Misleading Economic Statistics

By Lee Che-un

A few weeks ago, newspapers in Korea were bemoaning the fact that the country's gross domestic product ranking had slipped to 15th in the world.

More recently, I read that the per capita GDP had fallen to below $17,000. A nonchalant reader may conclude that the Korean economy is simply slipping, but as is the case with most news transmitted by the Korean media, both figures are somewhat misleading and do not reveal the entire truth.

First, the misleading aspects. Every time Korea talks about being the 13th-, 14th- or 15th-largest economy in the world based on GDP, it is trying to convey the impression that its economy is indeed the 13th, 14th- or 15th-best performing economy in the world. Savvy economists, and anyone else who knows a thing about economic statistics, will instantly realize that that is not the case.

A nation's GDP figure is used purely for comparative purposes (as in comparing current numbers to that of the past year, several years ago, etc.) to determine whether a nation's economy has grown or contracted. Any economist will tell you that the real key statistic in determining an economy's performance is its per capita GDP.

Strangely, when it comes to the nation's GDP, you can always find its ranking readily available, whereas with the per capita GDP, you can search high and low and never read about where Korea stands in the world (at least in the Korean media).

And I'll tell you exactly why. Korea's per capita GDP hovers around 48th, 49th, or 50th in the world, depending on which think tank's data you want to believe. In any case, the ranking is not only unflattering, but more damagingly, it underscores the stark reality that Korea is not even close to becoming an economically advanced nation. An equally sobering truth is that the citizens of at least 47 nations, at least 33 of which have lower national GDPs than Korea's, have greater incomes than Koreans.

The Korean media continues to trumpet the fact that the nation's GDP ranking is somewhere between 10th and 20th in the world, trying to stir up the belief among citizens that we can become an ``advanced nation." Sorry to burst the bubble, but strictly economically speaking, Korea's economy must perform a whole lot better, and the per capital GDP ranking must rank at least in the top 20 before starting to talk about being an ``advanced nation".

Now, if Korea ― like Sweden, Denmark, and Switzerland ― wants to become an ``advanced nation" culturally, with highly sophisticated systems of social welfare, education and health care, then that is an entirely different matter. Such a goal is well within reach, assuming the Korean government does want it.

You can go ahead and be happy (or sad, depending on your perspective) that Korea's GDP is 15th in the world, despite the fact that such a statistic alone doesn't tell you anything meaningful. But as is the case with anything, if you want to know the real truth, you need to heed the words of Anderson Cooper, the host of the popular CNN show ``AC360," and "dig deeper."

The writer is a financial consultant in Yongsan, Seoul. She can be reached at bogartyankee@yahoo.com.