Focus more on quality

Quantitative growth is not boon to people

The nation’s per-capita gross national income (GNI) hit an all-time high of $22,489 last year. However, individuals can hardly feel happy with the figure as their living standard is not improving. What’s wrong with it? Is it a statistical error or a structural economic flaw?

The nominal GNI rose by 9.3 percent in 2011 from a year before, according to the Bank of Korea. The strong local currency against the U.S. dollar played a key role in boosting the value of national income. In fact, the won gained 4.2 percent.

It would be better to have an inflation-adjusted figure to measure income growth more accurately. The real per-capita GNI showed a mere 1.5 percent increase year-on-year. This figure is in contrast to the nation’s real gross domestic product (GDP) that rose by a modest 3.6 percent.

The disparity indicates that the income growth was unable to catch up with economic expansion. In other words, individuals could not enjoy the proper share of economic fruits. The real problem lies in the structural weakness of the Korean economy.

The nation has displayed a widening gap between exports and domestic demand. Its economy has become more export-oriented, while local consumption has been stagnant. Only increasing exports can have little effect of creating more jobs or bringing higher income.

Firms affiliated with family-controlled conglomerates have made more profits from selling more products abroad. But individuals have been allowed to pluck only low-hanging fruits. This has contributed to deepening social polarization.

Another problem is a slowdown in the nation’s long-term growth potential. It will create a vicious cycle of a production cut, lower income and falling consumption. Policymakers should join hands with businessmen to work out far-reaching measures to boost growth potential, even though it is hard to do so.

It is equally important to put structural changes to the economy in order to create a balance between exports and local consumption. It’s time to focus more on quality than on quantity. Only then can individuals get their fair share of the economic pie. <Korea Times>

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