Koreans Earn Less, Spend More Abroad Than Japanese
By Kim Jae-kyoung
Staff Reporter
Although Korean's earn much less than Japanese citizens, Korean's spend more during overseas trips, with the ratio of Korea's overseas travel expenditure to GDP reaching nearly four times that of Japan's.
According to the Bank of Korea (BOK), Korea's overseas travel expenditure accounted for 2.2 percent of the nation's gross domestic product (GDP) in 2007, well above the 0.6 percent for Japan.
In 2007, Koreans spent a total of $20.89 billion, compared with Japan's $26.4 billion. Given that the size of Japan's GDP is four times that of Korea's GDP, Koreans' overseas travel expenditure is very high considering their income.
The central bank said that key culprits behind Koreans' high overseas travel expenditure were an increase in the number of people traveling abroad and overseas educational spending.
``More and more teenagers are studying abroad due to the poor public education system, which drove up overseas travel expenditure and deteriorated the service account,'' BOK senior economist Lee Sang-hyun told The Korea Times.
``Japan has a better education system and it is the key reason why fewer Japanese students go abroad. The soaring overseas education expense is one of the main factors hurting the current account balance,'' he added. ``In addition, more Korean people have traveled abroad with improvement in income levels.''
Over the past few years, Korean parents have scrambled to send their children abroad due to a loss of faith in the Korean education system, causing snowballing losses in the service account.
Korea's travel account posted a deficit of $15.09 billion in 2007, widening the service account deficit to $20.58 billion, sharply up from $2.85 billion shortfall in 2000.
During the same period, Japan saw its travel and service account deficits fall to $17.1 billion and $21.2, respectively, from $45.85 billion and $28.51 billion.
The central bank said that the decreases in Japan's travel and service account deficits were mainly due to an increase in the number of foreigners coming to Japan, powered by the Japanese government's efforts to attract foreign investors.
Expansion in the service account deficit has halved the Korea's current account surplus. The current account surplus came to $5.95 billion in 2007, down from $12.25 billion seven years ago.
The comparable figure for Japan, on the other hand, jumped by 80 percent to $210.53 billion last year from $119.45 billion in 2000 thanks to a rise in the income account and a reduction in the service account.
The neighboring country's income account recorded a surplus of $138.6 billion in 2007, up from $60.3 billion seven years earlier. It was way above the Korea's income account surplus of $770 million last year.
``Korea should focus more on overhauling the public education system and travel infrastructure to improve the nation's balance of payments,'' Lee said.