Economics of South Korea

One of the highlights of our trip to South Korea is the opportunity to hear from guest lecturers at Korea University, the premier university of thought leaders in Seoul and southeast Asia. We had the privilege of speaking with Professor Keuk-Je Sung, a professor of economics at Kyung Hee University’s Graduate School of Pan-Pacific International Studies.

Professor Sung’s lecture, “Korean Economic Development throughout History,” provided us with an overview of the issues associated with the struggles for economic independence that Koreans have had over time. He spoke about where South Korea has come from in these struggles and how they have grown to become the powerhouse of Southeast Asia that they are today. With business corporations like Samsung, Hyundai, LG, S-Oil and Kia, South Korean companies are proving the business acumen to compete in the global marketplace. But it wasn’t always this way.

Dr. Sung talked about the five levels of labor that an economy faces as they grow: (1) assembling products with less than 100 parts, like televisions, (2) assembling products with 1000+ parts, such as automobiles, (3) developing technologies for products like telecommunications and more advanced microchip devices, (4) developing products for airplane jets and other advanced technologies, and (5) developing technologies for space exploration and futuristic modalities. These are the levels of technology by which an economy can be judged, from the most basic to the most advanced. He said South Korea is advancing in the fourth and fifth stages, showing the world how they are competing in the global marketplace in these new technological spaces.

One strength that Dr. Sung said the South Koreans have is the strong economic will to succeed at all costs. Their children continue to focus on education and advanced knowledge in math, science, languages and technologies is helping them to compete globally in the 21st century. But he also said concerns among South Koreans include an aging population, and the loss of institutional knowledge because sacrifice is generational (younger South Koreans don’t know and understand the sacrifices that older South Koreans had to make in the past, in order to be successful today) continues to plague concerns about corporate continuity and change management.

North Korea continues to plague the economy of South Korea. Dr. Sung emphasized the gratitude and importance of the role of U.S. servicemen and women to help promote democracy in South Korea. He thanked all of us on behalf of a grateful nation and reminded us that while older South Koreans may have wanted reunification to become a reality, the younger generation looks at unification issues in terms of their own economic success: they don’t want unification to allow North Koreans to take their jobs.

All of these issues continue to plague the economic environment, but remain in the background as South Koreans continue to engage competitors on the global stage. Dr. Sung reminded us that South Korea has few natural resources that they can export, which underscores the importance of education to use their technological know-how and business expertise to remain competitive.

 

In the news: Approve the free-trade agreements

From The Washington Post: The U.S. economy needs swift approval of the pending free-trade agreements with Colombia, Panama and South Korea. Yet a week after the release of a disappointing employment report, procedural disagreement over a program that has provided benefits to American workers for almost 50 years is stalling the entire trade agenda.

Read the full story.

Given political realities, the cost-benefit analysis should be clear: better to incur the fiscal cost of renewing the Trade Adjustment Assistance program than to lose the much greater benefits of free trade with three important trading partners.

Read the full story.