[OUTLOOK]Not time yet for popping the corkThe financial crisis that drove our country to seek the help of the International Monetary Fund officially began in November 1997. But the broader Asian financial crisis began a few months before that. In mid-1997, Thailand's long-ailing currency crashed as foreign funds fled the country. The baht had fallen after 10 years of a snowballing trade deficit, and even the frantic efforts of Thailand's central bank, which used up all its foreign currency reserves, could not halt the plunge.
In early July of 1997, the fixed currency exchange rate of 25 bahts to one U. S. dollar was abandoned and the baht lost half its value. Thai banks and firms that had borrowed large amounts of dollars, trusting the fixed exchange rate, went bankrupt and the stock market crashed. The impact of Thailand's woes surged through neighboring countries ?the Philippines, Malaysia and Indonesia -- and in late October, hit the Hong Kong stock exchange market. By November, Korea was in such financial trouble that it had to ask the IMF for help.
In the five years since the Asian financial crisis, our economy has changed dramatically. The financial sector has been restructured and the management transparency of our corporations has been increased. We have also managed to turn around our trade deficit and attract more foreign direct investment. Foreign currency reserves, nearly exhausted in late 1997, are now well over 100 billion dollars, the fifth-largest in the world.
But some gloomy shadows of the "IMF crisis" still hang over us.
In 1995, we celebrated when our national income per capita finally reached $10,000. After the financial crisis, the weak value of the won dropped our national income per capita to a mere $8,900 dollar, lower than the $9,000 per person we earned in 1994.
Japan's national income per capita reached the $10,000 mark in 1981 and doubled to $20,000 by 1986. In 1991, it was $30,000. It also took Singapore only five years to double its national per capita income of $10,000 in 1989 to $20,000.
The Korea Development Institute reported earlier this year that it expected our national income per capita to reach $23,000 in 2011. Japan, laugh though we may about its geriatric economy, reached $30,000 11 years ago. We have a long road ahead of us before attaining the national income per capita of between $20,000 and $30,000 that most advanced countries enjoy.
The potential that our people showed in advancing to the semifinals of the World Cup tells us that we can be as good as any other advanced country if we don't let short-sightedness and selfishness get the better of us.
There are more than 140 free trade agreements in force in the world today. Korea, the 12th largest economy in the world, has yet to sign one. Our government has been pursuing an agreement with Chile for the last five years, but the benefits of such an agreement have been denied to the 48 million people of Korea because of the selfishness of apple and grape growers and the narrow-minded coverage of some media sympathetic to those farmers. In the same way, tenacious opposition from the domestic film industry has stopped us from signing a bilateral investment treaty with the United States that could do much to energize our economy. Our aggressive labor unions are infamous around the world for the frequency of their illegal strikes, including strikes at foreign-invested firms. What should the union members of our country learn from the employees of WorldCom? Instead of shaving their heads, tying red bandannas around their foreheads and dashing out onto the streets of Seoul regardless of public safety and order, the employees of the second largest long-distance calling company in the United States are silently -- if not happily -- acquiescing in the decision of the company to let go 17,000 of its 80,000 employees in the aftermath of its admission of a $3.9-billion accounting fraud that felled the company. Our distribution costs are still twice those of Japan, and the American Chamber of Commerce in Seoul said that Korea's business environment was considerably less appealing than those of Hong Kong, Singapore, Tokyo and Shanghai. This tells us that even five years after the financial crisis, there are still bumps in the road.
Last year, our national income per capita of $8,900 was similar to that of Argentina's $8,500 in 1995. We should remember that until the mid-1990s, Argentina too had heard praise similar to that we are hearing now from some international financial institutions and media for our success in overcoming the financial crisis.
We must continue on with economic reform with an even humbler attitude.
The writer is a professor of international banking and finance at George Washington University.
by Yoon S. Park