The economic gap between Korea and Japan may widen again, according to Hyundai Research Institute on Monday.
The institute said Korea's potential economic growth rate continues to decline while Japan's is inching up. The gap has been narrowing gradually since the 1980s.
In 1980, Japan accounted for 9.8 percent of global GDP compared to Korea's 0.6 percent, but by 2016 that narrowed to 6.3 percent for Japan and 1.9 percent for Korea. And the difference in per-capita GDP stood at only US$9,671, compared to a $30,196 difference in 1995.
But Korea remains behind Japan in terms of technological competitiveness and ability to respond to the fourth industrial revolution, raising concerns that the gap could widen again.
First of all, the portion of domestic consumption in Korea of value-added products fell from 45.1 to 40.2 percent between 2000 and 2014, but in Japan it only inched down from 53.6 to 51.8 percent.
Japan is still ahead of Korea in its ability to produce value-added products, while Korea's is deteriorating quickly.
The gap also remains wide in terms of scientific and technological prowess. In an evaluation in 2009 by the Swiss Institute for Management Development, Japan ranked second and Korea third, but Korea's ranking slid to eighth last year while Japan's remained the same.
Investment bank UBS ranked countries last year based on its ability to respond to the fourth industrial revolution gauged by labor market flexibility, technology, education, infrastructure and legal frameworks, and Korea fell behind Japan in all areas.
Lee Bu-hyung, an HRI economist, said, "We need to fundamentally reconsider the strategies necessary to boost industrial competitiveness to narrow the gap with Japan."