Sliding Economic Ranking
Korea Inc. Should Raise Global Competitiveness
No one is happy to read news that Korea's global economic ranking has continued to slide. But we have to recognize that the country has been losing its competitive edge to the so-called BRICs economies ― Brazil, Russia, India and China. It's time to wake up to the stark reality that the ranking is likely to go down further if the nation fails to work out a new strategy to find a new growth engine.
According to a World Bank report, South Korea's gross domestic product (GDP) totaled $929.1 billion in 2008, the 15th highest among 186 countries. Its ranking was one notch down from 14th in 2007 and four positions down from 11th in 2003. It is disappointing that the country has been overtaken by the BRICs over the last five years. Last year, Australia outgrew Korea. What's gloomier is that the International Monetary Fund (IMF) predicted in April that Korea will drop to 16th in 2009 and 2010 before reclaiming the 14th place in 2011.
Even Goldman Sachs forecast last year that the Korean economy would plunge to 19th in the world by 2050, outpaced by developing economies such as Indonesia, Turkey, and the Philippines. It also said China will become the world's largest economy in 2050 with a GDP of $70 trillion. The prediction should serve as a wakeup call for the Korean economy that might lose its chance of joining the ranks of advanced countries forever.
It is necessary to take a close look at the rapidly changing global economic landscape. China emerged as the world's third biggest economy last year, while Brazil and Russia advanced to eighth and ninth, respectively, and India took the 12th position. This indicates that South Korea has shown poor performance, compared with the newly emerging economies.
Of course, Korea's sliding ranking was attributed to the steep decline of the won's value against the greenback in the wake of the unprecedented global financial and economic crisis. GDP, a broad measure of goods and services produced in a country in a year, is usually calculated in terms of the U.S. dollar. But, no one can deny that the fundamental problem is the country's loss of international competitiveness. Under the rule of former President Roh Moo-hyun, the nation recorded an average annual growth rate of 4.4 percent, lower than the global average of 4.6 percent.
Another factor is Korea's excessive reliance on exports for economic growth. We have to realize that the export-oriented growth strategy of the past decades may seem no longer viable as China and other developing countries supply cheaper products to world markets. That is, Korea is sandwiched between advanced and developing economies because of a dwindling technological breakthrough and soaring production costs.
The only way of improving the country's competitiveness is to develop up-to-date technologies and promote management innovation in order to churn out quality products with lower prices. It is urgent to beef up telecommunication, biotechnology, renewable energy, environmental technology and space development as the nation's core industries to boost its growth potential.