Duality and Sustainability in Korea: Catching up with Japan

Abstract

This study extends the research scope by examining the prospect of Korea catching up with Japan as it tries to analyze the relatively lagging aspects of catch-up performance toward the period from 1990 to 2010. Likewise, it assesses the catch-up performance of Korea under a changed environment after the year 2010. We found a big discrepancy between market and technological catch-up as well as a deviation of productivity indices within each industry. Moreover, the proportion of the largest firms in Korea for each industry is bigger than that of Japanese firms. In addition, catch-up performance of Korea in other sectors except for some industries that have overtaken their Japanese counterparts is relatively inferior and weak compared to those in Japan. When we examined the sustainability of catch-up performance starting 2010 and beyond, we concluded that the catch-up trend of Korea is not sustainable due to the change in its economic situation, the illusion effect of market performance and the China factor. Thus, the need for revitalization of catch-up activities and measures is essential.