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Korea's Economic Growth Prospects Under the Income-led Strategy
Region: Asia
Theme: Economics
Location: Korea, South
Published July 30, 2019
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Korea is pursuing a bold strategy in an effort to achieve a paradigm shift that results in a fair economy. Some of its major initiatives – notably sharp increases in public employment and social spending and a hike in the corporate income tax rate – run counter to trends in the OECD area. In addition, the sharp hike in the minimum wage appears to have slowed employment growth. The success of the government’s economic strategy depends on raising productivity from its relatively low level compared to the most advanced countries. This in turn requires a comprehensive strategy to narrow substantial productivity and wage gaps between large firms and small and medium-sized enterprises and between manufacturing and services. Narrowing such gaps would enable Korea to achieve inclusive growth.

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