[FOUNTAIN]Used goods signal health of economy

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[FOUNTAIN]Used goods signal health of economy

We all know that GDP stands for Gross Domestic Product. How about RDP? The term means, “Re-use Domestic Products,” the total sum of money spent on buying used goods. Most likely, the Japanese came up with the term, which cannot be found in dictionaries, for Japanese economists use it most.
In general, the RDP rises as the lifespan of manufactured products increases and consumers are educated in recycling. If we sell used items to those who need them at an attractive price, both sides benefit from the transaction.
Recycling and reusing also help save resources. Consumers who buy secondhand clothes for the children, read used books and drive used cars contribute to RDP.
Frugality and prudent spending adds to RDP.
When the RDP growth rate is high, it means the country effectively recycles and reuses its resources. Therefore, RDP often serves as an indicator of sustainable development.
However, RDP, no matter how large, is not reflected in GDP. Brisk secondhand goods transactions are not factored into economic growth. The reasoning is simple. Used goods have none of the added value that a newly made product has. Transactions in used goods are a mere transfer of ownership, not a productive activity.
Sometimes manufacturers suffer from consumers’ inclination towards used goods because it could lower demand for new products.
But the gains realized by used goods dealers and consequent employment by businesses would be reflected in GDP. Resources saved by secondhand goods could be used in producing other goods, and the money saved could be invested elsewhere.
Koreans are increasingly interested in recycling and reusing. Large used goods dealers have opened up nice shops. Samsung Economic Research Institute predicted in 1998 that the secondhand goods trade would be a promising business model.
Each district office in Seoul runs a recycling center, but they have a shortage of supply. In the past, there were always a lot of people willing to get rid of old items in order to buy new things.
But the economic slump has affected consumer psychology. What if the contraction in RDP is a prelude to a long-term depression of domestic demand?


by Nahm Yoon-ho

The writer is a deputy city news editor of the JoongAng Ilbo.
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