According to the Ministry of Strategy and Finance (MOSF) on March 2, OECD announced the results of its Going for Growth report last month. South Korea occupied 4th place among 33 OECD countries in Product Market Regulation (PMR) indicators. It means that the nation is currently rated number four in the extent of state control and existence of barriers to entrepreneurs, trade, and investment.
Updated every five years since 1998, the OECD PMR indicators are aimed at making it easy for countries to compare regulation conditions for product markets and information on market structures. In 2008, the country ranked 6th among 27 nations.
An official at MOSF explained, “Our current regulatory level is similar to that of 2008.” The official continued by saying, “But other countries such as Greece and Portugal have reduced regulatory barriers. As a result, our ranking went up.”
The report said that Korea highly regulates trade and investment including foreign direct investment, tariffs, the suitability of international standards, and transparency in regulations, leading to severe barriers to entry. The country’s energy and freight industries are reportedly highly regulated, as well.
Related to this issue, the official at MOSF commented, “The Korean government tried to reduce regulatory barriers in various ways, but overall satisfaction was low.” The official added, “The government is going to accelerate structural reforms through a three-year economic innovation plan.”
In the meantime, the OECD report suggested that Korea should improve the competitiveness of its service sector, and facilitate women’s labor force participation.
The report said, “Increased provisions of childcare services and training opportunities for non-regular workers may involve substantial up-front budgetary costs, but also help reduce income inequality by increasing labor participation by women.” It added, “Stronger domestic and foreign investment in network and service industries can help reduce Korea’s large current account surplus.”
Korea was classified as a country saddled with problems of a rapidly aging population, low female labor force participation rates, and lower labor productivity in the service industry, together with Germany and Japan. Hence boosting competition in the service sector and promoting the participation of women in the labor force were recommended.