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Analysis Why South Korea’s productivity lead over Japan is an economic illusionRising output per hour masks dual-sector stagnation, shrinking labor pools and new regulatory risks for investors South Korea’s recent statistical eclipse of Japan in labor productivity is a misleading indicator that obscures deep structural imbalances and a demographic collapse more severe than that of its neighbor. While data from the Penn World Table suggests South Korea generated $54 per hour worked in 2021 international dollars compared to $49 in Japan, this milestone represents a lagging byproduct of capital intensity rather than a broad increase in national efficiency. For institutional investors, the headline parity between the two economies should be viewed as a signal of diverging risks. The current narrativesuggests that South Korea’s commitment to innovation © Korea Risk Group. All rights reserved. |





