[Viewpoint] Signals of a greater Korea ahead

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[Viewpoint] Signals of a greater Korea ahead

Early last week, several local newspapers featured a small story on a Goldman Sachs report on their business pages. The investment bank predicted that the size of a united Korean economy could surpass those of Japan and Germany by 2050.

The media did not make a big deal of the report, probably because a unified Korea 40 years from now sounds far-fetched. There is, after all, the ongoing noise from the North’s nuclear program. Moreover, a forecast that looks 40 years ahead might not have felt real.

Yet I wanted to study the report more closely, because something struck me like lightning. We need to carefully watch for signals about the future. While an accident might seem to have happened coincidentally, we often have the belated realization that there had been signals beforehand. When amazing things we never imagined approach, we have often failed to detect the signals. Instead, we are uncertain or simply complain about the present. However, if we need to, we can become super sensitive and detect even the slightest sound or faintest light.

Goldman Sachs publishes Global Economics Papers regularly, and we wonder why the prestigious investment bank is so optimistic about the Korea of the future. Issue No. 188 is not its first rosy forecast.

More than two years ago, in March 2007, Goldman published Global Economics Paper No. 153, with forecasts on the 11 countries with midsize economies and great potential. Those included Korea, Mexico and Indonesia. The report predicted that the “rich” club - countries with per capita incomes of more than $60,000 by 2050 - will include the G-7 countries less Italy, plus Russia and Korea.

More surprisingly, the paper ranked Korea in second place, with per capita income of $90,000, right behind the United States. According to the report, Koreans would be better off than citizens in the United Kingdom, Germany, Canada, France and Japan. The paper was briefly covered by business newspapers. In short, Goldman Sachs has produced such promising signals twice with no PR impetus from the government.

Interestingly, the latest paper put special emphasis on inter-Korean relations. Should the two Koreas maintain two systems and cooperate with each other, Korea would enjoy a tremendous synergy and have an economy bigger than any G-7 nation except for the United States by the year 2050. It predicted that the South would have a per capita income of $96,000 while the North would reach $70,000, making the average $86,000.

The report said it based its prediction on the quality labor and abundant natural resources in the North, technology and capital in the South and the drastic improvement of productivity possible from synergy of collaboration. Of course, the basic premise is the opening and reform of the North. When the South and the North work together, North Korea could achieve at least a 7 to 8 percent annual growth rate for the first 15 years, and the South would bounce back from a diminishing growth engine caused by a shrinking population.

Therefore, it would be better for Korea to pursue the gradual integration model of China and Hong Kong rather than Germany’s all-out unification, which would put considerable burden on the South. Considering today’s North Korea, whose per capita income is about $1,000, it sounds too good to be true.

Yet this must be said: We are not considering a far-fetched dream. Goldman Sachs has been repeatedly sending us signals.

What interferes with those signals is background noise. When that noise is loud enough, we can no longer detect the signals. Indeed, the Korean media failed to detect the recent signal because of such noise. Just when the report was published, our public servants unions joined the Korea Confederation of Trade Unions. Because of this noise, we didn’t capture the signal.

Who contributed the most to the economic development we enjoy today? Global business giants such as Samsung Electronics, LG Electronics, Hyundai Motor and Hyundai Heavy Industries played crucial roles. But in Korea, these conglomerates are often underappreciated and criticized.

The KCTU has been a leading critic of business leaders. It is truly absurd that the civil servants’ unions became members of this group. There are several hundred thousand young people desperately looking for jobs. I hope these bright job seekers can replace the civil servants who are wedded to an unreasonable mind-set.

The loudest noise in inter-Korean relations is the North’s nuclear program. The key signal from Goldman Sachs is the message that Korea will become the greatest nation in the world in the next generation if the North changes and the two Koreas cooperate. However, Seoul and Pyongyang cannot advance forward because of the nuclear noise. Of course, North Korean leaders have to detect the signal first. But Seoul also has to make sure it doesn’t miss the signal because of noise.

There will always be noise interfering with our perceptions. Even if it is dark at the moment, we need to constantly move, one step at a time, toward a signal from the year 2050.


*The writer is a senior columnist of the JoongAng Ilbo.

by Moon Chang-keuk
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