The OECD and Korea: Celebrating a milestone

Secretary-General of the OECD

In 2016, we celebrate Korea’s 20th anniversary of OECD membership. Throughout this time, Korea has achieved impressive convergence in living standards towards the Organisation’s top performers. In fact, as this special anniversary edition shows, from being one of the poorest countries in the world half a century ago, Korea is now the world’s 11th largest economy and 6th largest exporter. It is home, not only to some of the world’s most famous household brands, from cars to smartphones, but to the K-pop and fashion wave that has seduced young people everywhere. No wonder people refer to Korea’s transformation as “the Miracle on the Han River”.

During its 20 years as an OECD member country, Korea has overcome stern tests too, including the Asian financial crisis shortly after it joined. Fundamental to Korea’s achievements have been investment, innovation and human capital. Korean students regularly rank among the best performers in the OECD’s PISA tests, while the country is a leader in investment in research and development. At the same time, Korea has not been afflicted by the curse of rising inequality that has struck most other OECD members over the past decade. The level of income inequality remains slightly below the OECD average.

Membership in the OECD has, in turn, provided an opportunity to exchange ideas with the most advanced countries and to learn best practices. The OECD has played a crucial analytical and advisory role for Korea during the past two decades. In exchange, Korea has brought knowledge and diversity to our membership, and has been a vital ambassador in the Southeast Asian region in helping the OECD to reach out and become more global, inclusive and effective. Korea has also been a very active member of the Organisation. It chaired the OECD Ministerial Council Meeting in 2009 and played a leading role in adopting the Green Growth Initiatives. In 2010, Korea joined the OECD Development Assistance Committee, thus becoming a donor nation. Moreover in 2015, the OECD Committee for Scientific and Technological Policy met at ministerial level in Korea, the first time ever outside the OECD headquarters. Indeed, we have achieved so much together. But anniversaries are also an opportunity to reflect on our challenges and trace a path to a brighter future. In this respect, numerous challenges persist. Korea’s growth rate has slowed to some 2.8% per year since 2011. The development strategy has served it well, but appears to be in need of re-engineering to face the social, economic and environmental challenges ahead.

In addition, Korea’s population is also expected to undergo the most rapid ageing of any OECD member over the next half century. The short transition from the fourth-youngest country today to the third oldest by 2050 creates a number of challenges, notably for public finances. Public social spending is projected to rise from around 10% of GDP in 2013 to as high as 29% by 2060. Korea also faces the challenge of boosting productivity to achieve inclusive growth. The country’s dualistic economy is characterised by large productivity gaps between manufacturing and services, and between large and small firms. As a result, overall productivity is only 55% of the top half of OECD countries.

To leverage its position as a leading innovator, and thereby stimulate economic growth, President Park Geun-hye introduced the “creative economy” initiative in 2013. The initiative’s goals focus upon harnessing the productive potential of Korea’s private sector, in particular its lagging services sectors and smaller firms. There is scope to enhance the impact of Korea’s substantial R&D investments, for example, by strengthening the links between public research institutions and the private sector, as well as by improving the regulatory environment for innovative entrepreneurs. Smaller firms should also be encouraged to adopt information and communication technologies that allow them to seize the opportunities of the digital economy.

Meanwhile, the focus of the “creative economy” on green innovation, as part of the 2nd five-year plan of Korea’s National Strategy for Green Growth, can help reduce greenhouse gas emissions–an important objective in the context of implementing COP 21 agreements on climate change.

Challenges also remain in terms of addressing old-age poverty and labour market duality. To keep Korea on an “inclusive growth” path, win-win reforms to increase growth and reduce inequality should be prioritised, such as encouraging female labour market participation and investing in skills relevant to labour market needs. And as OECD experts in this edition point out, a stronger focus on well-being and the work-life balance would also help. The OECD continues to work with the Korean authorities on these and other policy priorities. The OECD and Korea have come a long way together since 1996, and what better way to celebrate this 20th anniversary than to look forward to strengthening our fruitful collaboration in the design, development and delivery of better policies for better lives.

www.oecdobserver.org/angelgurria and www.oecd.org/about/secretary-general


See also: “Korea: Policy priorities for a dynamic, inclusive and creative economy”, October 2015, OECD Better Policies Series.

©OECD Observer October 2016




Economic data

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly


Online edition
Previous editions

Don't miss

  • Africa's cities at the forefront of progress: Africa is urbanising at a historically rapid pace coupled with an unprecedented demographic boom. By 2050, about 56% of Africans are expected to live in cities. This poses major policy challenges, but make no mistake: Africa’s cities and towns are engines of progress that, if harnessed correctly, can fuel the entire continent’s sustainable development.
  • “Nizip” refugee camp visit
    July 2016: OECD Secretary-General Angel Gurría visits the “Nizip” refugee camp, situated between Gaziantep and the Turkish-Syrian border, accompanied by Turkey’s Deputy Prime Minister Mehmet Şimşek. The camp accommodates a small number of the 2.75 million Syrians currently registered in Turkey, mostly outside the camps. In his tour of the camp, Mr Gurría visits a school, speaks with refugees and gives a short interview.
  • OECD Observer i-Sheet Series: OECD Observer i-Sheets are smart contents pages on major issues and events. Use them to find current or recent articles, video, books and working papers. To browse on paper and read on line, or simply download.
  • Queen Maxima of the Netherlands gives a speech next to Mexico's President Enrique Pena Nieto (not pictured) during the International Forum of Financial Inclusion at the National Palace in Mexico City, Mexico June 21, 2016.
  • How sustainable is the ocean as a source of economic development? The Ocean Economy in 2030 examines the risks and uncertainties surrounding the future development of ocean industries, the innovations required in science and technology to support their progress, their potential contribution to green growth and some of the implications for ocean management.
  • OECD Environment Director Simon Upton presented a talk at Imperial College London on 21 April 2016. With the world awash in surplus oil and prices languishing around US$40 per barrel, how can governments step up efforts to transform the world’s energy systems in line with the Paris Agreement?
  • Happy 10th birthday to Twitter. This 2008 OECD Observer interview with Henry Copeland said you’d do well.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Once migrants reach Europe, countries face integration challenge: OECD's Thomas Liebig speaks to NPR's Audie Cornish.

  • Message from the International Space Station to COP21

  • The carbon clock is ticking: OECD’s Gurría on CNBC

  • If we want to reach zero net emissions by the end of the century, we must align our policies for a low-carbon economy, put a price on carbon everywhere, spend less subsidising fossil fuels and invest more in clean energy. OECD at #COP21 – OECD statement for #COP21
  • They are green and local --It’s a new generation of entrepreneurs in Kenya with big dreams of sustainable energy and the drive to see their innovative technologies throughout Africa. blogs.worldbank.org
  • Pole to Paris Project
  • In order to face global warming, Asia needs at least $40 billion per year, derived from both the public and private sector. Read how to bridge the climate financing gap on the Asian Bank of Development's website.
  • How can cities fight climate change?
    Discover projects in Denmark, Canada, Australia, Japan and Mexico.
  • Climate: What's changed, what hasn't, what we can do about it.
    Lecture by OECD Secretary-General Angel Gurría, hosted by the London School of Economics and Aviva Investors in association with ClimateWise, London, UK, 3 July 2015.
  • Is technological progress slowing down? Is it speeding up? At the OECD, we believe the research from our Future of ‪Productivity‬ project helps to resolve this paradox.
  • Is inequality bad for growth? That redistribution boosts economies is not established by the evidence says FT economics editor Chris Giles. Read more on www.ft.com.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .

Most Popular Articles

Poll

What issue are you most concerned about in 2016?

Unemployment
Euro crisis
International conflict
Global warming
Other

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2016