Cost of Gov't
The Federation of Korea Industries (FKI) said on April 29 that Korea’s total regulatory costs are estimated at 158.3 trillion won (US$147.5 billion), equivalent to 11.1 percent of its GDP, as of 2013. This amount, which is 3.6 times the corporate tax paid in 2013 and 7 times the earned income tax paid in the same year, means that each Korean paid 3.15 million won (US$2,937) for regulations.
The concept of regulatory cost can be defined as the difference between the actual national income and the national income that can be achieved in the absence of market regulations. In other words, it can be regarded as the opportunity cost that has to be paid in return for the benefits of the regulations.
The FKI added that the regulatory costs by industry were 93.6 trillion won (US$87.2 billion) in the service sector and 49.2 trillion won (US$45.9 billion) in the manufacturing sector. The values by industry were calculated by multiplying the added value ratios of the respective sectors by total regulatory costs.
According to the FKI, Korea recorded a market regulation index of 1.88 in 2013, ranking fourth among the 31 countries it analyzed at this time, while the OECD average was 1.46. “Korea’s GDP increases by 1.6 percent, and 299,000 new jobs are made available on the condition that Korea’s market regulation index is improved to the OECD average,” it remarked.