South Korea has been narrowing its gap with other advanced nations in terms of economic competitiveness, but it is still facing many challenges that could hamper its sustained growth, a report showed Wednesday.
"South Korea has been breaching the gap with OECD countries in the economic sector and it is turning itself from an input-focused economy to an economy driven by innovation," said the report that analyzed the nation's competitiveness based on comparison with other nations.
"However, there is still much to be desired in terms of quality of such innovation and many factors remain in place such as industrial polarization, a low birth rate and an aging population that could undercut the nation's
economic sustainability," it added.
The report, the first of its kind unveiled by the Seoul government, is based on a total of 245 indicators and other self-created measurement
models, the ministry said.
Previously, the government depended on research results by foreign institutes such as the IMD and WEF, which put South Korea at 23rd and 22nd in their latest reports in terms of national competitiveness.
The Korean report did not provide the overall competitiveness ranking, instead offering standings in detailed areas, including economic size, export scale and so forth.
According to the report, South Korea ranked 11th in terms of gross domestic product among the 30 OECD member countries, while its standings in
trade volume and global market share of its exports were 9th and 8th, respectively.
Korea's total labor input had fallen by an annual average 0.6 percent between 2001 and 2008. But increased investment on research, technology
innovation and infrastructure resulted in enhancing labor productivity, which helped offset the decline in input. Korea's labor productivity growth ranked second, the report said.
South Korea still needs to take extra precaution about its birth rate, the lowest among the countries as it could lead to a decline in labor force.
The report added that the issue merits attention especially at a time when the nation is facing increasing fiscal burdens from welfare and medical spending amid an aging population.
In terms of economic structure, the report said the nation's export-oriented economy could spell trouble by leaving the country more
vulnerable to outside shocks. The ratio of trade to GDP jumped to 82.5 percent in 2009 from 62.4 percent in 2000, marking the seventh highest among surveyed nations.
In the environment sector, the report noted that South Korea needs to make more efforts to reduce its carbon emissions and develop renewable
energy sources to join the ongoing global drive. The report, however, added that "green" investment and citizens' awareness of the importance of the environment here are fast improving.