The American economy has become as unrivaled as Everest.

 

[GLOBAL ECONOMIC TIMES]  The highest mountain in the world is Everest. Everest is 8849m above sea level, which is 238m higher than K2, the second highest mountain in the world. It is much higher than the high peaks of the Himalayas, such as Kanchenjunga (8586m) and Lhotse (8516m). This unrivaled height is known to be the result of a combination of the erosion of the surrounding mountains and the uplift of the earth's crust. In fact, Everest is estimated to have risen at an average of 2 mm per year, rising by 15 to 20 meters over 89,000 years. Due to the isostatic rebound effect, surrounding rivers and the surface eroded a significant amount of rock and soil, increasing the upward pressure of the mantle beneath the crust.

Everest, the world's tallest mountain, maintains its unrivaled height through a complex process of erosion of surrounding mountains and uplift of the earth's crust. Likewise, the U.S. economy remains dominant, accounting for nearly half of the world's market capitalization.

This status of the United States is the result of a combination of various factors, including the dollar's role as the reserve currency, continuous technological innovation, the growth of global companies, abundant resources, a strong financial system, and a strong domestic market. In particular, the 'America First' policy contributed to further strengthening America's dominance.

The Korean economy has grown through close economic relations with the United States. However, at the same time, it is revealing structural limitations in being sensitive to changes in US policy. In particular, while the global stock market is showing signs of recovery after the pandemic, the Korean stock market is showing a relatively sluggish performance, showing a phenomenon of ‘differential decoupling’.

This phenomenon is the result of a combination of various factors, including Korea's geopolitical risks, an industrial structure focused on semiconductors and automobiles, corporate governance issues, and a shrinking domestic market due to aging and low birth rates.

While the U.S. economy was growing rapidly, the Korean economy was relatively sluggish. In particular, since October 2022, when global stock markets showed signs of recovery after the pandemic, the U.S. S&P 500 index rose 63%, but Korea's KOSPI index rose only 21%. This ‘discriminatory decoupling’ phenomenon clearly revealed the vulnerability of the Korean economy.

The relative sluggishness of the Korean economy is the result of a variety of factors, including a sensitive response to changes in U.S. policy, an industrial structure focused on semiconductors and automobiles, corporate governance issues, and a shrinking domestic market due to aging and low birth rates.

Compared to the growth of the American economy, the Korean economy is like a mountain being eroded by its surrounding environment. If the Korean economy continues its current situation, the gap with the U.S. economy will inevitably widen further.

In order for the Korean economy to take off again, the following efforts are needed.

Industrial diversification: We need to improve the industrial structure focused on semiconductors and automobiles and discover new growth engines.

Technological Innovation: In line with the era of the 4th Industrial Revolution, new technologies must be developed and applied to existing industries.

Improve governance: We must improve corporate governance and establish a transparent and efficient government system.

Response to demographic change: We must come up with fundamental solutions to the problems of low birth rate and aging.

The growth of the U.S. economy has significant implications for the Korean economy. For the Korean economy to grow sustainably, it must learn from the strengths of the American economy and overcome its own weaknesses. We hope that through constant change and innovation, the Korean economy will once again be at the center of the global economy.