The underdog no more: playing with the big guys

Abraham Kim, Ph.D.

Unless you were a hapless expat on your way to send money back home late last week, anyone who has attempted to elbow their way through the unrelenting mob of shoppers in Myeong-dong could be forgiven for thinking that there is no financial crisis in Korea.

Indeed, yesterday saw both the won and the Kospi bounce back on news of a series of big bank bailouts overseas, and the worst of the panic seems to have blown over, at least for the time being.

Still, the wild fluctuations in the market leave plenty of reasons to be nervous, so I thought I’d take a step back and try to get an idea of what the international community is thinking when it comes to the investment climate on this peninsula.

To do so, I called up Abraham Kim yesterday at his home in Washington, D.C. Kim is an Asia analyst with the Eurasia Group, an international political risk think tank. Born in California to Korean parents, Kim came over to Korea in what he calls a “reverse immigration” at age 4. He returned to the United States for junior high, and finished his education there.

He started out with the good news. “In general, people recognize a lot of the positive aspects of Korea - that it’s one of the booming, dynamic economies, one of the democratic success stories, and that it’s a very stable place,” he said.

Next came the bad news - that a weak Korean government has been making moves that have done more harm than good.

“[Finance] Minister Kang [Man-soo] has not instilled a lot of confidence overseas. People I talk to off the record don’t support his leadership, and think he has contributed to the crisis,” said Kim. “He’s running the economy in a way that’s better suited for the ’70s or early ’80s, with heavy government management. ... It’s more of a developmental type of economics. The government can no longer dictate how the economy will run, because there are so many international players. Once the government intervenes like that, international investors lose faith.”

And, once again, we find ourselves tripped up on that rocky path to globalization. “Korea somewhat damaged its reputation with the previous administration, with economic nationalism and not dealing with international investors on a level playing field,” said Kim. “Some investors I’ve talked to feel like they’re not being treated fairly.

“Korea needs to no longer think of itself as an emerging market, but as a major player. It needs to open its markets and compete with the big guys.”

Here’s to hoping they do so soon - before I have to send money back home.

By Richard Scott-Ashe Deputy Editor [richard@joongang.co.kr]