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Bailey McCann, Opalesque New York: As investors increasingly look abroad for new opportunities, South Korea may have a hard time attracting attention, according to a panel hosted yesterday in New York by the Emerging Markets Trade Association (EMTA). At first glance, South Korea offers mega technology companies like Samsung and a hyper-educated population, but recent governance issues along with structural problems in the domestic economy could make investing difficult, panelists said.
"Monetary policy can't do much in South Korea anymore," explained Meral Karasulu, global debt team senior analyst at OppenheimerFunds. "More fiscal policy is necessary to deal with critical issues in the economy and society."
Karasulu added that the aging population along with the growth of irregular, part-time work for younger people, means that South Korea's domestic economy is increasingly unequal. "Competition for status in South Korea is incredibly intense and the premium that you get for education is diminishing, while the cost for education is incredibly high - it means women are having fewer children. As a result, the country is on pace to have a larger aging population than Japan."
Panelists added that unique compensation schemes in South Korea have also left the elderly impoverished. Many South Koreans are aged out of their jobs in their early fifties so that employers can avoid paying the higher salaries pegged to greater age/seniority. While other countries t...................... To view our full article Click here
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