West can learn Asia’s crisis management

By Cho Jin-seo

Staff reporter

Asian countries can set an example in crisis management for ailing economies in Western Europe, the chief of a leading state think tank said Friday.

Hyun Oh-seok, president of the Korea Development Institute (KDI), said the latest financial crisis has provided an opportunity for Asian countries to get more respect for their economic, political and social achievements.

“Asian nations have overcome the crisis very well thanks to well-coordinated policy responses by their governments,” Hyun said in an interview with The Korea Times. “Asia is having a greater role in the global state. The region has been a role model for underdeveloped countries on other continents. But the crisis showed that even countries with advanced economies can learn from Asia on how to respond,” he said.

Today and tomorrow, Hyun will co-host an IMF conference in Daejeon, titled “Asia 21: Leading the Way Forward,” at which many influential figures will exchange views on the region’s robust growth and changing economic and political status.

Dominique Strauss-Kahn, managing director of the International Monetary Fund, will give the opening speech, while Josef Ackermann, chairman of Deutsche Bank, is also to deliver a keynote speech.

Victor Fung, chairman of Hong Kong’s Li & Fung Group, and Lee Yoon-woo, vice chairman of Samsung Electronics, will represent Asia’s vibrant businesses. Many ministers and central bank governors will also attend the two-day event.

Hyun is to lecture on the need for more integration among Asian nations. He has proposed that Asia form its own free-trading block, so that it can compete against other regional blocks such as the European Union and NAFTA.

“Compared to the EU, where about 70 percent of all trading is intra-regional, Asia still depends too much on exports,” he said. “Historical and social issues make it hard to form a political union in Asia. But creating an economic block won’t be so difficult.”

For the conference, the IMF picked the specific topic of “Asia and the World,” because it wants to improve its image among policymakers in the region, Hyun said. “It seems that the people inside the IMF want to change its arrogant image.”

The IMF has been criticized for enforcing draconian measures during the Asian financial crisis in 1997 and 1998. Unlike the IMF recommended expansionary policies to Western countries during the latest financial crisis, it had urged Asian countries to tighten their belts during the regional crisis and raise interest rates.

The result was high unemployment and social unrest in some countries. In Korea, the Asian financial crisis is still referred to as “The IMF Crisis.”

“The IMF now recognizes that not all of its recommendations to Korea were right,” Hyun said. But the KDI chief, who served in various high-ranking positions at the finance ministry during the time, said it was unfair to blame the IMF for all the misdeeds. In fact, the experience helped Korea change in a good way, he noted.

“It was a blessing in disguise,” Hyun said, adding the IMF made Korea adopt global standards in bookkeeping, financial regulations and corporate governance. It also made companies and banks keep low leverage, which helped a lot during the recent crisis.

While he praised Korea’s fast economic recovery, Hyun was more skeptical on its future prospects. Hyun forecast less than a 3-percent average annual growth between 2015 and 2050, because of demographic changes. Korea has one of the lowest birthrates in the world, and the number of working-age people is expected to rapidly decrease over the next few decades.