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How to reach 30,000 dollars in per capita income

Posted November. 26, 2013 07:55,   


Korea`s per capita income is estimated to reach a record 24,000 U.S. dollars this year, up from 22,700 dollars last year. Per capita income topped 20,000 dollars in 2007 but fell to the 10,000 dollar range in the wake of the global financial crisis. Korea`s economy is forecast to grow nearly 3 percent this year, while the won has strengthened sharply, pushing up the per capita income.

However, concerns are rising that Korea may have fallen into a "semi-developed country trap" since per capita income has remained in the 20,000-dollar range for the seventh year. Korea experienced rapid growth as it endeavored to catch up with advanced countries` economic model but the economy has been stagnant without being able to find new growth engines after entering the ranks of semi-developed nations. Brazil and Argentina are countries whose economies have stagnated after having been well off in the 1960s and 1970s. It took Japan five years to start from 20,000 dollars to 30,000 dollars, and three years to top 40,000 dollars. Amid low global growth, worries are that growth potential will decline. Gloomy prospects are looming that Korea could fall down before entering the ranks of developed nations.

Average income level increased but the livelihoods of low-income people have aggravated as they are saddled with higher debt. Income disparity has widened as a result. The top 20 percent of income class were earning 5.05 times more than the bottom 20 percent this year compared to 4.98 times last year. Low-income households` debt increased from a year ago.

Experts predict Korea`s per capita income would reach 30,000 dollars in 2016 at the earliest and 2020 at the latest, on condition that potential growth rate stays at the 4 percent level and exports and demand rise within a virtuous cycle. However, large companies are having difficulty in finding places to invest even as they have money and smaller companies are facing limits in growing further. Factors hampering investment should be eliminated. R&D using advanced science technology should be expanded and industrial upgrade should follow.

Low birth rate and rapid ageing are leading to decreases in economically active population, which is a threat to lowering growth potential. There needs to be social and cultural changes that allow the utilization of female and aged population and expansion of creative education. There are nine countries in the world whose per capita income topped 40,000 dollars and entered the ranks of advanced countries after their population surpassed 10 million. These countries share fiscal stability, development of service industry, high birth rate and higher transparency.