“Decision-Making Structure Needs to Be More Mature for Korea’s Economy to Move Forward”

Kim Jong-seok, the head of KERI (Korea Economic Research Institute), said on June 29, “Korea needs to establish a mature decision-making structure in which difficult decisions can be made on their own. Only then can the nation’s economy move forward.”

He gave a lecture titled, “Korea’s Economy: It’s Current State and Tasks” during a breakfast forum for machinery industry leaders held at the Seoul Plaza Hotel on Taepyeong-ro in Jung-gu, Seoul organized by the Korea Association of Machinery Industry, saying, “We know what’s ailing the Korean economy, its symptoms, and how to cure it, but the government is reluctant to do anything about that. What it needs to do is to uphold the rule of law and create an environment where honesty and diligence pay off.”

He added that the economy will eventually turn around, but that its growth rate will be modest at best due to many reasons, including the slowdown of the Chinese and U.S. economies, the continuing trend of a strong Korean won, and high taxes and mounting household debts. Against this backdrop, the government needs to draw up measures to lengthen the economic recovery pace while improving the flexibility of the economy and recovering its growth potential to ultimately enable the economy to absorb future shocks.

He said, “In a closed society, the economy can only grow so much. In order to improve its growth potential, market flexibility needs to be improved, and opening-up policies and competition should be encouraged.”

About the “sandwich theory,” he said, “Korea’s always been sandwiched between China and Japan historically, geographically, and economically. So to address this problem, Korean companies need to carry out stringent restructuring and create products that are sophisticated and value-added.”

higgledy@donga.com