Trend Korea's income catch-up with the United States stalls

Summary

Lower-income economies can grow faster by adopting advanced technology and accumulating capital, narrowing the per capita income gap with advanced economies. Korea followed this path for decades, steadily closing its per capita GDP gap with the United States in purchasing power terms. Since 2010, however, slower productivity growth has markedly reduced the speed of that catch-up. Only in the optimistic scenario does Korea roughly maintain its 2010s catch-up pace in the future. In the baseline and pessimistic scenarios the gap with the United States is projected to widen again. The comparison combines World Bank actuals, OECD long-term projections for the United States and the authors' own projections for Korea on a purchasing power basis.