Widening Gap

The economic gap between South Korea and Japan is expected to be widened again.
The economic gap between South Korea and Japan is expected to be widened again.

 

The Hyundai Research Institute (HRI) said on March 26 that the respective ratios of South Korea’s and Japan’s GDPs to the global total GDP had been 0.6% and 9.8% in 1980 and were 1.9% and 6.3% in 2016. The research institute continued to say that the gap between the two countries can be widened again though as the potential economic growth rate of South Korea is on the decline and that of Japan is on the rise based on its economic stimulus policy.

According to the institute, the value added ratio each country accounts for in its final demand edged down from 53.6% to 51.8% between 2000 and 2014 in the case of Japan whereas it dropped from 45.1% to 40.2% during the same period for South Korea. In addition, South Korea’s international competitiveness in the field of science and technology based on the International Institute for Management Development’s data fell from third to eighth in the world between 2009 and last year while Japan ranked second in both years. South Korea ranked second in 2005 but fell to 15th in 2016 on the list of technological competitiveness of the International Institute for Management Development. Japan ranked 10th on the same list in 2016.

South Korea lags much behind Japan in terms of its response to the fourth industrial revolution, too. In a recent survey, the respective countries took the 25th and 12th spots with the latter surpassing the former in labor market flexibility, education system, social overhead capital and legal protection.

South Korean enterprises’ operating profit-to-sales ratio decreased from over 5% to less than 5% between 2010 and 2015 whereas that of Japanese enterprises rose from less than 3% to slightly less than 4%. During the period, the South Korean and Japanese companies’ sales growth rates showed little difference.

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