Think tanks' shrinkage leaves Korea in uncharted terrain

By Choi Sung-jin

Korea is facing multiple challenges these days. Its economy cannot escape from a protracted slump, its industry is at a loss what to do with the fourth industrial revolution, its politics are as disorderly as ever, and its relationship with the communist regime in the North is shakier than ever.

Most needed at these times of change are various research institutions, which can analyze situations correctly and provide right directions for the nation.

In reality, however, thinks tanks in this country keep shrinking as years go by, government officials say.

Last year, 94 researchers left government-financed research institutions, according to a report by the National Research Council for Economic, Humanities and Social Sciences. The number accounted for 4 percent of the total. Since 2012, 414 research fellows, or 17.4 percent of the total 2,383, have departed 26 state think tanks.

The situation is even more serious with private think tanks. A large-scale macroeconomic research institution, one of a handful of such think tanks, has had about 10 key researchers leave since last year, as the financial conditions of its parent group worsened. The number of research papers from the institution plunged 33.5 percent, from 236 in 2014 to 157 last year.

When Cho Chang-geol, honorary chairman of the Hanssem Group, said he would use his private fortune of 440 billion won ($366 million) to support think tanks about a year ago, some expected Korea would finally be able to have its own version of the Brookings Institution. So far, however, such expectations have not been met.

Also problematic are the qualities of research papers.

"Previously, a study paper had to undergo numerous debates and revisions before its release, but these days most reports are made public little changed from the original drafts," said a fellow at a private research institute. "It is worrying to see think tanks' roles are decreasing when they should be playing a far more important part than before."

A case in point was misdiagnosis by state think tanks about the influence low international oil prices would have on the Korean economy. One group of economists said the low crude prices would be a boon for Korea, which entirely relies on imported oil. The other group claimed it would be a bane because an economic slump in oil-producing countries would hurt Korea's exports to these countries.

Amid the controversy, five state think tanks said a 10-percent drop in oil prices would increase the economic growth rate by 0.16 percent. The Bank of Korea and the Ministry of Strategy and Finance joined them, equating the low oil price to an economic plus for Korea.

The opposite proved to be true, however, as exports declined throughout last year, and business took a turn for the worse. The central bank revised its position no earlier than in October, saying, "If oil prices fall because of sluggish demand, its effects on the national economy could be uncertain." Because of the lack of good think tanks, domestic businesses failed to minimize the negative effects of low oil prices.

Outsiders can hardly feel the seriousness of the problem. As recently as this January, the University of Pennsylvania ranked the Korea Development Institute as the top think tank in the Korea-China-Japan-India group. The reality within the KDI could hardly be more different, however.

"After the KDI moved to Sejong City, many competent research staff have left it, and their reports that are helpful for policymakers have dwindled," said an official at the strategy and finance ministry. The number of study papers produced by KDI plummeted 38.1 percent to 292 last year. The Korea Institute for Public Finance also produced only 87 reports, down 39, or 30.9 percent, from 2014.

The biggest reason for the mass departure of researchers from state think tanks is their relocation from Seoul to the provinces. "People who obtained degrees at prestigious foreign institutions are unwilling to work at think tanks far away from the capital city," said a former fellow at a government think tank. "Less capable researchers are filling the void."

Private think tanks are shriveling mainly because of the worsening performances of their parent companies. In theory, businesses have to increase investment at a time of economic uncertainty, but in reality, most of them are bent on making ends meet, reducing manpower not directly related with improving bottom lines," said a former researcher at a private think tank.

He said private research institutions are important because they serve as the counterforce to politicized state think tanks.

Korea already has far fewer think tanks compared with major countries. The number of think tanks here is 34, according to the University of Pennsylvania tally, fewer than Ghana's 37. The United States tops the list with 1,835, followed by China's 435, Britain's 288, India's 280, Germany's 195 and Japan's 109, among others.

China's think tanks in particular recorded about a six-fold increase between 2008 and 2015, but Korea's think tanks increased by only six, from 29 to 35, over the period.

Before it gets too late, Korea should start to set up more and better think tanks, experts say. "Establishing big think tanks requires massive government spending or investment by large business groups, which is not easy in an economically difficult time like now," said Choi Hyung-doo, former speaker of the National Assembly and author of "Development Strategy for Korean Think Tanks."

He said the government needs to establish a new ecosystem for think tanks, in which small groups of three or four retired government economists start small think tanks and the government supports them by providing financial and other assistance.