SHELTERED SEOUL
By Trends • Jun 1st, 2010Thanks to its position in Asia, South Korea has weathered the global downturn better than most. Now the country could be well placed to accelerate its development.
How has South Korea reacted to the global crisis?
Last year was difficult for all countries. But in Korea we were successful for several reasons. Number one, we took several measures, a very preventive approach. And that worked. Number two, we are heavily dependent on foreign factors, but if you look at our investment and trade, almost half is with Asian countries including China, and those are countries that were less affected by the financial crisis. Korea was the only country which recorded positive growth. Although it was 0.2 percent economic growth, this year we project almost 5 or 5.5 percent economic growth.
What about the banks in the country?
After the financial crisis, there was a flight of American dollars out from our country and back to the U.S. because those are multinational business tycoons bringing their home money back. Maybe there are too many U.S. dollars in the market. Of course, exchange rates should be decided by market forces but we tried to strengthen the mark, trying to avoid deep kinds of fluctuations.
Our banking sector is quite good. I think the number one reason dates from 10 years ago. We experienced the Asian financial crisis and we really restructured a lot and in terms of regulation, we improved a lot. We don’t see any good reasons why we have to tighten the regulations for the time being because they are good.
To what do you attribute Korea’s recent success?
Korea is a success story because first we focus on labor-intensive industries in the early stage of economic take-off. But another good thing we’ve done is to have a timely move over to heavy industry, such as shipbuilding, electronics, steel mills, and automobiles. And we set our visions for the future not in the same areas. The paradigm will be changed. If we respond right, then there can be another blue ocean for industry.
We still claim developing country status in certain areas. Maybe Korea is one of the early movers, but we still claim developing country status. So what we can do is to try to bridge the gap between developed and developing countries. Korea is in a rare situation for that.
What’s the relationship between Korea and the Middle East in terms of trade and commerce?
As a trade minister, I’m now engaged in our negotiation for future agreements with the GCC. I really tried to conclude that agreement last year, but it has been a little bit delayed. There are not many remaining issues. The GCC consists of very important countries. We are heavily dependent on those countries for our energy resources. And the GCC market is a big market for Korean products.
