On Korea: Academic Paper Series 2014

The Asian economic resurgence was first initiated by Japan after the end of World War II. Japan’s economy grew rapidly during the three decades from 1950 at the rate of almost 10 percent per year, with its GDP growing to be twice as big as that of Britain and almost half of the U.S. economy by 1980, becoming the second largest economy of the world after the United States. Similarly, Korea was able to replicate comparable economic successes as in Japan, even though the Korean economic drive started more than a decade later than in Japan. In recent years, however, the Korean economy has notably slowed down, with huge youth unemployment and even more serious underemployment. The recent drastic slowdown of the Korean economy has raised the possibility that it might face similar “lost decades” as in Japan during the past two decades. When President Park Geun-hye took office in early 2013, she called for a second Miracle on the Han River and launched a 3-Year Plan for Economic Innovation. However, the 3-Year Plan relies too heavily on the government to take the initiative and play the leading role. If anything, the government is expected to play an even more important role than before, in taking major policy initiatives and disbursing enormous public funds. In a truly globalized economy, there will be less room for Bureaufias to flourish in Korea. That is why the Park administration should complete FTAs with such major countries as China and Japan as soon as possible. It should also join the Trans-Pacific Partnership (TPP). In fact, completion of these FTAs should be considered as important as the government’s current deregulation drive.