A backward, less-developed nation can enjoy a latecomer's advantage in catching up with advanced economies, as the well-known economic historian Alexander Gershenkron from Harvard University postulated many years ago. His message is that a backward nation does not need to spend much money or time establishing new institutions or introducing new technologies in the pursuit of their economic advancement as advanced pioneering countries did. Once a backward nation is truly determined to learn from advanced economies, it can shorten the usual phases of industrial development.
Case in point: Japan's initiative right after the Meiji Restoration in the late 19th century "to get out of a backward Asia and enter advanced European countries" enabled Japan to leapfrog from an underdeveloped agrarian society to a modern technology-driven Asian industrial power far ahead of her Asian neighbors. At the time, many of Japan's elite went to the U.K., Germany, France, Italy and the Netherlands to learn new education and legal systems and about modern science and technology. They were brought back to Japan to embark upon its spectacular modernization. This is a case that shows that many new institutions and ideas are embodied in human talents who have spent a long time learning new systems and scientific methods in advanced nations.
Korea's economic "Miracle on the Han River" in the past half century can be largely attributed to human capital formation, which was basically cultivated under a compulsory education system. At the outset of Korea's economic modernization, the country recognized the importance of science and technology. As early as the 1960s, when Korea was one of the poorest countries in the world, the country, under President Park Chung-hee's leadership, established the Korea Institute of Science and Technology by bringing over Korean brains trained in science and technology mostly in the United States. They were involved in a great deal of applied research, which was translated into improving the quality of Korea's exports.
The newly inaugurated Park Geun-hye administration has created a "Ministry of Future Planning and Science" to trigger a second Han River economic miracle. For this purpose, President Park appointed as minister Dr. Kim Jeong-hoon, who went to the United States at the age of 15 but developed a brilliant career as a top-notch scientist, a highly successful venture businessman, and the president of Bell Labs, from which 13 scientists won a total of seven Nobel Prizes. The rationale for the highly muscled ministry is to fuse Korea's IT power base with the rest of the high-tech manufacturing, communication, and cultural industries by creating mushrooming venture businesses. The ministry's mandate is to nurture a new engine of growth for Korea to resume its new growth path while creating badly needed decent jobs.
At present, Korea is at a critical crossroads given the declining potential growth rate, which is down to 3 percent from the 7 percent that has been maintained until the early 1990s, and a youth unemployment rate reaching 20 percent, and one million unemployed. Korea, being a regional manufacturing power base but limited in its capacity to offer new jobs, needs to shift to a robust innovative economy. To do this, the country needs new high-caliber brains.
In this regard, Korea is rather fortunate to have such a brain as Dr. Kim, who is a self-made success story. Critics who argue against his qualifications for being an American citizen and a former advisor to the U.S. Central Intelligence Agency sound xenophobic and myopic. Korea should be more active in pursuing a high brain-return policy to become a truly innovative economy. We should recognize that the cross-border free flow of human talent is emerging as a global trend. Israel appointed Professor Stanley Fischer from MIT as the governor of the Bank of Israel even though he held U.S. citizenship at the time of appointment. Dr. Kim has regained his Korean citizenship and should be welcomed at the confirmation hearings of Korea's National Assembly.