Economic Research Institute (KERI), said “Most people entertained an illusion of ‘advanced country Korea’ in the situation of lacking overall capacities compared to other developed countries. Korea tried to drive unrealistic innovations, sticking to global standards.”

Regarding this, an official who was charged with the task, said, “It is not true that the winter doesn’t come because you don’t have a coat.” Therefore, you can blame the lack of preparation, but the opening of the domestic economy was inevitable.

Some criticism associates Korea’s entering into OECD with the economic crisis, which happened the following year. However, Kwon Tae-shin, Ambassador to the OECD, said it was just a coincidence.

The remaining questions-

Bae said, “Korea was only concerned about entering the OECD early. It doesn’t seem to care about its active role as a member country.” He pointed out, “It is important to put much effort to enhance national prestige within the international organizations.”

There is also an opinion that Korean economy should be substantially upgraded in its nature. “OECD aims at the advancement of the worldwide economic policy and the pursuit of maintaining economic growth following global trend. Korea has to fully grasp this idea and use this as a benchmark,” the head of economy division of Hyundai Research Institute Yoo Byung-gyu said.