Korea must undergo fundamental reform to become an advanced economy

In his exclusive interview with the Dong-A Ilbo, Professor Francis Fukuyama of Stanford University, a world-renowned scholar of international relations, ascribed the socio-political conflicts and confusion increasingly seen in the U.S. and Korea to “lack of public trust in political leadership, the level of which is unheard of.” In other words, the political system and its leadership remain in a stalemate despite the advance in technology, growing social complexity, and swelling public expectations.

In April 2013, during the early period of the Park Geun-hye administration, global consulting agency Mckinsey published a report titled “Beyond Korean Style: Shaping a New Growth Formula" where it likened the Korean economy to “a frog in a pot of slowing boiling water.” The report warned that if the county fails to find a new growth engine, the Korean economy might take a freefall. Personally, I would compare the nation’s economy to a high school student preparing for the college entrance exam, who stays up every night to get a better grade only to little avail. On the front of manufacturing, where the country does have room for improvement, it remains only stagnated, and in the field of high-end service sector and R&D such as medical tourism, which requires strong fundamentals, Korea is showing mediocre performance at best. Stuck between a rising China and a revived Japan, Korea is not just “sandwiched”; the country has practically become a sitting duck.

The country cannot escape the trap unless it undergoes a fundamental reform to shift the framework of politics, society, and education, as well as the economy. Korea went through the Asian foreign reserves crisis 20 years ago because it had failed to upgrade the national economy to the level commensurate with its status as a member of the OECD. The country should refrain from pursing populist policy designed to get short gains, which will burden the future generation, and it must break away from extreme conservatism that has long lost its relevance. In many advanced economies, the governments are already making an effort to enter the global market by cooperating with its local corporate players. Therefore, it is vital that we create a business-friendly environment through political leadership capable of embracing opposition parties, while unearthing a new growth engine based on the innovation in manufacturing and the convergence between service industry and ICT. Structural reform is desperately needed in order to transform the country into an advanced economy.

One thing that we must remember is that unification is not an option; it is a prerequisite for our survival and prosperity. The mine explosion accident near the DMZ in last year shows that on a divided Korea, even a small conflict has the potential of leading to a full-blown war. As for North Korea, while the country refrained from staging nuclear provocations last year because of China, the North is likely to try to establish itself as a nuclear state through a fourth nuclear test this year as the U.S. presidential election will be held in the new year. In its global economic outlook for 2016, The Economist said that it is possible that China, indignant over North Korea’s nuclear test, will begin a behind-the-scenes meeting with the U.S. as to how it will deal with the collapse of Kim Jung Un’s leadership. Now it is time that with a sense of duty, President Park took a more proactive stance to adjust the tripartite coordination between South Korea, China, and the U.S. in preparation for the situation of sudden change in North Korea.