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Can Korea join `40-80 club` of rich and populous countries?

Can Korea join `40-80 club` of rich and populous countries?

Posted January. 01, 2013 04:53,   


A Dong-A Ilbo reporter visited Detroit, the Motor City of the U.S. where General Motors is based, on Dec. 12. Banners reading “For lease” were seen hanging at many places across the city.

Detroit once enjoyed a massive boom in the heyday of the U.S. auto industry, but signs of vitality were hard to find across the city landscape.

The reporter visited streets of Sand Hill in Silicon Valley, California, several days later. Rent at offices there went for 2,500 U.S. dollars per 3.3 square meters, the second highest in the U.S. after New York City, but many companies are seeking to move to the tech capital.

The contrasts between the two cities give clues as to what path the Korean economy should take. If traditional manufacturing industries including car making provided a growth engine in the period when the U.S. went from 20,000 dollars in per capita income to 30,000 dollars (1988-1997), innovations in IT and high-end service sectors offered new growth momentum when the country raised its average income from 30,000 dollars to 40,000 dollars (1998–2004). Experts say that had the U.S. not constantly replaced older growth engines with new ones, the U.S. economy would no longer have been the world`s strongest.

The U.S. is a member of the "40–80 club, or a group of countries whose per capita incomes exceeded 40,000 dollars and population topped 80 million. Korea achieved average income of 20,000 dollars and a population of 50 million last year, and became the world`s seventh country to join the “20-50 club.”

Analysts say that if the Korean economy is to take a leap forward to join the 40-80 club in going beyond per capita income of 30,000 dollars, the next five years will be the most important period.

Korea is facing tough challenges both internally and externally. The working population, which serves as a locomotive of growth, will start to decline after 2017. The electronics and automotive industries including cars, home appliances and IT that are spearheading exports, are being closely tailed by competitors like China.

Dong-A and Hyundai Research Institute analyzed member countries of the 40-80 club. The study found that whenever such nations faced a crisis in growth momentum, they secured new growth engines through innovations in industrial structure and reform of social systems to overcome stagnant population growth, and took big leaps to join the ranks of the world`s richest countries.