Respect of market principles. Effective governmental intervention. Undaunted entrepreneurship. At a conference Monday, local and foreign experts largely cited those factors as propelling Korea’s spectacular economic growth over the past six decades.
True, smart, dedicated bureaucrats and diligent, ingenious executives have played important roles in turning one of the world’s poorest countries into its 15th-largest economy in just half a century. Their bold industrialization and export-oriented policies also rode nearly perfectly on the back of long-running global economic booms after World War II.
Yet it is also true that no positive factors or policies can be good forever or without adverse effects. When the government’s intervention becomes excessive, it turned into bureaucratic tyranny and undue trust in markets became market idolatry. Concentrating limited resources on selected conglomerates resulted in economic polarization hard to be cured without shock therapy.
What these economic gurus failed ― or ignored ― to point out was the sacrifice of numerous highly-educated, well-motivated workers, which set Korea apart from most African and South Asian nations that were on the same starting line 60 years ago. Unlike the image of radical unionism reflected on violent street protests, many Korean workers still have to fight for a few dollars’ increase in minimum wages, while the nation’s largest firms are swimming in record-breaking revenues.
So it was right for some conference participants to cite major problems of the Korean economy as widening productivity gap between large and small firms and worsening income distribution.
And this explains why the Lee Myung-bak administration has recently turned toward the working class-friendly economic policy as well as co-prosperity of big businesses and their suppliers. But the government’s pledge still seems to be more politics than policies. A case in point is its policy on family-controlled conglomerates.
The judgment on whether and for how long the world’s 15th economy should depend on a handful of chaebol may depend on watchers. But some of these conglomerates are returning to their pre-Asian financial crisis practices of sprawling corporate expansion, trying to snatch even such business areas as neighborhood retailing of mom-and-pop stores and ``makgeolli” (Korean rice wine) brewing.
Americans are realizing what’s good for General Motors is no longer good for America. Yet Koreans will likely have to repeat what’s good for Hyundai Motor is good for Korea for a long time.
This is never to say the government should curb chaebol’s power against market principles nor force them to make contributions to the growth of their smaller counterparts. The best way the government can help small businesses is to establish fair trade order as stipulated by the law.
Another major economic task facing the nation is to turn from the asset-oriented economic structure to work-oriented one. Major governments are now busy coping with adverse effects of financial capitalism, which unduly rely on securities and property markets. The global trends seems to have affected Seoul little, however.
The time is up for Korea to move from construction-oriented, property-led economy to productive industrial structure, job creation and supply of universal welfare. Otherwise, prospects for the next 60 years can hardly be said as bright.