[CULTURAL DIMENSIONS]How Korea ranks in the worldIn the late 1990s, the IMD world competitiveness rankings, put out by a Swiss business institute, captured the headlines, but now they receive only a short mention. One reason for the change could be the inclusion of a number of regions within nations in the rankings. A more likely reason, however, is the media’s notoriously short attention span.
The IMD competitiveness rankings are “so ’90s,” but they remain as relevant now as they were then. The 2004 rankings put Korea in 35th place, behind India and ahead of Portugal. Since 2000, Korea has ranked in the lower 20s among nations, but its ranking among Asian nations has fallen steadily over the past four years. Korea now ranks behind China, Hong Kong, India, Japan, Malaysia, Singapore, Taiwan, and Thailand. Only Indonesia and the Philippines, both of which languish near the bottom of the list, rank lower than Korea.
All international comparisons are problematic because common standards of evaluation are difficult to find. Subjective categories such as “quality of life” are difficult to measure with statistics within nations, let alone across many nations. The IMD rankings could thus be flawed in a way that makes Korea look less competitive than it really is. The reverse could also be true.
More interesting than the rankings is an analysis of the fundamentals of national competitiveness that accompanies the 2004 report. This document lists 10 “Golden Rules of Competitiveness” as follows:
1. Create a stable and predictable legislative environment.
2. Work on a flexible and resilient economic structure.
3. Invest in traditional and technological infrastructure.
4. Promote private savings and domestic investment.
5. Develop aggressiveness in the international markets as well as attractiveness for foreign investment.
6. Focus on quality, speed and transparency in government and administration.
7. Maintain a relationship between wage levels, productivity and taxation.
8. Preserve the social fabric by reducing wage disparity and strengthening the middle class.
9. Invest heavily in education, especially at the secondary level, and in the life-long training of the labor force.
10. Balance the economies of proximity and globality to ensure substantial wealth creation, while preserving the value systems that citizens desire.
If these rules are any guide, then Korea is in trouble. The year-long battle between President Roh and the National Assembly rendered Rule #1 non-functional. Rules #3 and #4 are under siege as manufacturing moves abroad and credit card debts pile up at home. Rule #7 could be at risk if labor unions become a powerful influence in the newly elected National Assembly. Rule #8 has been under pressure since the economic crisis of 1997, even though wealth distribution in Korea is better than many other industrialized countries.
On the bright side, Korea has made progress on Rules #2 and #5 as the economy has become more diverse and efforts to attract foreign investment have intensified since 1997. Contrary to public perceptions, running battles against corruption have helped raise ethical standards, helping to strengthen Rule #6.
If private education is included, Korea invests heavily in education as Rule #9 states, but investment in secondary and higher education is too low for the needs of society. Korea has also done fairly well on Rule #10, as evident in the development of a strong local film industry amid spreading globalization.
Together, this balance sheet shows that Korea is weakest in areas related to political stability and strongest in areas related to bureaucratic initiative.
Political instability creates insecurity in the business climate that stifles investment and sends investment overseas. At the same time, political instability raises doubts about the will of politicians to make difficult decisions and stick with them. By contrast, bureaucratic initiative to improve the foreign investment climate, nurture new industries, and develop human resources has led to some of the most positive developments in Korea in recent years.
Bureaucratic initiative comes from the right dose of political leadership; political instability comes from a lack of leadership and indulgence in “hyper-politics.” The right dose of political leadership dep-ends on the demands of the times. For Korea to improve its performance on the IMD’s Golden Rules, it needs a stronger dose of political leadership.
In the end, Koreans need to ask themselves if they are happy with being outranked by so many nations in the IMD and other competitiveness rankings. The left-leaning idealists who are now driving public discourse in Korea will respond by suggesting that national competitiveness is a capitalist game. Perhaps so, but most Kore-ans know that a society that strives to improve itself according to IMD’s Golden Rules is better than one the wallows in unstable, stagnating “hyper-politics.”
* The writer is an associate professor at Kyoto University in Japan.
by Robert J. Fouser