[Column] Corruption threatens competitiveness

Rising to the post of the president of Philippines, Josef Estrada, a former movie, star is no stranger to slander and scandals since the days of his vice presidency.

However, the recent disclosure of his receiving illegal kickbacks in the amount of US$10 million from a gambling syndicate has thrown the nation's economy into a tailspin with the value of the peso nose-diving and interest rates soaring.

Some observes voiced the concern of a possible second Asian crisis arising from the Philippines crisis. The current situation exemplifies the punishment rendered by the international capital fund market for internal corruption of a nation. This is in fact the very workings of the global economy.

A failure by a nation or business to manage itself properly leads to the pullout of capital by the international community, levying heavy loss. Recently in Korea, a conglomerate found to have dealt in illegal stock trading through its managing family member led to the loss of trust by the investors and a 50% loss in the value of its stocks, yet another example of the rules of the global capital market.

We are living in the new world order of a global capital market. The current scandal of kickbacks between a venture company and the high-ranking officials of the Financial Supervisory Service is one of great concern. The illegal loan scandal by the Hanvit Bank branch manager and the involvement of the politicians along with the current scandal point to the unchanging nature of corruption in our country and seem to reveal the lack of lessons learned from the economic crisis faced not so long ago.

The problem is that the corruption and moral laxity of Korea indeed might beget a punishing blow from the global capital market. Actually, lashings already have begun.

This year, while many companies have been reaping great profits, the stock market has remained far below its earlier levels. Such a phenomenon has been attributed to what is called the "Korean discount" due to the inefficiency of the political-economic system.

Of late, there have been citizen group movements that oppose globalization. The movement opposes the darker side of globalization, as well as voices frustration of some people against the rules and patterns of behavior imposed on nations, businesses and people by globalization.

However, globalization is an unstoppable runaway train. A concern in the current globalization is that while there are about 200 nations in the world, there are only about 30 nations that could effectively adapt and benefit from globalization.

For a nation to obtain its share of wealth and benefit from globalization, it must meet at least three conditions.

First, the business sector of the nation must have reached a certain level of competitiveness in order to survive global competition. Second, the internal political-economic system must be at an efficient level. Third, the human resources of the nation must reach a level of excellence to allow it to participate in various international dialogues and forums.

Of the three, the second condition, the efficient system requires three systematized conditions. First, the government must be efficient and clean; second, the management structure of businesses must be transparent and responsible management guaranteed; and third, a cooperative relationship with labor unions must be fostered through greater sharing of the successes of the businesses.

However, judging by these standards, it cannot but be said that Korea lacks in all three foundations. The corrupt nature of the politicians and the government revealed by recent scandals is not much different from that of the past. Businesses not only still lack competitiveness, but they also have only started to formulate management structures. The labor union movements still are mired in ideological grounds and in an organization lacking any ownership principle, those in charge are ever self-promoting as they share the loot among themselves.

On the other hand, Korea does have a level of excellence in human resources, and especially in the digital revolution, Korea is poised to take the lead. As such, if Korea does turn itself around and start on the establishment of the kind of political-economic system required by globalization, it might be counted among the 30 nations that could enjoy the fruits of globalization.

If not, Korea shall forever be mired in endless string of scandals and corruption.

Jung Ku-Hyun, Dean of Graduate School of Business Administration, Yonsei University