By Lee Hyo-sik
Staff Reporter
The Lee Myung-bak administration plans to open its currently "underdeveloped" medical, educational and other high-value services sectors wider to foreigners in 2010.
The move comes as Asia's fourth-largest economy faces a substantial fall in economic growth potential in coming years, with domestic demand for the manufacturing industry close to saturation while the nation remains far behind advanced economies in the service sector.
McKinsey & Company recently commented on Korea's underdeveloped services industry, saying it accounts for 67 percent of the nation's total added value, substantially lower than 84 percent in the United States and 75 percent in Germany.
It projected that with its current manufacturing-centered and outward-oriented economic structure, Korea will expand by an annual average of 3.1 percent from 2010 through 2020, with its per-capita gross domestic product (GDP) reaching only $27,800.
But if the country increases services sector productivity and promotes innovation, the economy could grow by 5.6 percent annually, pushing up the per-capita GDP to $37,000 in 2020.
Against this backdrop, the Ministry of Strategy and Finance plans to report a set of measures aimed at generating jobs and upgrading Korea's economic structure to President Lee Wednesday.
"Our top priority next year is to generate high-quality jobs and foster new growth engines. We will make every effort to advance the local services industry, and provide tax breaks and other support in a bid to promote research and development activities.
He said the government had focused on bolstering domestic demand, improving the current account balance and expanding an economic safety net this year in the aftermath of the worldwide economic downturn.
"But in 2010, we will do everything we can to prop up the sluggish job market through the revitalization of the economy, enhance social and economic structures, and upgrade Korea's standing on the global stage."
Among others, the government places top priority on generating jobs next year and to do so, it plans to advance the services industry here.
Over the years, the government has introduced a series of measures, including deregulations and tax cuts, aimed at enhancing the competitiveness of the services industry. The moves have yet to show positive results.
In recent months, President Lee has promoted the lifting of entry barriers to medical, legal, educational and other highly-protected service areas in an effort to foster competition and force service providers to offer high-quality services at lower costs.
McKinsey suggested that Korea should come up with a comprehensive services productivity program to innovate in five areas: government, finance, wholesale and retail, transportation and communication, saying they created a larger number of jobs than the manufacturing industry in 34 countries.
It also said the government should remove unnecessary red tape in the sector to foster innovation and creativity, which are the keys to increasing productivity.
leehs@koreatimes.co.kr
