Economic Size Comparison

A Nike ad cashes in on the eternal rivalry sentiment between these two Asian neighbors.
A Nike ad cashes in on the eternal rivalry sentiment between these two Asian neighbors.

 

While relationship between Korea and Japan has been strained, it appeared that the size of the economy and major corporate indexes of Japan are over four times greater than Korea. The gap in corporate R&D was also very big.

The Federation of Korean Industries (FKI) announced such results on August 18 and pointed out that even if the economic differential between Korea and Japan is constantly shrinking and major manufacturing industries do not quite have disparity, there exists a substantial gap in many fields.

The FKI emphasized that semiconductor production in Korea exceeded Japan this year to become the world’s second largest, and that the global market share in the telecommunication device and textile industries of Korean companies superseded the Japanese. Especially, the operating profit ratio of Samsung Electronics is four times greater than Panasonic, the number one company in Japan. Hyundai Motors also has a higher operating profit ratio than Toyota. In the steel and automobile component industries as well, Korea has similar market competitiveness to Japan, according to the FKI. The differential between the gross domestic product (GDP) of Korea and Japan was 17 times in 1980, 11.4 times in 1009, 5.4 times in 2010, and 4 times last year. The GDPs of Korea and Japan last year were US$1.221 trillion and US$4.901 trillion, respectively.

A disparity still exists. Regarding the number of products with the greatest market share in the world, an indicator of global competitiveness, Korea only has 64, whereas Japan has 231. Moreover, while Japan has 57 companies included in the Fortune 500, Korea has only 17.

Foreign direct investment (FDI) into Japan exceeded US$100 billion last year, about four times greater than Korea. Official development assistance (ODA) in Japan is also six times greater than Korea.

Gaps in scientific technologies and corporate R&D are even larger. In the science fields, Japan has 16 Nobel Prize winners, but Korea has none. In the world’s 2,000 R&D companies, announced by a European Commission in 2012 based on the R&D size of each company, there are 353 Japanese companies, whereas only 56 Korean companies were included. As of 2012, only three companies, Samsung Electronics, LG Electronics and Hyundai Motors, had R&D expenditures over 1 trillion won (US$981 million). However, 29 Japanese companies, including Toyota and Honda, exceeded that measure. Korea caught up with Japan in many fields, but there is still a long way to go.

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