“Economic Measures Led by the Government Will Not Do“

The Korea Development Institute (KDI) forecasted that the potential economic growth rate of Korea would be confined at 5 percent for the next 10 years in contrast to the 8 percent rate in the 70s and the 80s, and 6-7 percent in the 90s due to the rapid change of the paradigm of world economy.

KDI projected as above in the report titled `Vision 2011- Open World, Flexible economy` which was submitted to the congressional Special Committee on Future Project (chairperson Shin Yung-Kook). `Vision 2011` is the future project enterprise that KDI has been promoting with the help of the officials in research institutes like Korea Future Society since June of last year.

KDI demanded fundamental measures in the report, saying, "National competitive power tends to be constituted by technology and knowledge. Therefore the quantitative market strategy by the government reached its limits."

The KDI especially listed the reformation of software, including traditional practice and ways of thinking, and management renovation and privatization, as problems to be solved in establishing an economic system appropriate to the global age.

The KDI proposed that a transparent administration and raising responsibility as issues that enterprises need to address. It also pointed out the importance of trust between labor and management and settlement of conflicts by the law in the matter of labor, and efficiency of finance, public enterprise, and establishing a computerized government for advancing publicity.

KDI also pointed out that low value added products still take up a large portion due to lack of technological improvement. The number of No.1 items in market share of each country is 699 in Germany, 618 in the U.S., 354 in Japan, compared with 55 in Korea.

KDI indicated that the far-reaching effect of the IT business is feeble despite its rapid growth, and that digital management or electronic transactions cannot be promoted effectively because of financial customs such as bill transactions and transactions without documents. It strongly recommended that the service sector, which is lagging behind, be improved.

In-Soo Song issong@donga.com · Jeong-Hun Kim jnghn@donga.com