[Viewpoint] Korea is faring better this time around

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[Viewpoint] Korea is faring better this time around

The just-concluded summit of the G-20 nations in Pittsburgh, Pennsylvania has reconfirmed the very strong commitment by leaders of major economies to cooperate as they address the ongoing financial crisis.

There are significant implications for the Asia region generally. In particular, the selection of Korea to host the fifth G-20 summit next November is very significant.

Asia has weathered the current global economic storm fairly well, at least compared with other regions of the world.

The current global financial instability contrasts dramatically with the financial crisis of 1997, which began in Thailand with a run on the national currency and then spread rapidly to other areas such as Southeast Asia, including Korea.

While the current crisis has affected every region of the globe, Asia has remained relatively strong.

China’s growth has slowed but the country did not enter a recession, while that nation along with Korea and Japan play influential roles in the G-20. Led by China’s very large economy, there are now strong indications that growth is resuming in this part of Asia.

In the 1997 economic crisis, the United States demonstrated singular leadership. Robert Rubin - the Treasury secretary under former U.S. President Bill Clinton - and Federal Reserve Chairman Alan Greenspan negotiated very substantial financial commitments from Wall Street investment banks and European sources to maintain international liquidity.

The current crisis is being managed in a more systemic fashion. The G-20 has quickly succeeded the G-8 as the world’s principal management forum.

The G-8 is a geographically more limited body reflecting World War II and immediate post-war relationships, represented institutionally in the European Union (originally the European Economic Community) and North Atlantic Treaty Organization (NATO). Japan is the only non-Atlantic member in the group, which comprises Britain, Canada, France, Germany, Italy, Russia and the United States.

By contrast, the G-20 is truly a global organization, which directly reflects the diffusion as well as expansion of economic power in recent years. Korea participates along with Brazil, China, India and other nations until recently regarded as Third World in levels of economic development. That distinction, a legacy of the earlier Cold War era, is now very clearly out of date.

Furthermore, capital is both more fluid and more concentrated in the private sector now compared to the 1997 crisis, though government regulation is changing the latter. Fluid capital reflects the triumph of very advanced electronic technology, represented most dramatically by the Internet, and competitive market outlooks and biases. Korea’s extraordinarily rapid economic development since the 1950s, with marked success in sectors ranging from steel to semiconductors, is promising for continued expansion of international leadership.

U.S. President Barack Obama selected Pittsburgh as the meeting site because the city symbolizes the importance of structural change for economic survival and prosperity. Pittsburgh was once the nation’s premier center of steel manufacturing. Local leaders have adjusted effectively to a steep decline in the domestic American industry since World War II. Today, the city has a growing reputation as a center of high-technology research, development and manufacturing, with a current emphasis on energy-efficient facilities. This green dimension was a crucial ingredient in persuading President Obama to hold the summit there.

Pittsburgh’s unemployment rate today is under 8 percent - still high but below the national average. By contrast, in the early 1980s the city led the nation with an unemployment rate of over 17 percent. Earlier in the week of the summit, Bill Gates of Microsoft dedicated a new computer science complex at Pittsburgh’s Carnegie Mellon University. Apple, Disney, Google and Intel are some of the other high-tech global companies with major facilities in the city. The Economist Intelligence Unit has described Pittsburgh as the most livable city in the United States.

In short, an ability to handle change is essential for mature and very new industrial economies. In this context, Korea is a most appropriate G-20 host. The emerging, evolving current international economic order is encouraging for the international system as a whole.

*The writer is a Clausen Distinguished Professor at Carthage College in Wisconsin.

by Arthur I. Cyr

G-20 leaders and summit attendees pose for a group photo during the G-20 summit on Sept. 25 in Pittsburgh. [AP]
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