Crisis to Foster SOC Projects, New Growth Engines

Bloomberg News says that for Notre Dame Cathedral in Paris, the economic crisis is turning into manna from heaven.

As part of its efforts to stimulate the economy, the French government will inject 620 million euros (791 million U.S. dollars) to restore cultural assets, including the cathedral.

European Commission President Jose Manuel Barroso also wants “an unprecedented ambition” to counter an unprecedented crisis. He said high-speed Internet will penetrate the European continent by next year.

More countries have begun to introduce stimulus packages and tax breaks to overcome the economic crisis. They will also spend a huge amount on green technology and infrastructure, restoration of cultural assets, and development of alternative energy.

Many major economies have drawn up the largest bailout in their histories, accounting for four to 16 percent of gross domestic product. The United States has firmed up an economic stimulus package of 789 billion dollars.

The Korea Institute of Finance said yesterday that the world will spend more than 4.45 trillion dollars to rescue the global economy and financial market. The United States has confirmed a rescue package of 700 billion dollars and an economic stimulus package of 789 billion dollars; the United Kingdom a package worth 20 billion pounds (28 billion dollars); and Germany one worth 30 billion euros (38 billion dollars).

Hyundai Research Institute, a private think tank, estimates 6.5 trillion dollars will be injected to jumpstart the global economy, accounting for nearly half of U.S. GDP in 2007.

The economic stimulus packages of each country are mostly focused on investment in social overhead capital, tax cuts and assistance for the unemployed. There is a difference, however, between those of advanced and emerging economies.

Developed countries, which have made major social overhead capital investments, are lavishly investing capital in finding new growth engines in energy, the environment, education and health based on their knowledge-based economies instead of carrying out large civil engineering projects.

Washington will invest 54 billion dollars to improve the energy efficiency of public institutions and houses, 16 billion dollars on research in science and technology, and 24.1 billion dollars on healthcare reform.

By contrast, China will spend 86 percent of its stimulus package worth four trillion yuan (590 billion dollars) on building railways, roads, ports and buildings.

raphy@donga.com aykim@donga.com