Keeping Korea competitive
For the first time in history, Korea is the world’s ninth-largest exporter, recording an aggregate export volume of $165.4 billion in the first half of the year. We have moved ahead of our competitors, including Russia, Britain and Canada, and moved up three places from last year’s 12th place ranking.
Amid the worldwide economic slump arising from the global financial crisis, this is evidence that Korean companies have grown competitive enough internationally to earn a track record as a major exporter.
We would like to extend a warm, rousing round of applause to the entrepreneurs who have played an active role in the export markets of the world. Each one has turned the crisis into an opportunity.
Thanks to their strenuous efforts, our economy has pulled through the rough times and we are escaping the effects of the global economic crisis at an astonishing speed. In particular, the precious foreign currency reserves they earned played a pivotal role in helping the nation tackle the shortage of foreign capital from the global credit crunch. Building up the nation’s foreign currency reserves has also provided a strong protective shield that has helped to quell financial anxiety and exchange speculation.
However, we need to be careful about celebrating too much. We need to bear in mind that the amount of exports was 22.7 percent lower compared to the same period in 2008. Our rise in the rankings is not due to a remarkable increase in our export volume, but to the poorer-than-expected export performance of our competitors. This means that in comparison to our competitors we have not moved backward as much as we have failed to move forward. It is wonderful to note that we have weathered the global economic recession and the effects of receding trade.
In addition, we should not overlook the fact that Korea’s price competitiveness improved after the won’s steep depreciation against the U.S. dollar, which has also contributed to the increase in export volume. We should remember, though, that when the won increases in value there will also be great effects.
There is growing pressure for the depreciation of the won-dollar rate, with the criticism that the Korean won has been artificially undervalued. We should spare no effort to continue to strengthen the development of technology and design and reduce costs in order to maintain our export competitiveness even after the disappearance of the exchange rate effect.
Only then will we truly be competitive, even if the exchange rate effect is removed. If we can’t be competitive, our rise in the export rankings will be meaningless.