Wednesday, April 20, 2011

South Korea's per capita GDP near that of Japan?

Well, yes and no. No if you count just regular old GDP, whereby Japan's is twice that of South Korea's (which is slight over twenty grand). But if you're talking about purchasing power parity (PPP), then yes, South Korea's is only about ten percent smaller than Japan's:
According to the Bank of Korea on Wednesday, Korea's per-capita GDP in 2010 was around US$20,500, but its per-capital GDP based on the purchasing power parity was estimated at $30,286.

The PPP is the currency conversion rate that eliminates the differences in price levels between countries. The reason why Korea's PPP-based GDP is larger than its actual per-capita GDP is because public utility fees and other consumer prices are cheaper than in advanced countries.

The gap with Japan is narrowing. Japan's PPP-based per-capita GDP in 2010 was $33,828, around $3,500 higher than Korea and ranking 20th in the world, one notch ahead of Korea. Luxembourg ranks first with some $80,000 and the U.S. fourth with $47,000.

But without considering consumer prices, Japan's per-capita GDP is $42,325, according to an IMF estimate, more than twice Korea's.
This is not a new phenomenon, but it's important to take note of when South Korea's nominal GDP goes up or down based on the fickle exchange rate. Simply put, your $20K per capita GDP in South Korea can go an awful long way... as long as you keep the money in South Korea.

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7 comments:

  1. It is the same as masturbation...
    origin of the Japanese, culture...etc. dokdo problem is also same.
    And, the Korean compares others with Korean's advantageous measure and strange morality .

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  2. @hoihoi51

    I see no problems with the article, which points out the difference in GDP when taking PPP into account. This is a common practice of economists. S. Korea is still growing, while Japan stagnates in a multi-decadal recession.

    By 2040, S. Korea will be a wealthier country than Japan on a per capita basis.

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  3. Also, the Korean Won is currently undervalued as it is pegged to the Chinese Yuan, whereas the Japanese Yen is currently over-valued... once these differences are accounted for, the difference in per capita GDP between Korea and Japanese diminishes.

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  4. South Korea GDP is .96 trillion dollar. Won is not undervalue according to one of the articles on the internet. I doubt GDP per capita reached $20k in 2011. It is close, but not yet. One good thing about south Korea is having conglomerate like Samsung, beating up sony, panasonic and taiwanese semiconductor manufacturing. In addition to that, samsung is also creating a challenge for apple inc.

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    Replies
    1. Iti s one of the most undervalued currency among OECD countries. Where is your information coming from? South Korean Won was traded at 800won/1$ in 1996 but now in 2011, it was traded at 1150won/1$. (In 1997, 1500Won/1$ and in 2007 it was $930/1$) So if currency goes back to orginal state, its GDP per capita at nominal should be much higher. According to IMF data, in 1996, GDP per capita was 10 million Won and it was 26million won in 2012. But in terms of dollar term, the increase was only about 1.8 times. That being said, current GDP per capita should be about 1.4 times higher if currency rate goes back to orginal state

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  5. If they are so rich how come they are still sending out illegal immigrants and whores?

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    Replies
    1. Why are there so many American prostitutes?

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