National Test, Per-Capita Income over $10,000

In order for Korea to become a developed country, it should overcome the possible crisis that will come after passing the 10,000 dollar point of per-capita income, according to a report.

The Korea International Trade Association (KITA) said in its report on May 18 that most nations whose per-capita income is 10,000 dollars or higher went through an economic crisis and overcame it through drastic restructuring and efforts to find a new driving force for growth.

The KITA report said that the reason for such a crisis is that the past forces for growth reached their limits.

In the case of the Netherlands, since its per-capita income surpassed 10,000 dollars in 1971, the country faced negative growth for two consecutive years in the 1980’s due to rising unemployment, still notorious in the country, conflicts between labor and management, and surging wages. The country, however, successfully overcame the crisis by containing increased wages through labor-management agreements, downsizing social security, and privatizing public corporations.

Finland, whose per-capita income exceeded 10,000 dollars in 1973, also went through a financial crisis in the early 1990’s, but the country recovered through the restructuring of public corporations, reducing social welfare, and rearing a successful IT industry.

On the other hand, Argentina failed to do what the Netherlands and Finland has done because populism, a reluctance for restructuring, and politically influential labor-management relations impeding its advance towards that of a first world economy.

The KITA report stated that if a country becomes a developed nation after passing its per-capita income of 10,000 dollars, peaceful labor-management relations, continuous efforts at restructuring, and development of a knowledge-based society are required.

smhong@donga.com