By Kang Hyun-kyung
Staff Reporter
A globally renowned columnist and expert observed Tuesday that the ongoing financial turmoil in the United States will not ultimately lead to the collapse of capitalism.
In a lecture sponsored by the Institute for Global Economics (IGE) in collaboration with the Korea International Trade Association (KITA), Guy Sorman claimed the crisis has ostensibly had a serious effect on U.S. investment banks, but its impact on commercial banks would be negligible.
Sorman, an established writer and professor at Sciences Po, Paris, is serving as an advisor on President Lee Myung-bak's presidential council for future and vision.
``It is a crucial moment, but capitalism itself or the American economy will not see a crisis as some economists and experts predict,'' Sorman said in the speech.
Although subprime mortgage and financial derivatives caused the current financial crisis in the United States, the French expert made it clear that one shouldn't dismiss the positive role of what he called these creative products.
He said financial derivatives have played a critical role in helping the world economy achieve a 5 percent average growth rate over the past decade.
The presidential advisor made the point that rigid labor market and low national brand value are two core obstacles preventing Korea from moving its economy forward.
Citing French consumers' widely held misconception of global giant Samsung as a Japanese firm, he attributed the root cause of the misconception to Korea's failure to infuse cultural elements into its global branding.
He added that the government should hammer out an effective strategy for national branding by putting the best practices in the economy and cultural heritage together into a consistent package.
He also said militant unionism has had a negative effect on national competitiveness, claiming that foreign investors are hesitant to invest in Korea not because of high wages, but because of uncertainties in labor-management relations.
It is true that unions played a critical role in bringing democracy here during the military dictatorship, but it's time to say goodbye to the era of an active labor movement, he said.
Sorman also offered bittersweet advice to the government, saying it should think outside the box when managing the economy.
``The Korean economy is still too dominated by conglomerates and heavy industries so that there is no room for creativity,'' he observed.
Earlier, the government selected 22 alternative growth engines, saying it would pour a total of 99 trillion won into these chosen industries so as to make them become major vehicles for economic growth.
In the 1960s and 1970s, he said the government had selected and supported promising industries and sectors to make them national champions and to achieve growth.
Sorman said this strategy proved to be effective, but this would not be the case in the future.
``The economy needs diversification and innovation,'' he advised.
Korea Times Intern Kwak Jeyup contributed to this article.