Opening Remarks at
IARIW-BOK Special Conference
April 26, 2017
Juyeol Lee
Governor
The Bank of Korea
Distinguished guests, ladies and gentlemen!
I am very delighted to welcome you all today to this conference, jointly
hosted by the International Association for Research in Income and Wealth
(IARIW) and the Bank of Korea. Let me begin by expressing my special thanks
to our conference co-host, IARIW President Albert Braakmann; and to our two
keynote speakers, François Bourguignon, Professor at the Paris School of
Economics, and Martine Durand, Director of the OECD Statistics Directorate.
I would also like to express my sincere appreciation to all of the panelists,
session speakers, chairs, and discussants for their contributions to this
conference.
The IARIW is a highly-esteemed organization which has been at the
forefront of SNA-related research on income, wealth, productivity and well-
being. And the Bank of Korea, as the central bank and national accounts
institution, currently releases five major national accounts statistics including
GDP. I believe that today's conference will provide us with an opportunity to
re-examine national accounts statistics from the perspective of well-being
measurement and facilitate exchanges among researchers. Furthermore, it
will be a great help to improve Korean national accounts statistics.
As you well know, GDP is the primary macroeconomic indicator of a
country. Throughout Korea's development, GDP has been used as one of the
major indicators in setting economic policies and measuring the economy's
performance. And GDP is expected to continue playing a central role in
explaining a country's macroeconomic conditions for a considerable period of
time.
That being said, it has often been indicated that GDP has its limitations.
There are criticisms that GDP does not properly reflect new economic
activities such as the digital and sharing economies. And it is true that GDP
does not fully capture degradation of the environment, the distribution of
income and wealth, and changes in the quality of life.
Considering these points, we should make efforts to accurately measure
material growth through GDP, and at the same time work to create a balance
by estimating the quality of life measures that are not captured by GDP. I
would like to share some of my views on where we have to focus.
First of all, GDP needs to be revised to faithfully reflect the rapidly
changing economic reality. With regard to the advent of new economic
activities, including the digital economy and industries related with the Fourth
Industrial Revolution, we must collect the relevant base data and further
study estimation methodologies. In this regard, the Bank of Korea has been
reviewing whether the current GDP fully measures the digital economy and is
preparing a work plan for possible improvement.
Next, we need to expand national accounts statistics to show the
distributions of people's living standards, in addition to their averages. The
OECD has made considerable progress in its research on distributional
information of income and consumption by integrating macroeconomic
indicators from national accounts with microdata from household surveys. I
hope that progress will continue to be made in this area and that the OECD
will soon provide feasible international guidelines.
Lastly, as countries try to estimate well-being indicators in various ways,
we have to continue the research on how to increase the relevance of these
indicators for policy makers. Although quality of life measures have the
advantage of showing various aspects of life, they have a number of
weaknesses as policy tools. For example, it has been pointed out that the
selection and weighting of relevant indicators can be subjective, and that the
transmission mechanism between policy instruments and these indicators
has not been sufficiently clarified yet.
Ladies and gentlemen!
I have briefly laid out my views on the tasks of improving and
supplementing GDP and well-being measures. To effectively address these
challenges, continuous cooperation among academic institutions like the
IARIW, statistical agencies, and international organizations is essential. If this
kind of multilateral cooperation can be achieved, I believe that the usefulness
of GDP will be considerably increased and well-being could be measured in a
more balanced way.
I hope that this conference, through active and lively discussions, will
lead to many creative and practical ideas on enhancing well-being
measurement and the usefulness of GDP.
Thank you.
April 26, 2017
Governor
Juyeol Lee