[FORUM]Improving Export PerformanceEconomic stagnation in the United States and Japan has triggered poor export performance in countries that depend on U.S. and Japanese markets, such as Korea, Taiwan and Singapore. Korea has suffered greatly from plunging exports of IT products, including semiconductors and computers, its main trade goods.
Fortunately, the U.S. economy recorded 2 percent growth during the first quarter, higher than forecast, and consumption and expenditure have risen, prompting expectations that the economy will make a V-shaped recovery during the second half. Foreign demand for Pentium-level computers is rising owing to lowered prices, and exports of code division multiple access (CDMA) products to China are expected to increase. Consequently, Korea is forecasting an upturn in exports during the second half.
But Korea should not have to face these rapid changes in foreign markets with swings between joy and despair. Instead, it should improve its export constitution by seeking new markets, renovating domestic systems and improving its industrial structure.
Korea must devise a strategy to enter niche markets in developing countries, which take half of Korean exports. Korea should also study China, which is likely to join the World Trade Organization this year, in particular information on items that will benefit from eased regulations when the market is opened.The Middle East, which received $166 billion in oil money last year alone, has since the 1990s tried to escape its dependence on the petrochemical industry. Korea should join projects in such countries, especially in power generation, communication, IT and plant construction. Korea should also boost exports in ships, cars, IT and petrochemical facilities to Central and South America.
Recently, countries throughout the world have been putting greater efforts into entering new export and investment markets. The United States established a free-trade agreement with Jordan last year, and with Chile and Singapore this year. It also supports the introduction of a Free Trade Area in the Americas. Korea should concentrate on forming free-trade agreements with Chile and a bilateral investment treaty with the United States in respect to entering new markets and developing domestic trade systems.
It is also necessary to establish strategic alliances with major foreign companies in the iron and steel, petrochemical, electric, electronics, textile and car industries, in which trade disputes occur often. Many argue that we should develop new competitive products to add to existing export items. Including semiconductors, which make up 15 percent of Korea's exports, Korea's 10 top major export products account for 56 percent of total exports, indicating a seriously unbalanced trade structure. These products also react sensitively to changes in foreign demand, leading to severe price fluctuations. The current mass production structure should also be transformed, with diverse products manufactured in small quantities. To this end, the government should extend trade credit guarantees to technology start-ups, small and medium companies and strengthen its support of exports.
－ The writer is a researcher at the Korea Institute for International Economic Policy.
by Choi Nak-gyoon