Recently, it has been analyzed that South Korea, which aspires to be a global pivotal country, has gained a significant international standing in terms of economic power and is considered to have a status comparable to the major 8 countries (G8). However, there is a high possibility that the power struggle between the United States and China will prolong, necessitating a national strategy to diversify trade structures centered around China and accelerate the catch-up in key technologies.
In the new international order visualized through the recent G7 summit, it is expected that the fate of South Korea as a pivotal country with significant influence in the economic and diplomatic fields will be determined based on its strategies and choices.
According to an analysis by Maeil Business Newspaper and the Korea Economic Research Institute, based on the International Monetary Fund's economic outlook data, South Korea's Gross Domestic Product (GDP) is estimated to reach $1.7222 trillion this year, accounting for the 8th position (1.64%) in the global GDP. Surpassing Australia ($1.7078 trillion), South Korea is expected to move up one step from its current 9th position. South Korea and Australia have been competing for the 8th position in the global economy. The recent invitation of South Korea to the G7 summit, which concluded in Hiroshima, Japan, and the separate meeting between South Korea, the United States, and Japan are also seen as not unrelated to this economic status.
In fact, South Korea has already stood shoulder-to-shoulder with the G7 countries in terms of per capita income, total investment, and trade volume. In 2020, South Korea's per capita GDP reached $32,250, approaching the level of Italy ($34,113), a G7 country. Over the past five years, the average domestic investment (total fixed capital formation) in South Korea has been $736.9 billion, surpassing Canada and Italy. South Korea's total trade volume, which indicates its share in global trade, has also exceeded $1.1681 trillion on average over the past five years, surpassing Canada and Italy, which remained at $90 billion to $1 trillion.
Furthermore, according to the Global Firepower (GFP), a U.S. military strength evaluation institution, South Korea's military power ranks 6th in the world, placing it in the top tier.
However, due to its high external dependency and the economic structure with a significant export proportion, strategic choices and judgments have become crucial in the whirlwind of the emerging new international order. There is speculation that China is highly likely to take retaliatory measures against South Korea, following its sanctions on the U.S. semiconductor company Micron. The fact that Naver, the largest portal in South Korea, has not been properly accessible in China since the G7 summit is also interpreted as an indirect expression of dissatisfaction towards South Korea. Although there has been no official announcement from Chinese authorities, it is analyzed as part of an effort to control public opinion related to South Korea within China. In addition, the Beijing Administration of Radio and Television issued a statement prohibiting the Chinese entertainment program appearance of Jung Yong-hwa, a member of the group CNBLUE. Concerns are rising that the eased tensions between South Korea and China may intensify once again.
In the long run, for South Korea to join an expanded G7 regime in a stable manner, it is evaluated that it needs to accelerate its growth. Particularly, poor labor productivity has been identified as a factor impeding South Korea's path to becoming an advanced country. According to the Organization for Economic Cooperation and Development (OECD), the average labor productivity of the G7 countries is $74.2 per hour, while South Korea lags behind at $46.5. According to the World Economic Forum, South Korea ranks 97th out of 141 countries in terms of labor market flexibility.
Lee Sang-ho, the head of the Economic Research Team at the Korea Economic Research Institute, stated, "The rigid labor market structure and the lagging competitiveness of the service sector are hindering the improvement of internal productivity," and mentioned that the current situation makes it challenging for South Korea to enter the ranks of advanced countries like the G7.
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