Is Park overly ambitious for $30,000 per capita income era?

2014-01-06 17:50

Is Park overly ambitious for $30,000 era?

Na Jeong-ju
President Park Geun-hye looked determined when she talked about her plan to raise the country’s per capita income to over $30,000 in a nationally-televised New Year news conference Monday.She said, if her three-year “economic innovation” plan is successfully implemented, the country’s per capita income will top $30,000 and be poised for $40,000. She also noted that Korea’s potential growth would rise to over 4 percent and its employment rate would surpass 70 percent.
These goals reflect Park’s economic ambitions. She vowed to lay a firm foundation for a “creative” economy, in which the services sector will play a bigger role for growth.
“It’s a good idea to boost the growth potential by strengthening the services sector,” said Kim Sang-jo, head of the Solidarity for Economic Reform. “Raising the growth potential to 4 percent appears to be attainable, but it seems too early to talk about achieving $40,000 in per capita income. It’s also impossible to raise the employment rate to 70 percent.”
Kim said the country’s per capita income can reach $30,000 if the won’s value against the dollar surges drastically.
“The dollar-term per capita income largely depends on the won’s strength against the dollar. It’s more important for the government to strengthen economic fundamentals instead of focusing on that goal,” Kim said.
Cho Dong-gun, an economics professor of Myongji University, agreed.
“Last year, the country’s per capita income stood at some $24,000. I don’t think the government can raise it to $30,000 in just three years,” Cho said. “I think Park may know well that the goal is unrealistic. However, she presented that goal to draw more support for her creative economy initiatives.”
Park said the government will soon unveil a three-year plan centered on three objectives ― strengthening economic fundamentals, nurturing an innovative economy and creating a balanced economy where not just exports but also domestic demand is stimulated.
Some analysts said the plan resembles her father, the late President Park Chung-hee’s five-year economic development plans, which laid the foundation for Korea’s rapid economic growth in the 1960s and ‘70s.
Park noted that there are many “chronic abnormalities” in the economy and said she will work hard to root them out in order to build an economy based on a strong foundation.
“Among other things, we will start with the reform of the public sector. Some public organizations are having difficulty even in paying interests on debts they owe with their operating profits,” Park said.
Her commitment to public sector reform is a reminder that the government will keep its pressure for public organizations to tackle their ballooning debt problems and lax management practices.
Last month, the government unveiled a public sector “normalization” plan in which it called on public companies to come up with measures aimed at reducing their debt and rectifying any “abnormal” management practices.