[VIEWPOINT]Practical globalization

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[VIEWPOINT]Practical globalization

The average income of Koreans now exceeds $12,000 a year. The average income of a Korean worker is double the GNP per capita, far higher than the 90 percent of an American or the 110 percent of an average Japanese. In terms of purchasing power, a Korean’s average income is over $33,000, an amount far higher than that of an average American.
The purpose of developing the country’s economy is for the people to live better lives, and if we can keep up the growth while giving people high wages, there is nothing wrong with that. The problem is how much long this state can be maintained.
Today’s thoughtless spending eats up the potential for tomorrow’s growth. This generation should feel sorry for future generations. Today’s youth unemployment rate is one piece of evidence that tells us that such fears are not groundless. Another proof is the dwindling investment rate. Exports that do not lead to increased investment and growth that does not lead to more jobs is making our future uncertain.
The cause of the problem is simple. The miracle of the Han River was possible because we invested in education. The proliferation of knowledge by popularizing higher education, which had been denied to most Koreans during the Japanese colonial period, was the most important foundation for our economic growth.
But those who developed our economy through education and knowledge have stopped at this point when knowledge has become the most important factor in the economy. This is an ironic tragedy.
There are two crucial elements in the sources of the U.S. economic power. They are the monopolistic positions of the military industry and the education industry in the economy. Korea spends only one-tenth of what is spent in other advanced countries on one college student.
With such a meager level of investment, it is hopeless to expect our youth to get jobs in an already globalized labor market. The jobs befitting the level of Korean college education are starting to go over to China or India while the knowledge-based workers who are needed for high-paying jobs that require a high level of expertise and professional knowledge are all being produced abroad.
That is why everyone wants to go abroad to study or take one of the only two choices that are left in Korea ― becoming a doctor or passing the national judiciary exam or the civil service exam. If the high economic growth of the past depended on the quantity of education, future growth requires education of a higher quality.
The polarization of the economy, symbolized by the terms “big business” and “small and medium business” is ultimately the polarization of those who have consistently participated in the global knowledge-producing network and those who haven’t.
As the data on international patents show, the quantity of new knowledge being produced is expanding immensely. It would be impossible to catch up with only the capabilities of a small or medium business. Such businesses that have cooperative relations with big businesses are in better situations, and those who followed big business’s lead and moved to China are those who safely made the transfer. In case of many smaller businesses, the ultimate goal is in participating in the network formed by leading businesses both in and outside of Korea and acquiring a channel for continuously receiving and learning new knowledge. Of course, this also requires a shift in the thinking of big businesses; they will have to treat smaller companies as partners rather than subcontractors.
The success of a medium business that made itself a pioneering, royalty-centered business model by supplying Chinese mobile phone manufactures with critical parts and software was possible because it had ties with foreign businesses that continuously provided it with new information.
In other words, a three-tier global production network among the United States, Korea and China is operating. The main work for the employees of such medium-size companies is to provide technical assistance to Chinese factories and developing the next line of products.
The significance of globalization for government policies is that there is no guarantee that many industries will remain forever in Korea and that Koreans will not have any “lifetime jobs” from now on. The only thing that the government can do is to provide the people with the best lifetime education possible and help them acquire skills that can allow them to get good jobs anytime, anywhere in a flexible and global labor market.

* The writer is a professor of economics at Seoul National University. Translation by the JoongAng Daily staff.

by Lee Keun
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