Korean economy loses competitiveness

Korea is rapidly losing its luster as a competitive and innovative economy in the world as the country continues to slide in international growth rankings.

The U.S. Central Intelligence Agency’s World Factbook showed that Korea’s ranking in terms of gross domestic product growth fell 60 levels over the last two years, dropping to 117th place out of 189 countries last year.

Korea grew 2 percent in 2012, and is expected to face a ranking standstill this year as it is projected to have a similar growth range to last year. The Bank of Korea forecast Asia’s fourth largest economy to grow 2.8 percent on the back of fiscal spending and a rate cut in May.

Korea ranked 57th in 2010 when its economy grew 6.3 percent, and dropped to 102 as its growth declined to 3.6 percent amid the global economic downturn.

Also, the country’s ranking in terms of competitiveness measured by the World Economic Forum’s Global Competitiveness Index declined six levels, reaching 25th place out of 148 economies this year, the WEF said.

The index measures a country’s economic efficiency, innovation and maturity.

Korea only saw its ranking climb in the category of macroeconomic policy under the Global Competitiveness Index, and the rest, including infrastructure, private sector innovation, elementary and higher education, and labor and financial market efficiency declined.

Hong Kong, Singapore and Japan ranked higher than Korea in the WEF ranking, while China is catching up fast. China’s WEF ranking remained unchanged at 29.

Last May, the Switzerland-based International Institute for Management Development’s ranking for Korea in terms of economic competitiveness remained unchanged at 22 among 60 countries in 2013 for the third straight time.

Korea earned high marks for having a high education level, skilled workforce and reliable infrastructure.

However, it received poor scores in the areas of cost of living, tourism and direct investment flows. Its weaknesses also included high tariff barriers, a lack of efficiency in business accounting practices, and a poor education environment for primary and secondary students, the IMD noted.

Hong Kong and Singapore were above Korea in the IMD ranking, while China overtook Korea.

The Korean government acknowledged Korea’s economic weakness, and said that it would have to make up for its falling competitiveness by focusing on improving its policies concerning the job market and the development of a “creative economy.”

By Park Hyong-ki (hkp@heraldcorp.com)