Since joining the OECD in 1996, Korea has made impressive progress in raising living
standards. Over 1996-2016, the country closed the gross domestic product (GDP) per
capita gap with the OECD average by 26 percentage points. Vibrant exports underpinned
strong economic growth, with Korea becoming the eighth largest exporter in the world.
The country’s focus on innovation (its R&D spending is the second highest in the OECD)
combined with its highly skilled population (it is among the top performers in the
OECD’s Programme of International Student Assessment) supported this success. However,
the convergence of Korea’s living standards to those in the most advanced countries
has stalled in recent years. Output growth has slowed from 4.4% annually over 2001-10
to 2.8% since 2011. The country faces strong competition from emerging economies,
notably the People’s Republic of China in low- and medium-end markets, and with advanced
economies in high-end markets. This makes it more difficult for Korea to further expand
its global market share.