Korea's economic competitiveness sags in survey
Key changes that contributed to the change were increasing fiscal deficits and loss-plagued pension systems.
According to the International Institute for Management Development (IMD), Korea ranked 27th among 63 countries in its economic competitiveness rankings, down four notches from last year.
Korea lost ground in economic performance, government efficiency and business efficiency. However, it gained ground for infrastructure.
Government efficiency was demoted due to fiscal management and tax policies. Fiscal management competitiveness fell six notches.
Korea's competitiveness in relation to pension systems dropped from 35th to 50th.
The need for reform in several pension systems has become an issue in recent years, and President Yoon Suk-yeol promised reforms in his presidential campaign.
The National Pension Service's reserves of 920 trillion won could be depleted by 2055 as Korea's population continues to age.
Other major pension systems including for civil servants, the military and teachers are in similarly troubled shape.
Another area that saw a drop was fiscal soundness, which fell three notches.
Taxation policies fell three notches to 60th place.
Government policy adaptation to economic changes ranked 46th, down three notches, while policy transparency was down two notches to 38th place.
While capital market accessibility increased from 27th to 25th place, foreign labor employment fell two notches to 29th place.
Korea’s economic performance fell four notches to 22nd place; government efficiency fell two notches to 36th; business efficiency fell six notches to 33rd; and infrastructure was up a notch to 16th place.
Within economic performances, international trade rose three notches while inflation rose two. However, domestic economic competitiveness fell seven, international investment fell three and employment fell one.
In the business efficiency category, productivity and labor markets fell five notches each while business activity fell eight.
In the infrastructure competitiveness category, technology and science as well as welfare and environment dropped in rank, while basic infrastructure and education rose.
In the survey, Demark ranked first in overall competitiveness, followed by Switzerland and Singapore. While the U.S. ranked 10th, China ranked 17th and Japan 34th.
BY LEE HO-JEONG [firstname.lastname@example.org]