South Korea: Trying to Become a Tiger Once Again
South Korea: Trying to Become a Tiger Once Again

The inauguration of Park Geun-hye, South Korea’s first female president ushers in a new chapter in Korea’s history. Park Geun-hye is the daughter of former president (and dictator) Park Chung-hee and served for five years as first lady when her mother was assassinated in 1974. While Chung-hee’s presidency (1961-1979) economically transformed the country, it is associated with widespread human rights abuses. In spite of this political baggage, many eagerly await Park’s presidency.

Feminists around the world applaud the election of Korea’s first female president and hope that her presidency will improve gender equality. Korea ranks 108 out of135, according to the 2012 World Economic Forum (Kim, 2013). Improving gender equality will not be easy due to ingrained cultural as well as structural barriers to participation. If Park can increase the number of women participating in the economy, she will not only improve the lives of women, but the Korean economy as well.

The 2007-2009 Financial Crisis dampened growth of the South Korean economy, which is currently only growing at 2.8 percent. Since Korea’s export-led economy is dependent on outside markets, once these markets contracted, Korea’s economy slowed as well. Many hope that Park will be able to strengthen Korea’s economy and hopefully address some of the structural challenges that stifle entrepreneurship.

None of Park’s efforts will improve the economy, unless there is peace on the Korean peninsula. Park faces grave security challenges from their neighbor, North Korea. The February 12th nuclear tests are the third nuclear test since 2006. South Koreans claim it is a threat to the very existence (Klug and Kim, 2013).  Park will need to decide whether to contain or engage North Korea. Analysts feel that her decision will set the tone for U.S. administration as well (Klug and Kim, 2013).

This news analysis will examine the different ways Park can choose to handle security, economic, and social challenges during her Presidency.

Containment or Engagement with North Korea?

Since the Korean War (1950-1953), South Korea has both engaged and contained North Korea. Park’s predecessor, Lee Myung-bak, took a very tough stance with North Korea and cancelled all aid shipments. Despite his tough stance, North Korea conducted two nuclear tests and three long-range rocket launches during his tenure (Klug and Kim, 2013).  The two South Korean presidents before Lee both engaged with the North and gave the North various forms of aid (Ramstad, 2013).

When responding to North Korea, South Korea balances the interests of the U.S. as well as other countries in the region. Currently, the United States is pushing for tightened U.N. sanctions in response to the February 12th nuclear test. The U.S. fears that these tests put North Korea one step closer to building a nuclear bomb that could be mounted on a missile and thus able to hit the U.S. (Klug and Kim, 2013).

China feels that sanctions and the previous tough measures of the past five years have not worked. China, like the U.S., does not want a nuclear armed North Korea, but believes that sanctions are not the answer. Shi Yinhong, a professor of international relations at Renmin University explains. He views the recent tests as a show of Kim Jong-un’s strength for his domestic audience. The tests are both a warning to the West and an act of retaliation against the West for pressure exerted against North Korea in recent years (Yeon-cheol, 2013). Whatever the motive may be, South Korea can chose to diffuse tensions.

In her inauguration speech, Park talks about rebuilding trust on the basis of clear deterrence. She has not requested that the North abandon its nuclear program as a perquisite for talks between the two countries. Though she has not articulated the path she offers to engage the North either. (Byong-su, 2013).  Renewed trust could be achieved by resuming aid shipments, reconciliation talks, and talks on larger scale economic initiatives and possibly even holding a summit with the new North Korean leader (Klug and Kim, 2013). North Korean media has not commented on Park’s inauguration, which many view as a sign that the North is waiting to find out whether aid will be sent and whether other economic initiatives might take place (Ramstad, 2013).

Economic Revival

South Korea joined the world economy in the 1960s. By the 1970s, the light manufacturing export industry reached a maturity. To sustain the growth, Park’s father invested in heavy and chemical industry (HCI). Due to insufficient domestic demand, he liberalized the economy. Tariffs were gradually removed and foreign direct investment was introduced. South Korea’s low currency value alongside low international interest rates and low oil prices drove Korean HCI in the 1980s. In 1993, the government introduced a new five-year plan further liberalizing the economy and integrating into the global economy.

The plan was interrupted by the 1997 Asian Financial Crisis, brought on by profligate Korean bank lending to corporations. An IMF bailout forced further Korean liberalization. South Koreans paid off their national debt through gold jewelry donations to the national treasury (Fackler, 2011).  Many believe the crisis ultimately strengthening the public, corporate, labor and financial sectors (Oh-Seok, 2012). Korea was well-situated to weather the 2007-2009 Financial Crisis. From 1998 to 2011, Korea’s GDP doubled (Fackler, 2011).

South Korea’s growth rate has cooled though to an expected 2.8 percent growth rate for 2013. Many feel it is time for Park to address to deeper structural challenges, such a shift away from Korea’s statist economy. The government runs dozens of regulatory agencies and owns 400 companies, including the nation’s top banks (Ramstad, 2013). Driving South Korea’s economy, family-run conglomerate “chaebols,” such as Hyundai and Samsung, wield an inordinate amount of influence. South Korean policy favors the Chaebols over small businesses, hurting entrepreneurship and innovation. Chaebols accounted for 84 percent of overseas shipment in 2010. The ten biggest conglomerates account for more than half of the value of the nearly 1,800 companies listed on the Korean stock exchange (Pesek, 2013).

In addition, South Korea has a wide range of social challenges that have economic implications. Some of these problems include inadequate welfare for the elderly and enormous expenses for childcare and education. High child care costs result in low birthrates, which ultimately impact the number of people participating in the workforce. Fewer workers may lead to lower productivity. Furthermore, the size of the workforce is depending on schooling. In Korea, only graduates from a few select institutions are considered employable. This unwritten policy marginalizes many potential workers. Korean youth feel that there are not enough decent jobs available for them (Ramstad, 2013).

So how will Park address these challenges? In her inauguration speech, Park mentions “economic democracy” and “creative economy.” Economic democracy involves shifting away from Korea’s statist economy. While the creative economy means focusing on science and technology, instead of manufacturing (New South Korea president warns the North, 2013).  The creative economy is viewed as a response to low growth, while economic democracy is viewed as a response to income polarization (Seon-hee, 2013).

To jumpstart the creative economy, Park will establish the Ministry of Future Creation and Science (Democracy sorely missing from Park’s inaugural address, 2013). She will combine technology with information technology and other sectors to provide a new economic growth engine. On the economic democracy front, Park wants a fair market that roots out unfair business practices that favor conglomerates. She also wants to stimulate domestic demand, strengthen the service sector, and improve the environment for small and medium-sized enterprises (Seon-hee, 2013). None expect her to completely turn away from the Chaebols though.

Park already returned control of trade matters and treaties to the Ministry of Industry from the Ministry of Foreign Affairs where it has been for the past 15 years. Outside analysts worry that this might be a return to non-tariff barriers, which were common when trade policy was controlled by the Ministry of Industry (Ramstad, 2013). Some view Park’s policy shifts as moving away from neo-liberalist economic policy that resulted in recent financial crisis (Seon-hee, 2013).

Improving Gender Equality

As noted earlier, according to the World Economic Forum’s Gender Gap Index, South Korea scored 108 out 135 countries for gender equality. This ranking is based on 14 variables, such as access to high skilled employment, basic and higher education level education, life expectancy of pregnant women, and sex ratio of government ministers (Soyon, 2012). South Korea scored relatively high for social status, educational attainment and health issues, but low on economic and political factors.

Gender inequality begins before birth. In Korea, there are only 93 girls born for every 100 boys. This skewed ratio is far below world average and might even reflect selective abortion. On the economic front, South Korea holds the worst gender salary gap amongst OECD countries. Women without children earn 13 percent less than men, compared to only 6.5 percent in the U.S. Korean women with children earn 45 percent less than men. Only 55 percent of Korean women participate in the labor force, compared to 76 percent of men. On the political front, only 20 percent of the legislators are women. These numbers reflect a culture that expects women to leave the workplace to raise children (Fisher, 2012).

It is unclear how Park will move forward on this issue. She only gave two Cabinet posts to women, while her predecessor named four women Cabinet members when he took office in 2003 (Klug and Kim, 2013).  Park’s presidency itself does not necessarily open more doors either as she is viewed as the heir of a political dynasty. Nonetheless, her presidency may decrease gender inequality through her attention to social issues. If Park is able to address the high cost of childcare or the inadequate welfare of the elderly, both of which probably impact female participation in the workforce, she may improve gender equality in the economic sphere.

Conclusion

The Korean newspaper The Hankyoreh notes that Park’s inauguration speech never brought up democracy, unity, reform, or human rights. The article concludes, “It’s troubling to think we might have five more years of the economy-over-democracy mindset to look forward to” (Democracy sorely missing from Park’s inaugural address). Few articles in the Western or Korean media address these challenges and Park has not indicated that these issues will be a priority in her presidency either.

South Korea plays a pivotal role in the region, balancing the interests of the West alongside the interests of other Asian countries. It faces many of the same demographic challenges as China and Japan though not as severe as either of them. It seems that South Korea is at a cross-road. If entrenched interests win, then many will become disenfranchised and may leave to find better opportunities. If Park though is able to pass policies that decrease gender and economic inequalities and provides a more level-playing field for small and medium-sized corporations, then Korea may become a tiger once again.

Works Cited

Byong-su, P. (2013, February 26). In inaugural address, new president Park discusses building trust with North Korea. The Hankyoreh. Retrieved from: http://english.hani.co.kr/arti/english_edition/e_national/575580.html

Democracy sorely missing from Park’s inaugural address (2013, February 26). The Hankyoreh. Retrieved from: http://english.hani.co.kr/arti/english_edition/e_editorial/575568.html

Fackler, M. (2011, January 6). Lessons learned, South Korea makes quick economic recovery. The New York Times. Retrieved from: http://www.nytimes.com/2011/01/07/world/asia/07seoul.html

Kim, S. (2013, February 24). Shared wounds in Korea. The New York Times. Retrieved from: http://www.nytimes.com/2013/02/25/opinion/south-koreas-new-national-mother-figure.html

Klug, F. and Kim, H. (2013, February 24). First female South Korean president faces North Korea crisis. Time. Retrieved from: http://world.time.com/2013/02/24/first-female-south-korean-president-faces-north-korea-crisis/

New South Korea president warns the North (2013, February 26). Bangkok Post. Retrieved from: http://www.bangkokpost.com/news/local/337665/new-south-korea-president-warns-the-north

Pesek, W. (2013, January 17). Grandchildren run South Korea’s economy. Bloomberg. Retrieved from: http://www.bloomberg.com/news/2013-01-17/grandchildren-run-south-korea-s-economy.html.

Ramstad, E. (2013, February 25). South Korea’s new leader faces economic challenge. Wall Street Journal. Retrieved from:  http://online.wsj.com/article/SB10001424127887323384604578325460218120762.html

Soyon, K. (2012, October 24). S. Korea among bottom in gender equality globally. KBS World Radio News. Retrieved from: http://world.kbs.co.kr/english/news/news_Ec_detail.htm?No=94095

Yeon-cheol, S. (2013, February 20). Chinese professor says six-party talks on NK denuclearization have run their course. The Hankyoreh. Retrieved from: http://english.hani.co.kr/arti/ENGISSUE/102/574744.html

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