[Overseas view] Trans-Pacific dynamismA little over 50 years ago, the Republic of Korea emerged from the deadliest and most devastating war of the second half of the 20th century. Its economy was in shambles: 37th in the world, smaller than Bangladesh, the Philippines and Romania.
Per capita income, slightly over $1,000 in today’s purchasing power parity terms, ranked Korea’s citizens in 76th place in the world, with a standard of living on the same level as Albania, Mozambique and Yemen.
In my region of the world, the citizens of Colombia were twice as well-off as 1950s Koreans, those of Argentina nearly five times better off and Venezuelans nearly eight times richer. What happened over the next two generations would have to be described as miraculous, were it not for the enormous amount of toil and sweat that millions of Koreans contributed to make the country’s transformation possible.
Today, the Republic of Korea is an economic powerhouse. With a Gross Domestic Product nearing $1.2 trillion in purchasing power parity terms, it hosts the 12th-largest economy in the world. Its citizens have achieved “first world” standard of living, with a per capita income akin to that of New Zealand or Greece.
Today, the average Korean is more than twice as well off as her Argentine or Venezuelan counterpart, and more than three times wealthier than the average Colombian.
On the corporate front, Korea boasts 52 of the Forbes Global 2000 world’s largest public companies. It has international brands familiar from Siberia to Tierra del Fuego ― like LG, Hyundai and Daewoo ― and the most valuable consumer electronics company in the world, Samsung, with a market capitalization in excess of $100 billion.
In the last five years, the countries of Latin America and the Caribbean have also been experiencing an economic renaissance. Boosted by high commodity prices and favorable financial conditions, and aided by the hard-won economic reforms of the 1990s, the region has been growing at an average annual rate of 5 percent, with low inflation and strong current account surpluses. Economic dynamism and stability, coupled with innovative social policies, are making a substantial dent in the region’s poverty.
As reported recently by The Economist, between 2002 and 2006, 15 million households in the region ― close to 10 percent of the population ― ceased to be poor. Indeed, in Brazil and Mexico, which host half the region’s 560 million people, the incomes of the poorest 50 percent of the population are rising faster than the average. On this trend, analysts predict that by 2010, the majority of households in the region will be middle-class 21st century consumers with access to modern credit and savings products ― a key turning point in the development process.
As Latin America seeks to consolidate the gains of the last half decade and plot the leap to a next stage of development, it again looks to models like Korea ― a high-growth economy nourished by a superb educational system, cutting edge-technologies and strong incentives for exports and inward investment in high-tech ― for direction, ideas, and inspiration. But it does so also for trade and investment.
Trade between Korea and Latin America has been growing at rates in excess of 10 percent per year since 1990. Samsung, LG and Daewoo are today operating from Manaus to Mexico City and Tijuana to Taubate. Opportunities abound for even greater exchange and improved access to both markets.
The free trade agreement signed between Korea and Chile in 2003 points the way to a new dimension in economic relations between both regions.
By working jointly with our partners in the Korean government to bring more than 120 Latin American businesspeople and trade and investment promotion officials to Seoul next week for the 2007 Korea-LAC Trade and Investment Forum, the Inter-American Development Bank aims to open new doors for business and cooperation at the dawn of the “Pacific Century.”
*The writer is president of the Inter-American Development Bank.
by Luis Alberto Moreno