[Viewpoint] A scenario of hope

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[Viewpoint] A scenario of hope

Owing to incompetent politicians who care for nothing but political struggle, and the media that keep on shouting that times are hard and consumption is down, many companies have gone bankrupt and many people are going through difficult times. Unease in our society is forever rising because even the most skilled experts are not saying much. It is almost springtime, but is there actually any hope for us?

I recently heard about the bleak lives of ordinary American people from a fellow professor who came from the United States for a short visit. He said people are eating at McDonald’s and taking the bus to cut down on expenses. He said that Korea is not yet in a financial crisis. We talked about the potential of Korean companies that have managed relatively well in the reeling international market. We arrived at the conclusion that Korea could lead the world as far as the manufacturing industry is concerned, if we could only go about it in the right way.

Here is our scenario of hope. We have products we can present to the world, such as semiconductors, cell phones, home appliances, fibers amd motor vehicles, as well as our construction and shipping industries. It was possible for Korea, Japan and China to become the factories of the world because more advanced economies decided to leave mining and manufacturing industries that require hard labor to less developed countries and switched over to the service industry, which has higher added value. It was, therefore, a long time ago when the United States stopped producing television sets. Nevertheless, advanced countries believed they could fill the gap created by the absence of mining and manufacturing industries with the power of abundant capital and financial techniques, and they actually enjoyed a prosperous life for a long time with high profits from their capital and cheap products from less developed countries.

However, the capital and financial system they believed in has unfortunately created a problem. Now, advanced economies know they cannot make as much profit as they want from capital and finance and are looking for alternatives. But there is no appropriate one because the industrial foundation has already grown too weak. The mining and manufacturing industries are still significant in Korea. Although the share of the service industry, which was 45 percent of the gross domestic product in 1970, grew to 56 percent in 2005, it is still very low compared to 76 percent in the United States, 70 percent in Germany and 60 percent in Japan.

In particular the products we are most proud of are ones that we have secured by winning over Japan, the world’s strongest manufacturing country. Therefore, it is even more reassuring. Meanwhile, China still needs time to overtake Korea. Moreover, we have abundant human resources. According to the Korea International Trade Association, 39 percent of Korean university students majored in science and engineering in 2004, the highest of all member countries in the Organization for Economic Cooperation and Development. It is two times higher than that of the U.S., where 15 percent of students major in science and engineering, and much higher than Germany, in second place with 31 percent, and Japan, with 25 percent. This means our small- and medium-sized companies, where 88 percent of workers work, are still going strong.

The entire world, Korea included, is racing to take economic revival measures, pouring astronomical amounts of funds into the market, to overcome the current financial crisis. Financial resources still remain in the financial sector because there is no appropriate place to invest in and people cannot trust each other. However, people like Warren Buffett are already concerned about overheating. Once the markets revive, those who provide better quality goods will win. The next generation will surely be ours because Korea has an advantage in the high standard of manufacturing capability of its business corporations and rich human resources. This is our scenario of hope.

Here and there, we already find many signs that our hope will turn into reality. The rumors of a crisis that broke out intermittently have stopped and the government is recovering credibility. I even read a foreign article that casts a positive light on the Korean economy, saying that even global companies going through difficult times in other countries are increasing sales goals of their Korean branches. There is also a prediction that economic revival will start in Asia, which is based more on the real economy. However, I am concerned that if the economic recession continues for a prolonged period, the small and medium-size companies that are vulnerable to changes in the external environment will fall one by one, and we will not be able to see the sprouts of hope.

It’s said that a good offense is the best defense. How about offering our full support to small- and medium-size companies so they can build themselves up to become dominant powers in the world market by using this as a chance to internationalize their products, establish a system of monitoring market information and streamline areas prone to bubbles?

Naturally, there will be some who will find it unfair. So we will need a national consensus. But do not fret. Korean people have saved gold and given up their youth without complaint when they saw that the country needed them. After all, aren’t we sharing jobs, our lifeline, nowadays? This is not just a crisis; for us it is a valuable opportunity to become the world’s strongest industrial country.


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

by Lee Jeong-jae
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