Ignoring the Korean economy`s low growth syndrome

Hyundai Research Institute said in a report that Korea will need 15 years to reach per-capita income of 30,000 U.S. dollars, if the number of years to be counted starts from 2007, when the country achieved 20,000 dollars in average income. This is based on the assumption that the growth rate for per-capita income remains below 3 percent. This is a serious setback given that most advanced economies took only eight years on average to reach the same level.

The third quarter this year was the sixth straight with no growth for the Korean economy, a record streak since such statistical information began to be compiled in 1970. The economy is struggling because of sluggish exports, production and investments due to the global economic crisis. Since Korea is highly dependent on the global market, economy leaders should do their utmost to allow the country to survive the crisis by improving the structure of the Korean economy. In addition to securing growth potential by increasing human resource investment, they must make the economy more flexible and friendlier so that foreign companies as well as domestic corporations can more comfortably invest even under such a difficult situation.

Korea`s presidential candidates, however, are trying to ignore the low growth problem and instead have announced vague slogans such as "economy democratization" and welfare. Cases in point are the slogans "Creative Economy" of Park Geun-hye, "Fair Economy" of Moon Jae-in, and "Innovative Economy" by Ahn Cheol-soo. Their pledges have no clear ideas on how to escape the low growth swamp. If they blame the country`s economic trouble on external variables such as the uncontrollable global economic crisis and emphasize welfare distribution, the low growth situation will worsen and Korea might need more than 15 years to reach per-capita income of 30,000 dollars.

The candidates` pledges to care for the poor and needy through "welfare without growth" will prove to be worthless. Such promises are like a mother who says she will raise spending money for her family and buys an expensive winter coat as a present, but fails to come up with ideas to make money when cash gets scarce. Many small businesses will go bankrupt and numerous college graduates will not have jobs. The government will collect less tax due to low growth, making the expansion of welfare spending impossible. Class conflict between the haves and the have-nots will erupt. The three presidential hopefuls should realize that they cannot solve the difficulties that the poor and weak are facing unless they break the vicious cycle of low growth.