11% Export Growth Will Allow for $20,000 in Per Capita Income by 2010

To achieve the 20,000 dollars level of per capita income for Koreans by 2010, the nation should increase its exports 11% every year. According to an analysis, Korea should try harder to facilitate exports, which has posted below 10% of annual growth in the past years, by forming a Free Trade Agreement (FTA) and creating a business-friendly environment, to name a few.

The Korea International Trade Association (KITA) released a statement yesterday. “To begin an era of per capita income of 20,000 dollars by 2010, the nation should secure an annual growth rate of at least 11% for eight years or reach 380 billion dollars in export volume.”

By relating the amount of exports to GDP, if Korea`s exports continuously contribute 34% to the GNP until 2010, the outbound trade is estimated to grow by 10% annually, which will help to reach the goal of 350 billion dollars in exports.

If the contribution of exports to the GNP increases to 37%, the annual growth rate for exports will be 11% and therefore by 2010, exports will be worth 380 billion dollars, while a 40% contribution to the GNP will be worth 410 billion dollars in exports, and a 45% contribution will be worth 460 billion dollar exports.

“At a time when the domestic market-oriented growth strategy is showing limitations, exports are sure to be emphasized,” pointed out the report, released by KITA. It also indicated that “Ireland`s successful achievement of 20,000 dollars in per capita income in eight years was attributable to export-focused policies.” The export ratio in Ireland has risen from 50.8% in 1989, when per capita income reached 10,000 dollars, to 66.5% in 1996, when a 20,000 dollar- income was created.

“Export-driven growth would not be easy when developing countries, such as China, emerge as competitive rivals,” said Park Gyung-jin, researcher at KITA. “In order to achieve the annual export growth rate of 11% for the next eight years, it is urgent for us to sign FTA`s with major partners while creating a more business-friendly environment by enhancing flexibility in labor markets as well as deregulation.”

Mi-Kyung Jung mickey@donga.com