September 07, 2012 11:50
Korea may have overtaken Japan in terms of sovereign credit rating, but Japan is still a formidable economic powerhouse. A higher credit rating simply means that a country is more capable of repaying its debts but does not mean economic superiority.
Japan still trounces Korea in terms of economic size and productivity. Japan's GDP stood at US$5.87 trillion last year, more than five times Korea's $1.12 trillion. Japan's per-capita GDP was $44,600 last year, twice as much as Korea's $21,500.
Korea's major businesses still depend on Japan for a large number of core technologies and key components. As a result, Korea still buys more products from Japan than it sells, and its trade deficit stood at $28.6 billion last year.
"Japan's economic decline started in 1992, when Sony overtook U.S. businesses to become the world's No. 1 company. Japan was unable to deal with the economic slump and low growth that began at the time," said Prof. Oh Jung-keun of Korea University. "Now the economic situation facing Korea is said to be similar to Japan’s [in those days]."
"Korea won't overtake Japan in terms of industrial competitiveness and productivity anytime soon," said Kim Hyung-joo at LG Economic Research Institute.
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