[Viewpoint] A global test for Korean leadership

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[Viewpoint] A global test for Korean leadership

Many summits, including that of the exclusive club of G-20 leaders, are bound to be disappointments or failures, especially for those not invited. Expectations, however, are higher for Korea’ leadership of the G-20 summit in November 2010.

The event is a paradox, but still offers a precious chance to highlight the “Korean development model”. This could be wishful thinking, given greater priorities to ensure global economic recovery.

The agenda is skewed in favor of the advanced market economies, of which Korea is also one.

The event will also highlight contradictions and gaps not only among the blocs of rich countries in the U.S. and Europe and among the emerging markets in East Asia and South America, but also with poor countries who need a voice at the discussions.

Korea’s leadership of the G-20 is a chance to show that an organized culture of nationalism or love of country, commitment to continuous innovation, investments in social and physical infrastructures, human capital investments through education and training, and focused leadership, among others, are essential to overcome crises and constraints to economic development.

Very few are aware of Korea’s development experience after the devastation of World War II and the Korean War, as well as the recovery from the Asian financial crisis in 1997-98. Featuring the Korean development model through information kits given to thousands of summit delegates descending on Seoul, along with the large amount of global attention the G-20 summit will receive, should be a landmark contribution more valuable than endless billions of dollars into the sinkhole of development assistance to poor countries.

It is important for Korea to transform the development dialogue and overcome the lobby of professional beggars entrenched in international organizations who claim to speak on behalf of poor people from all over the world.

The challenge for Korea’s G-20 event organizers is to balance the need to put out the fires and bubbles of an unstable, unregulated global financial market, while securing the positive aspects of globalization.

All countries have a common stake in green technology, stable financial markets, and fair globalization - sufficient incentives for leaders of countries inside and outside the G-20 to be bound together by a Seoul statement in November 2010.

There should be no room for failure since the Toronto summit on June 26 and 27, 2010 will provide enough early lessons for the Seoul organizers to avoid messy spectacles and empty rhetoric, along with the usual crowd of protestors and police.

There are urgent issues that require follow up, such as effective global financial regulations, global warming, job creation and the decent work deficit, among others.

The event is a rare teaching opportunity for other countries to learn how Korea mobilized patriotism or love of country to recover from war, low incomes and lack of jobs to achieve advanced industrialized status.

This is significant, given the pending agenda in the G-20 for more official development assistance (ODA) for poor countries.

Korea’s experience should teach developing countries how to graduate from being a recipient of international assistance to being a donor. Many development policy makers are not familiar with Korea’s experience: how the state provided leadership to organize industries and markets, overcome market failures, build infrastructure, advance in science and technology, implement a decisive postwar agrarian reform, and other key features of Korea’s development.

There are some paradoxes about the G-20 summit in Korea. The G-20 summits first began after the beginning of a crisis stemming from the capitalist system in the West, mainly the U.S. and Europe. The first meeting was held in 1999 in Berlin, between finance ministers, central bank governors and the IMF.

This year, however, the venue is Korea, in East Asia. Emerging countries such as China, Brazil, India and Russia may have significantly different priorities.

Korea’s organizers may have to refocus the agenda to highlight the G-20’s significance to Asia and emerging markets. The G-20 also signifies a power shift away from the G-7/G-8 countries, the acknowledged locus of financial and monetary coordination.

The Pittsburgh summit in 2009 acknowledged this power shift and established the G-20 as the “premier forum for international economic cooperation ... in an interconnected global economy to build and balance the global economy, reform the financial system, and improve the lives of the poor.”

Seoul’s G-20 organizers will be expected to carry over much of the heavy baggage from the 2009 summits in London and Pittsburgh: follow up action on global warming, results from the financial regulatory reforms, transparency in compensation to be linked with long term risks, caps in executive bonuses, job creation, filling the decent work deficit, social security and other issues.

There are threats of new bubbles, such as Dubai, or from China, which could threaten agreed frameworks of financial regulation and monetary coordination.

Experts point to these heavy expectations for Korea’s leadership as a bridge between traditional industrialized countries that used to make up the G-7/G-8 countries and the emerging market economies.

Korea is strategically, and uniquely located between three economic giants: China, Japan and Russia. Strong political and military ties with the United States will require Korea to balance these strong geopolitical interests, face threats as well as opportunities to craft new global strategies.

A successful Seoul G-20 summit means higher expectations for Korea’s global leadership.

This is a new element in Korea’s diamond dilemma, between the path of brilliance or mediocrity. It is important for Korea’s institutions to be in a position to supply this great demand for global leaders, managers and innovators.

*The writer is a professor of business at Hanyang Univ. and a member of the PhilRPG.

by Maragtas S.V. Amante
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