Convergence and diversity in Korea

The Republic of Korea (hereafter, Korea) is one of the few (mostly East Asian) countries to have succeeded over the past several decades in ‘catching up’ with the levels of productivity and competitiveness associated with ‘industrialised nations’ in Europe and North America. Ultimately, productivity measures are translated into per capita income, and Korea is now positioned between Spain and Italy in terms of gross national income per capita. ¹ In terms of competitiveness, the volume of exports of Korea is comparable with France and the Netherlands. ² As is often remarked, this is a remarkable achievement. Over several decades of rapid growth, Korea has progressed upward in relative standing from ‘middle income’ to ‘advanced’ country status. In this process, Korea has managed to avoid the so-called ‘middle income’ trap in which the relative standing of a country progresses to the point where increasing wages and declines in the rate of improvement in productivity reduce international competitiveness and slow progress relative to other countries.