OECD Economic Surveys: Korea 2012

Table of contents
Basic statistics of Korea
Executive summary
Assessment and recommendations
	Figure 1. Macroeconomic developments in Korea
	Korea’s economic expansion and macroeconomic policies to sustain it
		Korea experienced slower growth and higher inflation in 2011
		The pace of growth is projected to pick up, although there are a number of risks
		Spending restraint is aimed at achieving the 2013 balanced budget target
			Table 1. Short-term economic outlook
		Monetary policy tightening has paused since mid-2011
			Figure 2. Monetary conditions are relaxed
		Exchange rate policy and capital flows
			Figure 3. Foreign exchange reserves have risen while short-term foreign debt remains high
			Figure 4. Exchange rate trends
			Box 1. Macroeconomic policy recommendations
	Policies to promote economic growth
		Figure 5. Korea continues to converge towards the United States
		Figure 6. Population ageing in Korea is projected to be the fastest in the OECD area
		Achieving low carbon, green growth
			Figure 7. Korea’s energy intensity is declining but remains well above the OECD average
		Labour market measures to promote growth
			Figure 8. Long-term projections of the labour force
		Pro-growth tax reform to finance increasing spending
			Table 2. The tax mix in OECD countries
			Figure 9. Average and marginal tax wedges on labour
		Enhancing the contribution of the education system to growth
			Figure 10. The share of inactive youth with tertiary education is high in Korea
			Figure 11. Spending on pre-primary education is low in Korea
		Developing the service sector
			Figure 12. The service sector
			Box 2. Key policy recommendations to promote economic growth
	Policies to promote social cohesion by addressing rising income inequality and relative poverty
		Figure 13. Inequality has been increasing in Korea
		Increasing social spending gradually to promote social cohesion
			Figure 14. The rate of relative poverty by age group
			Figure 15. Health-care spending per capita in Korea is low and the private share is high
			Table 3. International comparison of health-care services
		Breaking down dualism to reduce wage inequality
			Figure 16. The incidence of low-paid work
		Raising income in the service sector
			Figure 17. Wages in the service sector as a share of manufacturing
		Improving equity through reforms in the education system
			Figure 18. The percentage of 15-year-olds attending after-school lessons in Korea is exceptionally high
	Conclusion
		Box 3. Key policy recommendations to promote social cohesion
	Bibliography
	Annex A.1. Economic co-operation with North Korea
		Table A1.1. Comparison of North and South Korea in 2010
		Figure A1.1. North Korea’s trade with South Korea and China
	Annex A.2. Progress in structural reforms
Chapter 1. Sustaining Korea’s convergence to the highest-income countries
	Figure 1.1. Korea’s per capita income is converging to the most advanced countries
	Figure 1.2. Population ageing in Korea will be the fastest in the OECD area
	Korea’s long-run growth potential
		Figure 1.3. Korea’s potential growth prospects
		Figure 1.4. Explaining differences in income in 2010
		Box 1.1. Labour market dualism in Korea
			Table 1.1. Employed persons by status
			Table 1.2. A comparison of regular and non-regular workers
	Labour market reforms to boost employment and productivity
		Figure 1.5. Rapid population ageing in Korea and the decline of the labour force
		Figure 1.6. International comparison of employment rates
		Boosting female labour force participation
			Figure 1.7. Changes in labour force participation by age and gender
			Figure 1.8. Responses of female workers to marriage and childbirth
			Table 1.3. The desired number of children and obstacles to having them
			Figure 1.9. Households’ share of total spending on educational institutions is high in Korea
		Promoting continuous employment of older workers
			Table 1.4. Reasons given by firms as obstacles to employing older workers
			Figure 1.10. Wage profile in Korea
			Figure 1.11. Employment rates of younger and older workers
		Encouraging labour force participation of discouraged youth
	Tax policies to promote employment and growth
		Figure 1.12. Value-added taxes in OECD countries
	Policies to improve educational outcomes
		Figure 1.13. The rapid expansion of educational attainment in Korea
		Upgrade the quality of early childhood education and care
			Figure 1.14. Spending per student on pre-primary education is low in Korea
		Improve the quality of primary and secondary schools through greater autonomy and diversity
		Upgrade the tertiary sector
		Improving vocational education to address the overemphasis on tertiary education
			Table 1.5. Employment outcomes for university graduates in 2007
			Figure 1.15. The share of inactive youth with tertiary education is high in Korea
			Figure 1.16. International comparison of labour outcomes for university graduates in 2009
	Increasing the role of the education system in innovation
		Table 1.6. Flows of R&D funds in 2009
		Figure 1.17. R&D expenditure by performing sector
	Promoting the development of the service sector
		Figure 1.18. Korea’s service sector is relatively small and has low productivity
		Table 1.7. Labour productivity growth in manufacturing and services
		Table 1.8. Ease of starting a business in OECD countries
	Conclusion
		Box 1.2. Summary of recommendations to sustain Korea’s convergence to the highest-income countries
	Notes
	Bibliography
Chapter 2. Achieving the “low carbon, green growth” vision in Korea
	Table 2.1. The development of Korea’s Green Growth Strategy
	Table 2.2. The Five-Year Plan for Green Growth (2009-13)
	Mitigating climate change
		Overview of energy use and GHG emission trends in Korea
			Figure 2.1. Trends in GHG emissions and GDP in Korea
			Table 2.3. Analysis of GHG emissions increase in Korea
			Figure 2.2. The energy intensity of the economy is high, while emission intensity is about average
		Creating a clear price for carbon through market-based instruments
			Figure 2.3. The estimated decline in sales in Korea following the introduction of an ETS
		Reforming electricity pricing
			Figure 2.4. Electricity prices in OECD countries in 2010
			Table 2.4. International comparison of electricity price trends in the industrial sector
			Table 2.5. Recovery rate of electricity price by sector in 2010
		Developing renewable energy
	Creating new engines for growth
		Green financing: channelling funds to green business
			Table 2.6. Requests by firms for green certification
			Table 2.7. Green financing in Korea
		Promoting green innovation and private investment
			Figure 2.5. R&D spending and green technologies
			Table 2.8. Level of technology in the 27 core green technologies
			Figure 2.6. Public R&D expenditure on green technologies by research stage and sector in 2009
		The impact of green growth on employment and income distribution
	Improving the quality of life through green growth
	Conclusion
		Table 2.9. Taking stock of structural reforms in the area of green growth
	Notes
	Bibliography
Chapter 3. Promoting social cohesion in Korea
	Figure 3.1. Income inequality and relative poverty are increasing
	Rising income inequality and relative poverty and the factors behind it
		Figure 3.2. International comparison of relative poverty rates
	Social spending is low but increasing rapidly
		Figure 3.3. International comparison of public social spending
		Figure 3.4. The composition of public social spending in Korea compared to the OECD average
	Increasing social spending to promote social cohesion
		The Basic Livelihood Security Programme (BLSP)
		The earned income tax credit
		The Basic Old-Age Pension
			Figure 3.5. The rate of relative poverty by age group
		National Health Insurance (NHI)
		Improving participation in social insurance programmes
			Table 3.1. Participation rates of employees in the NPS, NHI and EIS
	Labour market reforms to promote social cohesion by breaking down dualism
		Table 3.2. Flexibility and security in the Korean labour market
		Figure 3.6. International comparison of temporary employment
		Factors explaining the high level of labour market dualism
			Table 3.3. Reasons given by firms for hiring non-regular workers
			Table 3.4. Reasons given by non-regular workers for accepting non-regular employment
		The impact of the 2007 labour law reform
		Problems associated with the high share of non-regular workers
			Figure 3.7. Poverty rate among working-age population in 2006 by employment status
			Figure 3.8. Coverage of unemployment insurance
		Policies to address labour market dualism
	Reforms in the education system to promote social cohesion
		Improving access to high-quality early childhood education and care
			Table 3.5. Enrolment in childcare and kindergarten
			Figure 3.9. International comparison of private spending on education in 2008
			Table 3.6. Childcare fee by exemption status
		Reducing the reliance on private tutoring: addressing the issue of hagwons
			Table 3.7. Private, after-school education in Korea in 2010
			Figure 3.10. The percentage of students attending after-school lessons in Korea is exceptionally high
			Box 3.1. Why parents send their children to private, after-school lessons
				Table 3.8. Reasons for increasing private tutoring
			Table 3.9. Participation and spending in private tutoring rises with academic performance
			Figure 3.11. Household income and participation and spending on private tutoring in 2010
			Table 3.10. Policies that would reduce spending on private tutoring
		Reducing the burden of tertiary education
			Figure 3.12. International comparison of university tuition fees
			Table 3.11. Government-guaranteed loans for university tuition
	The service sector as a factor in inequality
		Figure 3.13. Trends in wages by the size of firm
		Table 3.12. Incidence of low wages by firm size in 2006
	Conclusion
		Box 3.2. Summary of recommendations to promote social cohesion
	Notes
	Bibliography