Changing our export paradigmOn Dec. 14, Korea’s trade volume exceeded $1 trillion for the first time in three years. Only nine countries have had over $1 trillion in trade. But considering the changes in domestic and international environments, some say the government should deviate from the qualitative export expansion policy.
First of all, global trade is not likely to grow considerably in the future. The United States and other developed nations are reinforcing trade protectionism, and as the global division of work between underdeveloped and developed worlds changes fundamentally, the rate of global trade growth has slowed down considerably.
Yet a bigger problem is that Korea’s export industry lacks preparation for the future. The world is busy calculating the impact of the fourth industrial revolution on industries and societies. In China, the venture start-up boom is led by universities, and the government and leading IT companies are making major investments. Chinese companies are already globally competitive in drones, electric cars and mobile payment.
Meanwhile, Korean companies haven’t gotten clear future business ideas or visible achievements. Some major companies invest in bio and hydrogen vehicles but are yet to catch up with global leaders. Also, competitiveness in creative engineering and software fields is lacking. We need to change the export portfolio with high added-value products, including parts and materials. There should be distinguished and clear pinpoint support for the industries with high potential and companies with competitive capabilities.
The government has recently announced the industrial policy direction of the new administration. It outlines the plan to create more than 300,000 jobs by 2022 through innovative growth. The direction is right, but further policy priority coordination and specific policy execution measures need to follow. Policy financing support such as trade insurance should not only be simply expanded but also be associated with expansion of new export items and job creation.
*Dean of the Graduate School of Industrial and Entrepreneurial Management at Chung-Ang University