[FORUM]Korea advancing against time

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[FORUM]Korea advancing against time

Pundits are forecasting that Korea's gross national income per capita will reach $10,000 this year. As things are now, this year's GNI per head will likely be less than $10,000. The figure hit the record high of $11,385 in 1996 and then plunged after the financial crisis in 1997.

Two questions immediately come to mind. First, how many years will it take for Korea to become an "advanced country?" Second, how many years are left for Korea to take advantage of the opportunities that would make it one of these countries?

Both questions are difficult, but we can do some simple arithmetic. How many years will it take to become a so-called advanced nation? How long will it take to increase our per capita gross national income to $20,000? It will take 14-15 years to double our per capita GNI if the nation's annual GNI grows 5 percent every year without exception. After 2016, per capita GNI would be higher than $20,000. In addition, the rate of population increase must also be taken into consideration.

Korea's population is increasing 0.6 percent annually, but the rate of population growth has decreased over recent years. In 2015, the rate of population growth is expected to have dropped to 0.1 percent annually. Therefore, in Korea's case, the rate of population increase is not an overriding factor in calculating how long it will take per capita GNI to double.

If the annual rate of price increases is around 3-4 percent, only 1-2 percent of economic growth could count toward the 5 percent annual income increase. The conversion rate of the won against the dollar presents other problems. We know empirically that when the nation's annual income rises, the value of the nation's currency increases. If the won's value against the dollar rises, national income, which is expressed in dollars, increases. There is no reason to control the currency exchange rate under this situation.

Now the answer to the second question. First of all, age distribution of the population comes to my mind. Korea will become an aged society in 2019, when the number of people over 65 accounts for more than 15 percent of the population. This will dampen the South Korean economy.

That can be one of the guidelines. Unless Korea's GNI per capita reaches $20,000 before the year 2019 it will be difficult for the nation to become an advanced country.

What if Korea suffers deflation like Japan? How will the North affect our economy? What if an economic crisis hits again? In the event of another economic crisis, the exchange rate would fluctuate and thousands of dollars would be wiped off the GNI ledger. We experienced this during the financial crisis that rocked the nation beginning in 1997.

The calculations above are rough estimations. But one thing is for sure: Time is not on Korea's side.

We have a time limit for becoming an advanced nation, 2019, the year Korea becomes an aged society. That will be the end for ambitions to become an advanced nation.

But there are so many factors that can influence Korea's reaching a per capita GNI of $20,000. The economy must be stable and the exchange rate must be stable.

If actual economic growth is maintained at 5 percent to 6 percent annually, reaching a GNI per capita of $20,000 would not be difficult. But that is a fantasy.

That is why no one believes the campaign pledges of the presidential candidate who promises to raise the GNI per capita to $30,000.

It is useless to calculate exactly when Korea will reach a GNI per capita of $20,000 when the figure is now only at $10,000.

Let's think again. We do not have many chances to become an advanced nation but we are convinced that time is on our side.

We will not become an advanced nation, considering the way things are going now, within the time limit that we are facing.

* The writer is an editorial writer of the JoongAng Ilbo.

by Kim Su-gil

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