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Korea's Economic Achievements and Prospects
Author: Pyo Hak-kil
Region: Asia
Location: Korea, South
Published May 25, 2011
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According to a preliminary estimate by the Bank of Korea on 4 January 2008, Korea’s per capita gross domestic product (GDP) and per capita gross national income (GNI), which adjusts GDP for changes in terms of trade, exceeded $20,000 by the end of 2007. This was achieved mainly through the rapid appreciation of the won from a rate of 1,011 won per dollar as of end of 2005 to 900.7 won per dollar at the end of October 2007, as the growth rate of real GDP in 2007 was estimated to be less than 5 percent. Korea appears to be the only formerly colonized nation that has thus far surpassed the per capita income level of $20,000.

Korea’s per capita GNI passed the $10,000 mark in 1995, when it reached $11,432, but plummeted to $7,355 in 1998 after the fi nancial crisis. It started to recover in 2000, when it reached $10,841. It was during the Roh Moo-hyun government that per capita GNI increased from $11,497 (2002) to $20,000. Thus, the Roh government must be credited with this remarkable achievement.

In addition to growth in per capita income, there were other economic achievements. They include price stability and a surplus in the trade balance, which are often main macroeconomic policy targets for any open economy. The Roh government should also be credited for initiating free trade agreements with Japan, the United States, and the European Union.

In response to President-elect Lee Myung-bak’s claim that Korea must recover from economic stagnation, President Roh argued that there was nothing wrong with the current state of the Korean economy and, therefore, that there is nothing to recover from. Nevertheless, the issue of economic recovery or revitalization was a dominant one throughout the presidential campaign in 2007, and the major opposition party candidate, Lee Myung-bak, early in his campaign seized on this public perception and managed to win election despite a great deal of negative campaigning and personal scandal.

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