Economists call for policy reform

Scholars and analysts raised the need for a drastic overhaul of Korea’s economic structure, including policies to induce long-term investment and incentives to allow owners of small firms to make bold investments.

“Right now, the Korean economy is facing troubles from home and abroad,” said Ha Sung-keun, a professor emeritus of Yonsei University and former member of the Bank of Korea’s Monetary Policy Board. “It’s time that Korea decides its future course of action and steer itself to the right direction policy-wise,” Ha said Thursday at a seminar hosted by the Korea Economic Association.

Lee Keun, an economics professor at Seoul National University, said Korean companies are lagging compared to their competitors abroad due to the lack of a mechanism that encourages long-term investment.

“Korean companies are focused on short-term performance and the reason many of them are struggling to find future sources of income is because they didn’t make proper investments a decade ago,” Lee said. “We need policies to vitalize long-term investment through options such as loyalty-driven securities.”

The Florange Act in France, for instance, doubles voting rights for shareholders who have held a stock for more than two years.

Lee also called for a policy to grant more authority to the owners of smaller companies. “If we look at the cases in the U.S. such as Google and Facebook, the government allowed them to issue different classes of shares when they first went public, giving their CEOs the right to yield more voting power,” Lee said. “As a result, these companies were able to make future-oriented investments.”

Lee Hyun-hoon, a professor of international trade and business at Kangwon National University said aging is a global trend.

“Looking at the global demography, by 2030, there will be about 1.4 billion people at the age of 60 or over.”

BY CHOI HYUNG-JO [choi.hyungjo@joongang.co.kr]