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Output growth of around 4% is projected in 2014-15. However, a new growth strategy is essential to foster a creative economy and sustain growth. Policies are also needed to reduce income inequality and poverty, particularly among the elderly.
Korea needs to move away from its current economic model and implement a range of reforms to develop a creative economy that can sustain long-term growth, according to the latest OECD Economic Survey of Korea. The strategy should be accompanied by new measures to reduce income inequality and poverty, particularly among the elderly, the OECD said.
Korea has achieved robust economic growth relative to other OECD countries since the financial and economic crisis, but its growth prospects are burdened by high levels of household debt and, in the medium term, rapid population ageing.
Labour market reform to improve growth prospects and reduce inequality is a top priority in the face of rapid population ageing and a dualistic labour market. Sustaining output growth requires policies to mitigate the impact of rapid population ageing by increasing labour inputs from under-employed segments of the population.
The rapid expansion of education in Korea is exceptional and has played a key role in its economic
development. Sustaining Korea’s growth potential in the face of demographic headwinds requires further
improving the education system to boost productivity growth.
Korea, which has had the highest growth rate of greenhouse gas emissions in the OECD area since 1990, adopted an ambitious Green Growth Strategy in 2009.
A year ahead of Korea chairing the next G20 Summit, Mr. Gurría described in Seoul the “cocktail” of strategy, policies and framework conditions that will enable economies to harness new sources of economic growth, prevent environmental degradation and enhance the quality of life.
OECD Secretary-General Angel Gurría has warned that unless a new generation of statistics is developed to measure social progress and well-being, people may lose confidence in institutions and in the capacity of governments to address their problems.
Assessing the progress and failings of our societies requires a far broader set of measures than just economic indicators.