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Web-only Exclusives November 30, 2000 From Our Correspondent: Hirohito and the War A conversation with biographer Herbert Bix From Our Correspondent: A Rough Road Ahead Bad news for the Philippines - and some others From Our Correspondent: Making Enemies Indonesia needs friends. So why is it picking fights? |
For Members Only
The pride and perils of success
UHM RAK YOUNG SEEMED earnest. "We recognize that our liberalization plan falls short of the level achieved by advanced countries," says the assistant minister of the Finance and Economics Board, referring to Seoul's market-opening concessions. "But we have made a commitment to continue the process. Everybody knows we have come a long way in deregulating our economy in the last few years." Last week two key committees of the Organization for Economic Cooperation and Development, the Paris-based club of industrial countries, were finally convinced and agreed to recommend South Korea's application for OECD membership.
Milton Kim is a scion of the family that controls the sixth-largest chaebol, Ssangyong, and CEO of its securities brokerage. He credits the OECD bid with helping "accelerate deregulation, particularly in financial services, and create a level playing field not just for foreign players but for local players [previously] barred from a lot of things." Yoon Byung Chul, president of midsize Hana Bank, argues: "We had to open up one day. By liberalizing financial services, our government is helping enhance the competitiveness of our industry." It will also help cut the cost of domestic credit, a major demand of business.
For Koreans, OECD membership would climax a half-century climb from colonization and war to industrialization and democracy. From one of Asia's poorest nations in the late 1950s, with average income of less than $80 a year, Korea is now the region's third-richest non-oil economy, with per-capita GDP of nearly $12,000. Annual exports, below $100 million in 1962 (about half of the Philippines' then), will reach $150 billion this year, or about eight times that of the Philippines. At current growth rates, South Korea will be the 10th-biggest economy and trading nation next year. "These numbers justify our being admitted to the club of the world's economic leaders," says Hyun Jung Taik, a director-general at the Finance and Economics Board. He says OECD membership will allow Korea to participate in making global rules, improve its credit rating, cut the cost of foreign borrowings, and help offset bilateral trade pressures.
The opposition National Congress for New Politics thinks OECD membership is just a vote-getting ploy by the ruling New Korea Party. The NCNP contends that OECD-linked deregulation means abandoning a plan to nurture and defend small businesses from takeover. Critics also warn of inflation from the rush of as much as $10 billion in foreign investment once barriers go. Moreover, a sudden reversal of such hot-money flows could trigger a Mexico-type crisis. Even a ruling-party stalwart, presidential hopeful Park Chan Jong, has objected to OECD membership at this time. "It will deal a serious blow to our economy," he said of financial deregulation. But most Koreans won't let such worries spoil their proud moment.
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