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Long-term projection for the growth pattern and industrial structure of the Korean economy

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Long-Term Projection for the Growth Pattern and Industrial Structure of the Korean Economy
Published on November 20, 2013 in Korea by KIET ⓒ2013 KIET ISBN 978-89-5992-558-2 93320
Contents
Abstract…………………………………………………………… 7 I . The Necessity of Long-Term Projection ………………… 9
1. Increasing Uncertainty in the Global Economy …………… 3. Increasing Demand of Long-Term Projection for Industrial Structure …………………………………………… 12 9 2. Structural Problems in the Korean Economy ……………… 11
II. Changes in the Domestic and International Environment for Korean Industry …………………………………………… 13 1. Environment/Energy Sector ………………………………… 13 2. Global Economy Sector………………………………………… 14 3. Technical Development Sector ……………………………… 15 4. Society/Culture Sector ………………………………………… 15 III. The Long-Term Structural Changes in the Korean Economy 18
1. Economic Growth Pattern……………………………………… 18 2. Change in Demand Structure ………………………………… 19 3. Changes in Industrial Production Structure ………………… 20 4. Change in Export Structure …………………………………… 23 5. Change in Import Structure …………………………………… 26 6. Change in Employment Structure …………………………… 29
IV. Methodology for Long-Term Projection ………………… 34
1. KIET-DIMM12 (KIET-Dynamic Inter-Industry Macroeconomic Model 12) …………………………………… 34
2. Procedure for Projection ……………………………………… 37 3. Assumptions for Domestic Exogenous Variables ………… 38 4. Assumptions for Foreign Exogenous Variables …………… 39
V. Long-Term Projection for the Economy and Industrial Structure ……


Full Text
Title Long-term projection for the growth pattern and industrial structure of the Korean economy
Similar Titles
Material Type Reports
Author(English)

Lee, Jin-Myon; Lee, Youngho; Kim, Bawoo; Han, Jungmin; Kim, Jaejin

Publisher

[Seoul]:KIET(Korea Institute for Industrial Economics & Trade)

Date 2013-11
Series Title; No KIET Occasional Paper / 92
ISBN 978-89-5992-558-2 93320
Pages 60
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Macroeconomics
Industry and Technology < General
Holding KIET; KDI School

Abstract

This paper aims to conduct long-term projections about the
organizational changes in the Korean economy and industry. The KIET–DIMM (KIET Dynamic Inter-industry Macroeconomic Model) was developed into KIET–DIMM12 to conduct this research. The KIET–DIMM is basically designed to achieve balance between
industrial demands and supplies based on Walras’ general
equilibrium theory in microeconomics and the equilibrium over aggregate demand and supply in macroeconomics. The KIET–
DIMM12 is updated with population/household block based on KIET–DIMM consisting of demand-supply, price/technology,
foreign, and macroeconomy blocks. The GDP average annual growth rate is expected to be 3.75% in the 2010s and 2.87% in the 2020s. The proportion of consumption to GDP is expected to increase from 67.8% in 2010 to 69.6% in 2030 and investment’s proportion to GDP is expected to decrease
from 28.3% in 2010 to 26.4% in 2030.
In terms of industrial structure, the ratio of the manufacturing
industry compared to total industry would be downsized by the decrease in relative prices, while that of the service industry would persistently increase because of some diversified and gentrified service demands and increase in leisure activities. The ratio of exports of the manufacturing industry is expected to increase while that of the service industry would decrease, reflecting the characteristics of domestic oriented industry. On
the other hand, the ratio of imports is projected to decrease in the manufacturing industry and increase in the service industry. The growth rate of labor demand is expected to slow down due to sluggish GDP growth, improvement of productivity, and rise of
flexibility of the labor market.
The policy implications from this research are as follows. It is necessary to narrow the gap between domestic demand and
exports so as to establish countermeasures to alleviate the polarization between light and heavy and chemical industry. Finally, the competitiveness of the service industry must improve to prepare for a service industry-focused expansion of the
economy.