Don’t have overly pessimistic views
The recent report card on the Korean economy is enough to make you worry. Three percent growth cannot be guaranteed, exports are sluggish, and household and government debt is growing. Some tend to conclude that it is a result of the failed economic policies of the Park Geun-hye administration, compared to the economic growth during the Kim Dae-jung and Roh Moo-hyun administrations. However, there needs to be more fair standards and objectivity to make such comparisons.
Comparing the growth rate directly may not be so fair. During the 10 years under Kim and Roh, the Korean economy grew an average 4.8 percent annually, considerably higher than the 3.1 percent average of the eight years under Lee Myung-bak and Park. But the Korean economy is highly dependent on exports, and global economic conditions need to be taken into consideration. For the last eight years, the Korean economy has maintained growth close to the global average of 3.2 percent. During the Roh administration, the Korean economy grew by an average 4.5 percent annually, when the global average was 5.1 percent.
Exports should also be compared to other countries’ status. In 2015, Korean exports decreased by 8 percent, but worldwide exports went down by 11 percent, according to the World Trade Organization. As a result, Korea became the sixth-largest exporter, surpassing France.
During the Kim and Roh administrations, the portion of corporate income increased by 5.1 percentage points in 10 years, while the portion of household income decreased by 5.6 percentage points, and 220,000 more people were employed annually. However, during the Park administration, the portion of household income went up by 1.1 percentage points, and 420,000 more people became employed, marking the highest employment rate of 65.7 percent. Income distribution improved as well, and the Gini coefficient, which went up to 0.292 at the end of the Roh administration, fell to 0.277.
Of course, the Korean economy is undeniably struggling. It is true that we face the challenges of an aging population and weakening competitiveness in core industries. In order to overcome these difficulties, we need more structural reform to enhance the economy’s fundamentals, nurture the services sector and new industries, and create more jobs rather than temporary economic boosters. Ungrounded disparagement and criticism without alternative plans based on unreliable data and interpretation won’t help solve problems.
*Hanyang University professor of economics and finance