The industrialization and high growth of the Korean economy over the last three is largely attributable to Korea’s active participation in international trade. There are sweeping changes taking place across the international market today, including the globalization of business activities, the emergence of the World Trade Organization (WTO) regime and the accelerated integration of various nation-states into economic blocs. These changes, in turn, will transform the states’ ability to implement their policies and regulations. The purpose of this study is to survey the economic and foreign policy tasks that the Korean government ought to fulfill in response to these profound changes worldwide.
The concept of a national border is losing its meaning and effect day by day, mainly because of the globalization of business activities and the weakening of the domestic government’s control over the migration of labor, capital and business operations. The emergence of the WTO regime is already a testament to the growing volume of international transactions and the loosening of regulations on foreign investment. The integration of national economics is well in progress both on the surface and on deeper levels, involving the lowering of barriers to the trade of services and the increasing convergence of various states’ economic policies and institutions.
The erosion of national borders in the world economy will increase the flexibility of highly mobile production factors such as capital and educated workforces, while letting the economy of each state be determined by the quality and quantities of the immobile resources it possesses such as land, unskilled labor, social overhead capital, scientific and technological innovation and culture. The concept of a national economy will be increasingly invoked to refer to the collection of economic actors active in the given boundaries, with a growing emphasis placed not on the nationalities or industrial affiliations of these actors but on their economic performances. The economic policy goals and the economic management system of each given nation should change in response to all these anticipated developments.
As such, the Korean government will need to find measures first and foremost to retain its resources within its boundaries, including educated labor and innovative businesses. As the power the government’s policies exert on individual economic actors gets weaker, policymakers should instead focus on enabling economic actors to adapt to and survive the various changes taking place both at home and abroad. The private sector should increase its autonomy and self-sufficiency, which is key to the enhanced autonomy of the entire national economy. Moreover, fair and transparent norms of international trade should be developed so as to prevent large and powerful nations from lording it over smaller and weaker ones.
The goals pursued by economic policies and the administration of those policies should also be refined. This requires the establishment of fair and clear rules in the first place. When the rules of the game are fair and transparent to all the players, they strive to reach their full potential and the resources are allocated accordingly. It is only under the blessing of fair and clear rules that the selfish pursuits of individuals amount to cooperation for the common good, allowing each given national economy to reach its full potential. The proliferation of nepotism, corruption, cronyism and the like, on the other hand, will only drive out businesses offering quality products at good prices and entice those that have more interest in illegal and less than transparent pursuits than transparent success.
On the external front, Korea should pursue greater openness and non-discrimination. Korean companies need to become accustomed to openness and non-discrimination and achieve greater autonomy, all at the minimum cost possible. The enhancement of autonomy is the only sure path to survival in the borderless age. Korea cannot evade the possibility of retributions from other states so long as it does not shed the perception of being a protectionist state, despite being the world’s 11th-largest economy and 12th-largest trader. In the meantime, economic management should fully reflect the market principles. The government should no longer foster the growth of certain industries through protection and subsidies. Instead, businesses should be encouraged to endorse the fair and clear norms of international trade based on multilateral origins.
We can increase the chances of our interests being protected in the formation of international trade norms by allying with states that share similar interests and sound a collective voice of a multilateral organization. A good example is the Cairns group that small and medium exporters of agricultural produce formed in order to promote their shared interests through solidarity.
무국경지대의 경제정책목표와 대외정책과제(Economic policy goals and foreign policy tasks of the borderless age)
|Series Title; No||KDI 정책포럼 / 111|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < General|
|Holding||KDI; KDI School|