"South Korea is the only case to escape the middle-income trap"... The limits of technology accumulation seen through the crisis in the shipbuilding industry

The dazzling achievements accomplished by the South Korean economy and the recent low-growth crisis it faces coexist. According to the KBS Special "Time of Accumulation" video aired in 2017, South Korea is cited as a representative case of escaping the "middle-income trap," a rare occurrence in global economic history, but at the same time, it faces structural problems where the potential growth rate is continuously declining.

South Korea, which broke through the middle-income trap, a target for global benchmarking

According to a report released by the World Bank in 2012, most of the 101 countries that started at a middle-income level in the 1960s fall into the "middle-income trap," where they stagnate and fail to enter high-income status. According to the explanation in the video, excluding city-states like Singapore or Hong Kong, or countries belonging to specific economic blocs, South Korea is evaluated as the only country that grew from the bottom up and properly escaped this trap. Thanks to these achievements, reports from international organizations sometimes use South Korea's growth model as a target for benchmarking.

Potential growth rate plunges to the 3% range and continuous signals of low growth

However, warning sirens are sounding behind the scenes of the South Korean economy. Along with the analysis that South Korea's potential growth rate has plunged to the 3% range, the video points out a trend where the potential growth rate has been declining by about 1% every year since the late 90s, regardless of changes in administration. Phenomena such as the export growth rate falling to its lowest level in 3 years and 3 months are appearing, indicating a weakening of the economy's growth engine. The core diagnosis of the video is that this is not a problem that occurred suddenly in recent years, but a structural change that has been systematically progressing over the past 20 years.

Shipbuilding and offshore plants hitting the wall of accumulated experience

These limits of technology accumulation are specifically revealed in the case of the South Korean shipbuilding industry. While South Korea possesses overwhelming capabilities in the field of ultra-large vessel construction, it is experiencing difficulty in overcoming the wall of experience accumulated by global companies in the offshore plant field. According to the video, offshore structures must operate in extreme environments, such as having to withstand depths of up to 3,500m, and clients show conservative characteristics, preferring companies with hundreds of project experiences due to the risk of accidents. Ultimately, catching up with the experience accumulated by global companies over a long period of time has emerged as a task that is not easy to achieve in a short period.