KOREA FOCUS - April 2012

Table of Contents

- Korea Focus - April 2012 - TOC - Politics 1. Reflection on Democratization Since 1987 2. Matriarchal Politics in Experiment 3. Suprapartisan Preparations for Unification 4. North Korea-U.S. Dialogue Urges South-North Exchanges 5. U.N. Chief’s Role in Halting Repatriation of North Korean Defectors - Economy 1. Correct Prescription for Korean Economy 2. Occupy ‘New Capitalism’ 3. Role Division Between Universities 4. World Envies Korea for UAE Reactor Deal 5. Korean Hospitals’ Inroads into Global Market - Society 1. Korea-Africa Day in Burkina Faso 2. 13 Years Needed to Open the Park Chung-hee Memorial 3. The Korean Crisis of Authority 4. We Need More Women in Politics 5. Are You Depressed?

- Culture 1. An Exhibition Named “As They Are” 2. A Tearful Literary Night in Central Asia 3. The Legacy of Mollendorff in Leipzig 4. Looking Forward to the Era of Hallyu 3.0 - Essay 1. Economic Outlook of North Korea in 2012

2. Korea-China-Japan Free Trade Agreement: Prospects and Issues 3. Widening Gaps in Income and Quality of Life: Trends in HQLI and Implications 4. What Business Can Learn from K-pop for Global Strategy - Feature 1. Two Key Persons Behind the Birth of 50-year-old Industrial City Ulsan - BookReview 1. ‘A Hearth Runs beneath These Homes’ 2. Jongmyo, the Coveted Royal Shrine - Interview 1. Peter Beck: “Every cloud has a silver lining.”

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- Reflection on Democratization Since 1987 - Matriarchal Politics in Experiment - Suprapartisan Preparations for Unification - North Korea-U.S. Dialogue Urges South-North Exchanges - U.N. Chief’s Role in Halting Repatriation of North Korean Defectors

Reflection on Democratization Since 1987

Lee Hong-koo Advisor to the JoongAng Ilbo Former Prime Minister

Twenty-five years have passed since a prodemocracy movement in South Korea pressured military rulers to amend the Constitution and conduct a presidential election by direct popular vote in an epochal reform. The primary task facing Korean society at the time was to restore civil liberties long suppressed by successive authoritative governments. Koreans thus attained significant

political

freedom,

a

remarkable

achievement

in

their

democratization process. Today, complaints about the repression of free speech or political activities are almost nonexistent compared to a few decades ago.

Nonetheless, there is no denying that today’s Korean society is beset with polarization, and no one is optimistic about a democratic solution to its grave consequences. While a prodemocracy movement can topple autocracy, it does not necessarily ensure the establishment of a stable democratic state. This has

been underscored by a number of Arab countries that remain mired in protracted

confusion

following

their

Jasmine

revolutions

aimed

at

democratization.

In this regard, the international community considers South Korea’s democratic evolution relatively successful in view of the fact that it has experienced two peaceful power transitions between rival camps since the 1987 reform. However, widespread public concerns are evident about tumultuous elements that persistently disrupt the nation’s political arena, prompting envious looks at its neighbors.

Despite the deadly onslaught of catastrophic natural disasters and prolonged economic recession, Japan has aptly displayed political maturity by steadfastly upholding parliamentary democracy. Taiwan also exhibits the vitality and maturity of its democratic political culture. Fiery campaigns were staged for its presidential election in January as the Kuomintang’s one-China policy and the opposition Democratic Progressive Party’s call for a full independence of Taiwan created an uncompromising ideological rift. But the election itself was orderly and the opposition unreservedly accepted its defeat.

In a notable contrast, worries are already rampant in Korea about the upcoming general elections in April and the presidential election due in December this year. Since 1987, the nation has had five presidents. Each of them had to quit his political arm, the ruling party, either voluntarily or under duress, toward the end of his term – a lamentable phenomenon that is apparently being repeated today.

If a single-term president can leave so easily the party that had sent him to the office of the chief executive and can simply return to a private citizen upon completing his term, who would take responsibility for the governance during

the five years of his tenure? How can a political party evade its responsibility so simply? How can such an “irresponsible presidential system” promise a democratic and accountable government for the people?

A review of our experiments in democracy over the past quarter century underlines the fact that Korean politics, laden with serious systemic defects because of constitutional shortcomings, has been trapped in a cycle of feverish election races, or struggles for power. While some analysts groan that Korean politics has been a “misfit for textbook principles of democracy from the beginning,” the principles of power coming from the people but being accountable to the people need to be emphasized.

When the Future Korea Constitutional Committee, a suprapartisan group of 186 members of the current National Assembly, proposed an amendment to the Constitution, many harbored hopes that institutional defects of Korean politics could be mended. But the hopes were dashed by the lack of interest and cooperation by party leaderships. Politicians unanimously criticize the concentration of power in the presidential office, but few can resist the temptation of becoming president someday and exercising enormous power to straighten out all outstanding problems and reform the governance structure, a hollow dream that has practically driven the Korean constitutional democracy into a quagmire.

In order to reinvigorate the nation’s political development, this year’s parliamentary and presidential elections should be fully utilized. Although a constitutional revision is out of the question with the two major elections close at hand, political leaders must at the least make detailed pledges to end practices that virtually disregard or override the Constitution.

For instance, the Constitution provides that the president shall appoint the

prime minister with the approval of the National Assembly to make the prime minister accountable to both branches of government while serving the people.

However, this principle has been ignored for no clear reasons under successive governments. Article 87 of the Constitution empowers the prime minister to recommend cabinet appointments and dismissals to the president, but in reality, the prime minister’s prerogatives have been constantly stripped by the president. If these malpractices can be rectified on the occasion of this year’s elections, the excessively concentrated presidential power can be fairly apportioned to institutionalize normal governance and the stature of the legislature and political parties.

Korean politics since the 1987 reform has continuously displayed disorderly performances and even chaotic phases at times. Instead of solely blaming the incompetence of government and political leaders, we all should recognize that the chronic misbehavior in the political arena has resulted from our habitual disrespect of the Constitution and democratic institutions and that the time has come to correct the wrongs.

[JoongAng Ilbo, February 13, 2012]

www.koreafocus.or.kr

Matriarchal Politics in Experiment

Song Ho-keun Professor of Sociology Seoul National University

An unprecedented phenomenon is now occurring in the 64-year political history of the Republic of Korea: both the ruling and main opposition parties are led by women. Outstanding women leaders, such as Park Sun-cheon and Kim Ok-sun, once played important roles as senior members of opposition parties in the 1960s and the 70s, respectively. But they never dreamed of taking the top leadership role themselves, as they were overshadowed by three influential patriarchal leaders, namely, Kim Young-sam, Kim Dae-jung and Kim Jong-pil. The past six decades in Korea’s political history have been engraved with “macho” leadership. Now, suddenly we are witnessing the advent of matriarchal politics.

In fact, we must admit that in evolutionary terms, men are inferior to women.

The older we grow, the more we realize that men are prone to struggle and

they even have affection deficiency. Most septuagenarian or older men shedding tears over their mother’s tomb obviously miss the loving care of their mother who used to embrace them unconditionally when they were exhausted from “hunting expeditions.” Men’s tears are biological signals, while women’s are anthropological. Men identify themselves with their mother’s hard life and sympathize with their father’s unfounded pride. Men shed tears because they now understand the evolutionary fate of their father who was hard-charging in everything and worked diligently for his family while his inner self wandered aimlessly.

Korean political circles needed leaders who would hold the exhausted people in their arms. Suddenly, two women took over their party’s helm. Han Myeong-sook became chairwoman of the main opposition Democratic United Party, taking charge of the “taming of wild dogs.” She herself unwittingly displays aggression to rein in the rough and rowdy party members. Given the circumstances, nobody would match her and win the hearts of the DUP members who are “grinding out an oath” to regain power in the upcoming elections.

Meanwhile, Park Geun-hye, chairwoman of the interim leadership committee of the ruling Saenuri Party (formerly called Grand National Party), always looks upright and prudent about everything, presumably because she lost both her parents when she was not old enough to run a household and take care of her younger siblings on her own. She is now demonstrating “matriarchal love” to her party members who have been “shellacked” by their opposition rivals.

People hope that regardless of their experience in politics, matriarchal leaders will raise awareness and filter men’s “inferior genes” that tend to transform power into a devilish tool.

Female political leadership already has arrived in some advanced countries. In

the 1980s, Margaret Thatcher, the stern and resolute British prime minister, brought stability to the United Kingdom which had been a chaotic battleground of male politicians. Her successors at 10 Downing Street, Tony Blair and Gordon Brown of the Labour Party and David Cameron of the Conservative Party, inherited her matriarchal legacy, regardless of their party affiliation. After succeeding Gerhard Schroeder as the German chancellor, Angela Merkel with a “wise mother” image has helped Germany regain its former status as a country of large-minded people. Had it not been for her motherly consideration, Greece would have already gone bankrupt and Europe would have been divided into north and south.

Helle Thorning-Schmidt, the gracious-looking prime minister of Denmark, launched a coalition of centrist and left-wing parties. Finland has both a female president and a female prime minister. Women also stand out as political leaders in Ireland and Iceland. Women leaders in rich countries behave without reserve to the extent that they take taxis and go shopping. In those countries, men exercise power and women manage it.

If mothers of the world are likened to land, Park Kyung-ni, the author of “Toji” (The Land), once ached for her own mother. Park wrote several poems about her mother when she felt she would soon join her in heaven. After she emptied her mind of all thoughts before she died, only her mother remained.

“The Way Mother Lived,” one of her last poems, reads in part, “Never did I see Mother raise her voice / to quarrel with others. / Even with Gi-bong’s quarrelsome family / she never argued. / When people spoke ill of others / she said nobody is faultless. / Never did she say she wouldn’t keep company with / even those who liked to make trouble.”

In Korea’s male-dominated, ugly political environment, verbal arguments lead to fistfights. The task ahead for the women political leaders is evident as they

prepare their parties for the general and presidential elections this year. They have to remove the sting of barbarity from the male-dominated politics in which everybody is engaged in bloody battles, covets wealth when they have power, and makes no bones about using violence against anybody who is ideologically different from them.

School violence, about which everybody is worried, is not the only problem in our society. People are already frightened by the possibility of ideological showdowns and physical clashes that will grow wild this year. Naturally, they can neither extend a hand to the unpopular conservative government nor express confidence in the zealous progressive forces.

It is fortunate that, in this season of uncertainly, we can see a ray of hope in matriarchal politics. What did the macho politics bring us after bloody fistfights? Prosperity and welfare? Reconciliation and compromise? Morality and common good? I doubt it. Under the banners of working class politics hoisted for decades, working-class people still feel abandoned and helpless.

Reiterating reconciliation and unity for decades, politicians have behaved like perpetrators of domestic violence.

Maybe, the people are already split up into two races: conservatives versus progressives, or the haves versus the have-nots. Are the upcoming parliamentary and presidential elections going to be fisticuffs between these two races? Election victories should not be the only imminent concern. Macho politics should be driven out for good. Will the hard-won matriarchal politics offer clues as to how?

[JoongAng Ilbo, February 21, 2012]

www.koreafocus.or.kr

Suprapartisan Preparations for Unification

Kim Tae-woo President Korea Institute for National Unification

I have just returned from Berlin, where I participated in a forum on common Korean-German perspectives on unification. It was jointly organized by Korea’s National Unification Advisory Council, an establishment mandated by the Constitution to advise the president on unification affairs, and the Konrad Adenauer Foundation.

The debate was very enlightening and instructive as I have been envious of the Germans, who successfully seized their sudden opportunity to achieve national reunification, and tried to learn from them. One particular subject I reaffirmed at the session was a suprapartisan approach taken by German political leaders who, cutting across political lines, made concerted efforts in dealing with unification issues.

In 1969, Chancellor Willy Brandt launched Ostpolitik, or Eastern Policy, aimed at improving West Germany’s relations with Eastern European countries including East Germany, Poland and the then Soviet Union. The policy was especially instrumental in laying the groundwork for rapprochement and eventual unification with East Germany. In the 1980s, Chancellor Helmut Kohl became one of the main architects of reunification by pushing forward with his three-pronged policy of “reconciliation and cooperation between the two Germanys,” “change in East Germany” and “preparations for unification.”

West Germany aggressively pursued peaceful relations with East Germany at the government level by providing substantial assistance. At the same time, it tried to infuse aspirations for unification in the hearts of East Germans.

In that process, German political leaders maintained a suprapartisan stance in accomplishing the paramount national task of unification, an attitude that should serve as a model for us Koreans. While Ostpolitik was initiated by Brandt of the Social Democratic Party, the policy was determinedly applied by Kohl of the conservative Christian Democratic Union to ultimately achieve unification in 1990. Working with the two chancellors as foreign minister from 1972 to 1992 was Hans-Dietrich Genscher of the liberal Free Democratic Party. Genscher played a key role in crafting the Helsinki Accords in 1975 to create the Organization for Security and Cooperation in Europe (OSCE), a crucial East-West forum of the Cold War era. He also greatly helped improve the human rights situation and eventually open up communist East Germany.

Throughout the period, coalition partners of the German government changed frequently. However, Bonn could implement surprisingly consistent policies toward unification, owing to its political leaders who disregarded their partisan interests for the sake of achieving the nation’s supreme cause. Witnessing mudslinging strife between rival political parties over unification issues too often at home, Koreans should envy the attitudes of German political leaders.

Presently at issue, for instance, is a bill to revise the Inter-Korean Cooperation Fund Act, which is pending at the National Assembly. The bill calls for a special account to meet the expenses of unification should the process begin, in addition to the current funding for inter-Korean exchanges and assistance to North Korea. Proposing the bill, the Ministry of Unification symbolically dubbed the account a “unification jar,” referring to the old custom of Koreans saving money in a jar for a rainy day.

The creation of a “unification jar” is meaningful in that it signals the start of savings for unification, which will require a huge amount of financial resources. The account will receive unused inter-Korean exchange funds from the annual state budget and voluntary public donations. Germans are applauding the proposal. They regard it as a “helpful idea” to encourage the public to be mindful of reunification that could come at any time. Standard & Poor’s and other international credit-rating agencies said the account would help reduce the enormous burden of unification expenses.

Given these circumstances, there is no reason why such a realistic proposal as unification jar should remain a sheer object of political bickering. Learning from West Germany’s phased yet astute approach that comprised the improvement of inter-German relations at government level, and inducement of changes in East Germany and all-out preparations for reunification, we need to take substantial steps toward unification. The opposition party’s claim that a unification account may “irritate” North Korea excessively underestimates the importance and urgency of preparation for unification. No less lamentable is its objection to the unification jar on the grounds that the Lee Myung-bak administration would get the credit.

With the general elections close at hand, the current National Assembly is

about to close soon amid public outcries of disappointment at its short list of accomplishments through its four-year term. The ruling and opposition parties may at the least pass the bill for a unification account before closing the current legislative term so as to mitigate the public’s disillusionment.

[Segye Times, February 4, 2012]

www.koreafocus.or.kr

North Korea-U.S. Dialogue Urges South-North Exchanges

Editorial The Hankook Ilbo

The agreement between North Korea and the United States announced on February 29 after a third round of bilateral talks is deemed more forwardlooking than expected. The North agreed to temporarily suspend its nuclear tests, test launchings of long-range missiles and uranium enrichment activities at Yongbyon, as well as to allow International Atomic Energy Agency inspectors to verify and monitor the suspension of its uranium enrichment program.

In return, the United States agreed to send provide 240,000 tons of food to the North, consider further food aid, and try to improve bilateral relations. This led to expectations that the six-party nuclear disarmament talks might resume at an early date, considering that Pyongyang has accepted most of the preconditions set by Seoul and Washington for resumption of the talks. This is highly welcome, as it appears to provide momentum for a big turning point in

the situation on the Korean peninsula.

Pyongyang and Washington reached the agreement about two months after North Korea’s new leader, Kim Jong-un, took power. Before former leader Kim Jong-il died, the two countries had already reached a tentative agreement through two rounds of negotiations. But the announcement carries remarkable significance in that it signals the North Korea’s new leadership decided to assume its former leader’s policy. The agreement will help stabilize the Kim Jong-un regime and mitigate the outside world’s distrust in its external policies. White House Press Secretary Jay Carney also said, “We believe that it is a positive sign that in a relatively short period after the change of leadership in North Korea, that DPRK decided to re-engage with the United States in substantive discussions and to take some positive initial steps.”

North Korea seems to have concluded that it would be helpful to stabilizing its new leadership at an early date by suspending its nuclear activities and continuing negotiations with the United States in return for food aid. In 1994, the North signed the “Agreed Framework” with the United States in Geneva just three months after regime founder Kim Il-sung died. At the time, the regime agreed to freeze its nuclear program in return for supplies of heavy fuel oil and a light-water nuclear reactor.

But it is still too early to be optimistic, considering the bumpy road lying ahead. In announcing the latest agreement, Pyongyang said its rewards would include a light-water reactor, which is not found in a statement released by the United States. Furthermore, the North may resume any of its suspended uranium enrichment program, nuclear tests, or missile test-launches anytime.

The North has left wiggle room for a breach of the agreement by adding, “as long as talks proceed fruitfully.” But neither petty guile nor deceitful stratagems will work any longer. North Korean leaders should realize that the best way is to faithfully carry out agreements and build trust.

[March 2, 2012]

www.koreafocus.or.kr

U.N. Chief’s Role in Halting Repatriation of North Korean Defectors

Park Sung-joon Visiting Professor of International Politics University of Incheon

We take pride in having a Korean serving as a leader of the global community: U.N. Secretary General Ban Ki-moon. A career diplomat from a divided nation involved in an ongoing regional conflict, Ban was able to become the world body’s chief administrator due mainly to his own ability and professional experience. But his bid for the post also needed the support of China, a permanent member of the U.N. Security Council, which Beijing points out implicitly.

Could this be the reason? So far, Ban has not shown any response to Beijing’s forcible repatriation of North Korean defectors, which is breaking the hearts of many South Korean people. It is clear in every respect that the North Koreans crossing the border into China are refugees as defined by the United Nations’

1967 “Protocol Relating to the Status of Refugees.” Nevertheless, Beijing has continued to commit atrocious acts against humanity by forcibly sending them back to the North, where they will surely face political persecution, defining them as “illegal immigrants who have trespassed on the border for economic reasons.”

Under these circumstances, Ban has neither made any mention of the issue nor taken any action about it. Can this be because he feels he is indebted to Beijing? Or, is it because he lacks expert knowledge of the pertinent U.N. document?

The United Nations approved the “Convention Relating to the Status of Refugees” in 1951 to resolve the problems of refugees displaced in the wake of World War II. The convention, therefore, applied only to pre-1951 European refugees. Then, in 1967, the “Protocol Relating to the Status of Refugees” was adopted to remove the geographic and time limits from the convention. The protocol defines a refugee as “ a person who is outside of the country of his nationality, and is unable or unwilling to return to it, owing to a well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group, or political opinion.”

The Chinese Foreign Ministry cannot be unaware that the U.N. definition should apply to the North Korean defectors who fled their country with hopes of ultimately reaching South Korea. But it keeps mechanically reiterating the mantra that “North Korean defectors are illegal immigrants who crossed the China-North Korea border not for political reasons, but for economic reasons.”

This is the judgment made by the Chinese Communist Party in the 1990s when the problem of North Korean defectors in China became known for the first time.

The North Korean defector issue has become increasingly difficult to resolve, primarily because the previous South Korean administrations took over defectors from China on an individual basis. This was done through behindthe-scenes negotiations under the pretext of “quiet diplomacy” in a bid to avoid irritating Pyongyang for 10 years and then the current government has never attempted to change the diplomatic format. Over these years, not a single South Korean administration has ever tried to persuade China to define North Korean defectors as refugees. Hence the Chinese government has simply maintained its stance.

In this regard, our government did well to decide, though belatedly, to bring up the question of defining North Korean defectors as refugees at the United Nations. In private meetings, even Chinese Foreign Ministry officials have said, “We really can’t understand how come the South Korean government has left the North Korean defector issue unsolved all these years.”

Now that our government has decided to move forward, Secretary General Ban Ki-moon should take action, too. As the top U.N. officer who is visiting various troubled regions around the world to call for peace and support U.N. peacekeeping activities, Ban should now show the international community that he is concerned about finding solutions to this shameful issue. We want to see the U.N. chief roll up his sleeves to resolve the issue, while openly warning Beijing against repatriating North Korean defectors against their wishes by taking advantage of the international law that allows each sovereign nation to decide whether to grant refugee status to asylum seekers in its territory.

[Chosun Ilbo, February 27, 2012]

www.koreafocus.or.kr

- Correct Prescription for Korean Economy - Occupy ‘New Capitalism’ - Role Division Between Universities - World Envies Korea for UAE Reactor Deal - Korean Hospitals’ Inroads into Global Market

Correct Prescription for Korean Economy

Cho Yoon-je Professor of Economics Sogang University

A precise diagnosis leads to a correct prescription and treatment. In the run-up to elections, distorted diagnoses of current conditions abound with politicians seeking to distinguish themselves from rivals. Consequently, the politicians could fall prey to these ill-informed diagnoses and arguments, even if they are elected.

It takes considerable time to rectify such distorted diagnoses so government policies based on incorrect diagnoses tend to inflict significant economic costs, distort the market and become a heavy burden on state finances. If these phenomena are repeated, the fate of the nation will surely begin to wane.

Let’s take a close look at the economic policy under the preceding Roh Moohyun government. On the whole, the liberal Roh administration pursued

market opening and liberalization in line with the conservatives’ policies after the 1997 Asian financial crisis. Freedom House, a U.S.-based nongovernmental organization, also said that Korea’s economic freedom score rose from 6.91 to 7.34 during the period.

The comprehensive real estate holding tax, introduced in response to surging property prices in the Seoul metropolitan area, can be seen as a leftist policy but increases in property taxes must have been inevitable and welfare spending also had to be raised. Market opening and autonomy were expanded, as the Roh administration respected the independence of the central bank and the autonomy of domestic financial institutions, refrained from using powerful public organizations for political purposes, and added free trade agreements.

President Lee Myung-bak was elected in 2007 thanks to “political framing,” in which the Roh government’s economic policies were billed as “anticorporation,” “left-leaning,” and part of a “lost decade.” Consequently, the Lee government had to dismiss Roh’s neutral or slightly center-right policies as leftist ones and adopted business-friendly and rightist policies in its early days.

Thus Lee’s differentiated policies tilted decidedly to the right.

North Korea policy was no exception. Few would deny that the Roh government failed to abide by principles in dealing with North Korea. There were clear limits to engagement with the criminal North Korean regime, which defies reasonable explanation. Inter-Korean exchanges and cooperation expanded and North Korea’s dependence on South Korea and the actual level of the North’s openness increased.

These developments, however, were defined as the leftist showering of North Korea with unconditional aid. In contrast, the current conservative government’s policies largely recall Cold War policies toward North Korea.

A similar phenomenon is now recurring. We should guard against groupthink and herd behavior, regardless of ideology or policy line. In its early days, the Lee government adhered to an excessively rightist economic platform, which included tax reductions for the wealthy. Since the start of the second half of its term, however, the administration has shifted to considerably centrist policies.

Government intervention in the market has rather grown stronger during Lee’s presidency than during the administrations of his two progressive predecessors. If Lee’s policies are politically framed as “ultra-conservative” and “neo-liberalism,” future government policies will excessively tilt toward progressivism, regardless of whoever wins the presidential election this year.

The public’s disappointment in the Lee government these days has little to do with its ultra-conservative economic policy. In truth, people have been disappointed with deepening corruption in the public sector, appointments of inner-circle confidants to key government posts, obsession with short-term achievements and excessive dependence on public relations techniques in managing state affairs.

Public disillusionment and frustration with the increasing level of bipolarization and the expansion of the working poor are running far deeper, but these social problems have been rather caused by the universal trends of globalization, global financial crisis and other structural factors.

It is true that our society needs a broader welfare system because welfare was neglected too much in the past. Social aid to the underprivileged and the fiscal role in income redistribution should be expanded. To that end, sweeping tax reform is also needed. But herd behavior in any direction is not desirable in the policymaking process.

The nation’s rapidly aging population has already expanded welfare expenditures even under the current system, threatening to trigger a fiscal crisis. Growth is still important to the Korean economy, as the nation is currently ranked below 30th place in the world in terms of per capita income.

Our economy needs to pursue more competition and more autonomy, rather than more regulation and more government intervention.

Competition-based creativity and productivity improvement should be promoted by eliminating competition-restraining factors prevalent throughout our society and the deeply-entrenched collusive ties between the holders of vested rights. By doing so, our nation can survive in the face of China’s intensifying economic threats. What is necessary of us is fair competition. It is not wise to attempt to restrain competition itself.

Election expenses are not simply limited to putting up campaign posters, mobilizing campaign workers and buying newspaper and TV advertising.

Those expenses are a relatively small part of the total. The nation will have to shoulder much bigger election costs if politicians distort the status quo through controversial political framing and make bad policy choices ahead of presidential elections.

We should carefully reflect on what has gone astray and why people are anxious for change. What if doctors attempt to save the life of a liver disease patient through a gall bladder transplant? That’s outrageous.

[JoongAng Ilbo, March 3, 2012]

www.koreafocus.or.kr

Occupy ‘New Capitalism’

Kim Hyoung-tae President Korea Capital Market Institute

Diamond and graphite both consist of carbon. But the two minerals are quite different in spite of their identical chemical composition. Diamond is the hardest mineral known to man while graphite is one of the softest. A transparent crystal of carbon atoms, diamond is extremely hard to crack. In contrast, graphite is black and easy to break apart.

The difference between the two minerals lies in the way their carbon atoms are linked. Although the structure is similar, the density of the carbon-to-carbon bonding is dissimilar. Graphite has a sheet-like structure where the atoms all lie in a plane and are only weakly bonded to the sheets above and below. In contrast, diamond has a framework structure where carbon atoms are tightly bonded at a 109.5 degree angle.

Criticism is mounting over the so-called “graphite-type capitalism” which has clearly exposed its limitation. Then, what would be the characteristics of “new capitalism” that we should pursue in the days ahead? Above all, the bonding between social layers should be as hard as the diamond structure. Social bonding can grow when liquidity is guaranteed between classes.

In other words, new capitalism is backed by abundant liquidity. Blood can circulate throughout the body when its supply is sufficient. Smooth blood circulation is the key to good health. Likewise, a society can be healthy when movement between classes is brisk.

The same theory applies to the market. A stock market can easily fall prey to manipulators when liquidity decreases. The entire market can be controlled by a single transaction or two, heightening the possibility of stock price manipulation or distortion. Therefore, a stock market running short of liquidity cannot be regarded as a stock market in the true sense of the term.

Likewise, capitalism which doesn’t have sufficient movements between social classes cannot be seen as true capitalism. In a sense, the diversity of classes existing in a capitalist society is a necessary evil. The essence of capitalism is that one exerts the utmost to move up the ladder and attain greater affluence.

The problem is not the existence of classes but the closed access to social mobility. Difficulties in inter-class movement weaken the vitality and bondage of capitalism, just like a stock market dragged down by low trading volumes.

This kind of capitalism can destroy itself, just like rust on the cast iron caldron.

Rust is formed from iron but also erodes iron.

Class mobility is important not only to individuals but also to enterprises. It should be much easier for small and medium-sized companies to rise to the

status of middle-ranking enterprises. Similarly, middle-ranking enterprises should be allowed to grow into large conglomerates. A true capitalist society should be able to offer such a hope to its members. In Korea’s corporate environment, the path for a small company to become a middle-ranking enterprise is relatively wide open. But it is extremely difficult for a middleranking firm to grow into a large conglomerate.

The 10 biggest stocks in the local bourse in terms of market value have remained virtually unchanged for the past 20 years. Excluding enterprises spun off from conglomerates, Shinhan Financial Holding Co. and Samsung Life Insurance are the only new entrants in the top 10 list. Not a single manufacturing company has entered the list.

In the United States, Apple, Google and Amazon, which were all non-existent or had very low rankings two decades ago, have recently entered the top 10 list. The U.S. business ranking could be changed again, as social networking giant Facebook will soon be listed on the stock market. Of course, Exxon Mobil and GE have stayed in leadership positions for several decades through constant renovation efforts.

Korean conglomerates should not be criticized for having stayed in the top market positions. They have earned their status through hard work.

Nevertheless, it is a very serious problem that the composition of top-ranking enterprises has remained virtually unchanged over the past decades. It should be hard to accept if a small number of families or residential districts exclusively produce entrants to the most prestigious universities. Like individuals, business entities should also be able to climb up the corporate hierarchy.

The Republic of Korea can grow only when one-man companies can grow into small and midsized companies, the small and midsized companies into middletier companies, and the middle-tier companies into large conglomerates. Only then will the nation be able to reach US$30,000 in per capita income.

[Chosun Ilbo, February 7, 2012]

www.koreafocus.or.kr

Role Division Between Universities

Oh Se-jung President of Institute for Basic Science Contributing Editorial Writer of the Dong-a Ilbo

The “half-price” college tuition debate, which made big headlines last year, still remains unresolved. Colleges and universities across the nation are having difficulty in setting this year’s tuition fees. Recently, fees illegally charged by state-run and public universities have additionally emerged as a hot-button issue. It is not clear how the half-tuition issue will unfold, but many universities have already taken some tangible measures, such as increasing scholarships and lowering tuition.

While it is encouraging that students’ financial burden has been alleviated somewhat, the tuition cuts at most universities have not been significant except for a few cases. The principles of fair competition are violated if sky-high tuition puts higher education out of many students’ reach and shrink their chances of success in society. But we have to fundamentally examine if half-

price tuition is sustainable. We should also look into whether it is a passing populist phenomenon that will eventually fade away.

In fact, the originator of half-price tuition is not Korean politicians, but renowned U.S. futurologist Peter Drucker. In an interview in the March 10, 1997 issue of Forbes magazine, Drucker predicted, “Thirty years from now, the big university campuses will be relics. Universities won’t survive. The current set-up is doomed. The college won’t survive as a residential institution.” In other words, the U.S. scholar argued that most universities will be weeded out unless they lower tuition costs.

Despite the gloomy prediction, however, tuition at American universities has steadily risen. Thus far, tuition hikes have not emerged as a serious social issue, because of superficial economic prosperity and a constant increase in the number of college applicants. But with economic bubbles beginning to burst, resistance to inflated tuition is not limited to Korea alone. It has now become a worldwide phenomenon. American college students have also launched protests against high tuition. In Europe, too, many debt-ridden countries began to reduce assistance for universities, triggering strong protests from college students. It can be said that Drucker’s prediction has finally begun to come true.

Drucker repeated his argument in June 1997, saying: “Universities won’t survive. The future is outside the traditional campus, outside the traditional classroom. Distance learning is coming on fast.” Did he predict the complete disappearance of universities which are playing a pivotal role in producing and disseminating knowledge in the 21st century knowledge-based societies? Of course, that is not true. He simply emphasized the traditional way that universities operate has major problems.

Drucker presented an alternative vision. He predicted that e-learning and virtual campus will eventually replace the traditional brick-and-mortar colleges, underscoring the rapid development of information technology and the spread of online lectures. Under this scenario, the gathering of students in one place to hear a lecture would gradually disappear due to its heavy financial costs. Indeed, distinguished universities across the world already have rushed to open Internet lecture programs, which are comparatively cheap to run due to rapid enrollment growth.

Can we fundamentally resolve the problem of high tuition costs if all universities expand Internet lecture programs? The problem is that the solutions are not so simple. The importance of face-to-face contacts between teachers and students has been a long debated issue in the education sector.

Aside from this issue, we also need to ponder on the role of universities in the modern knowledge-based society.

The time-honored role of universities is to spread knowledge. The 21st century universities are simultaneously asked to play a more important role in producing new knowledge through state-of-the-art research. The cost of knowledge delivery can be lowered through Internet lectures and other methods. But the cost of knowledge production cannot be easily reduced, posing a fundamental limit to the universities’ cost-cutting efforts. Moreover, due to the recent scientific developments, the cost of knowledge production has been rising steadily.

State-of-the-art research projects require large-scale equipment and facilities.

In particular, the growing importance of interdisciplinary research and education has intensified the concentration of research personnel. Therefore, the size and budget of research-oriented universities are increasingly expanding.

In the end, the fundamental solution is for universities to have separate roles.

There should be a clear division between universities specializing in knowledge delivery and universities specializing in knowledge production.

Universities belonging to the former group will be able to lower tuition by taking advantage of advances in information technology and large-scale lectures. Universities belonging to the latter group will need additional financing from the government or beneficiaries.

Accordingly, the ongoing policy of uniformly forcing all universities to lower tuition fees is not sustainable over the long term. Moreover, it is not desirable for the nation. Dividing the roles of universities would certainly require sweeping restructuring and massive resistance is feared. Still, it is difficult to swim against the tide, no matter how strongly universities may oppose and struggle against changes. Universities are required to prepare for the long-term trend, instead of seeking to resort to trickery to collect more tuition.

[Dong-a Ilbo, February 10, 2012]

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World Envies Korea for UAE Reactor Deal

Kwon Tae-kyun Korean Ambassador to the UAE

The site of the United Arab Emirates’ first nuclear power plant is a sparsely populated coastal village called Braka, a three-hour car ride west of Abu Dhabi, the capital of this Middle East country. The plant is scheduled to go online in 2017, with the completion of one of its four nuclear reactors to be constructed by 2020. Spearheading the mega project is a Korean consortium that won a US$20.4 billion contract in late 2009 to build the plant, marking Korea’s first nuclear reactor export.

The work currently being done is basic infrastructure, including ground hardening and elevation, building a breakwater and installing camps to accommodate workers. The number of construction workers is already approaching 4,000. The Federal Authority for Nuclear Regulation of the UAE is expected to formally approve the construction of nuclear reactors in the

Braka complex this summer. Then, the main work of constructing buildings and installing power generation equipment will begin.

Nuclear power plant construction is an ultra-large-scale project that draws several tens of thousands of workers at its height. Korea’s UAE nuclear plant deal is undisputedly the envy of multinational corporations, which are desperately looking for new contracts in this country. A deal exceeding only $1 billion is generally considered a mega project here. The foreign firms envy their Korean rivals for “swallowing” as many as 20 mega deals at one time through the $20 billion nuclear plant contract. Even ambassadors from advanced countries have expressed hopes to participate in the project.

Not so long ago, the ambassador of a major country exercising enormous influence in this region sent me a rare breakfast invitation. Arriving at his residence, I was surprised to be treated to Korean food, including gomguk (thick beef soup) and kimchi. As I wondered about the special treatment, the ambassador replied that his chef was instructed to prepare a special meal for a very special Korean guest and cooked the Korean dishes after studying a Korean cookbook. Then he implicitly asked me to help his compatriot companies participate in the UAE nuclear power plant project.

Japan’s Fukushima nuclear disaster in March last year sparked a brief alert, but the UAE government’s commitment to nuclear power generation has not been shaken at all. Its ambitious plan to turn Abu Dhabi into a hub of the Middle East by 2030 has already begun to gain momentum. UAE government leaders are clearly aware that electricity demand will rise steadily in the years ahead while it will take a considerable time before new renewable energy, such as solar light and wind power, becomes economically feasible. They seem to be convinced that, as long as its safety can be guaranteed, nuclear power is the most environmentally friendly and stable method of power generation.

While Japan, Germany, Italy and other Western countries successively announced decisions to review their nuclear power plant projects, the UAE has focused on the cause of the Fukushima accident and its technological and geological analysis as well as Japan’s countermeasures. UAE officials were also curious about how Japan, which heavily depends on imports for power generation fuels, like Korea, can continue state management after halting all of its 54 nuclear reactors, although its political motivation could be fully understood.

After the completion of the four UAE reactors in 2020, Korea is expected to earn another $20 billion from their joint operation over the next 60 years. In a sense, Korea partially owns the UAE nuclear reactors. Nuclear engineering professors of the Korea Advanced Institute of Science and Technology have been sent to the UAE to help establish a nuclear engineering department at Khalifa University’s College of Engineering to educate local engineers needed to operate the Braka facilities. In addition, about 50 UAE vocational high school students are brought to Seoul every year for skill training. In the meantime, Emirates Nuclear Energy Corporation has hired retired engineers of Korea Electric Power Corporation as part of its effort to prepare for joint operation of the UAE reactors.

Nuclear reactor export is a new growth engine for the Korean economy, as it can greatly contribute to additional deals abroad, export increase and job creation. Many countries worldwide are envious of Korea for its UAE nuclear deals. Some competitor countries may be even waiting for trouble in Korea’s UAE nuclear plant project. Given these circumstances, we cannot afford to engage in an internal conflict over the UAE reactor project. As Korea’s incumbent ambassador to the UAE, I cordially hope that all Koreans will unite for national interest and continue to give full support for the nation’s first reactor export project.

[Maeil Business Newspaper, February 22, 2012]

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Korean Hospitals’ Inroads into Global Market

Park Ki-hyo Deputy Editor of Science and Technology Desk The Maeil Business Newspaper

Chaum, a future-oriented medical center in Seoul’s affluent Gangnam district, has become a top destination for high-end medical tourism. Its patients have included U.S. movie stars and professional athletes as well as a Chinese tycoon who reportedly flew to Korea by a chartered plane to visit this luxury medical facility. The foreign visitors are also known as heavy spenders usually shelling out at least 10 million won (about US$8,950) a week.

Chaum offers state-of-the-art medical services such as stem-cell and bio spa treatments. Apart from this latest hot spot, Seoul’s plastic surgery and skin clinics are flooded with visitors from China, Japan and Southeast Asian countries. The Health Authority Abu Dhabi of the United Arab Emirates (UAE) has concluded agreements with Seoul National University Hospital and other Korean hospitals for treatment of UAE medical tourists in Korea.

The increasing overseas popularity of Korean medical service can be proven by statistics. According to the Bank of Korea, the nation’s medical tourism income reached $115.6 million (about 129.7 billion won) in 2011, the highest amount since such income started to be compiled in 2006. Medical tourism posted a surplus of $6.5 million (about 7.3 billion won) last year, the first time revenues exceeded expenditures. While these accomplishments are certainly encouraging, Korea’s market share remains insignificant compared with the size of the global medical tourism industry.

As of 2010, the world’s medical tourism market was estimated to reach $100 billion, according to a report released by McKinsey & Company. Korea’s global market share stood at a merely 0.11 percent. In the United States, the global leader in medical tourism, Korea is rated behind Thailand or India in terms of the standards of medical care, according to Korean hospital officials I met in Los Angeles last year.

In Korea, only the most excellent students who graduate in the top 0.1 percent of their high school class can enter medical colleges. We can hardly be satisfied with the accomplishments of the nation’s medical sector so far, particularly in view of the high concentration of talent in the industry. The boom enjoyed by local skin and plastic surgery clinics represents a tiny segment of the enormous medical tourism market. We need to further raise the level of our medical care to provide better treatments to foreign patients with serious illness.

Experts also call for Korean hospitals to make inroads into the global market in order to ensure further advances of the nation’s medical service industry.

The Twan Hospital, which is being built in the UAE by Johns Hopkins Hospital of the United States, is expected to generate royalty income

amounting to $470 million over five years, in addition to revenue from hospital operations. It will be difficult for Korean hospitals to compete directly with the world’s top hospitals in the near future, but the task is not impossible at all.

The Ministry of Health and Welfare and other government agencies are also required to extend greater support to help Korean hospitals advance into overseas markets successfully. But more important is the determination of local medical service providers to venture into overseas markets. Instead of remaining complacent with a little success at home, they should be ready to take risks in the global market.

[February 16, 2012]

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- Korea-Africa Day in Burkina Faso - 13 Years Needed to Open the Park Chung-hee Memorial - The Korean Crisis of Authority - We Need More Women in Politics - Are You Depressed?

Korea-Africa Day in Burkina Faso

Kim Ki-seok Chair of Global Education Cooperation Graduate School, Seoul National University; Co-Chair of Educators Without Borders

Africa is transforming into a continent of hope day by day. Last December, the Economist highlighted the continent’s remarkable change in an article titled “Africa Rising.” According to the weekly magazine, some African countries recorded higher economic growth rates than Asian powers in the past 10 years.

The annual growth rates of Botswana (8.8 percent), South Africa (8.6 percent) and Namibia (6.8 percent) are comparable to South Korea’s growth rates in the 1970s. Macroeconomic indicators forecast the “African lions” will outstrip “Asian tigers” sooner or later.

These African countries that are drawing global attention for their notable transformation regard South Korea as an exemplary development model.

Korea’s experience in “creating something from nothing” is recognized as a

valuable asset. The World Bank and other international organizations have intensively supported Africa’s development in recent years, conveying the message, “You can make it if you do just like Korea.” Specialists from international organizations also advise African countries to improve their standard of education and make it the driving force of development, as Korea did.

As it is widely known, Korea overcame colonial exploitation, fratricidal war, extreme poverty and dictatorial oppression to achieve growth, an unprecedented series of achievements in world history. Our nation achieved the three daunting challenges of decolonization, industrialization and democratization at the same time, thanks to the development of our formal and non-formal educational systems.

It is no surprise that Korea is one of the first countries to acknowledge Africa’s rise. In 2010, Seoul hosted the Korea-Africa Economic Cooperation (KOAFEC) Ministerial Conference under the theme of “Rising Africa, Together with Korea.” On the occasion of this biannual conference, the Korean government earmarked 10 billion won (approximately US$10 million) for the KOAFEC Trust Fund to be offered as grants to African countries.

Among the various projects to be funded is a future leadership program for scholars, dubbed the “Education Research Award” (ERA), which may be seen as Korea’s version of the U.S. Fulbright Scholarship Program. Under this program three African doctorate holders in education of junior to mid-career levels are invited to Korea every year to study the nation’s experience in educational development The benefits from Africa’s abundant natural resources, such as diamond, natural gas and uranium, are largely short-term profits and prone to corruption

and abuse by dictatorial regimes, aggravating inequality and tribal conflicts toward self-destruction. In contrast, development cooperation based on knowledge sharing will help pave the foundation for effective governance, transparency and the rule of law, leading to long-term development. Many government and private sector leaders in Africa are therefore showing enthusiastic interest in Korea’s knowledge-sharing programs.

Of particular note, the first “Korea-Africa Day” designated by the Association for the Development of Education in Africa (ADEA) was celebrated on February 12, in a Korea-Africa conference on knowledge sharing held in Burkina Faso, one of the poorest countries on the continent. The triennial ADEA conference attracted some 1,000 participants, including African heads of state, ministerial-level officials and educational leaders as well as delegates from international development agencies.

The Korean delegation, consisting of 60 members, introduced our nation’s experiences in educational development under 11 themes and announced a mid- to long-term plan for the development of Korea-Africa educational cooperation. Korea’s experience is a precious legacy for the global community.

For many countries struggling to reduce poverty and achieve national development, Korea’s experience can be even more valuable than monetary assistance. Therefore, knowledge sharing with Africa should begin with providing our development experience carefully tailored to meet the needs of individual nations.

[Chosun Ilbo, February 13, 2012]

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13 Years Needed to Open the Park Chung-hee Memorial

Kim Kwang-dong Director of Nara Policy Institute

The Park Chung-hee Memorial-Library opens today in Sangam-dong, western Seoul. Ground was broken for the memorial honoring President Park in 1999 with the support of the Kim Dae-jung administration, but the project was subjected to 13 long years of ups and downs. The Roh Moo-hyun administration (2003-2008) rejected funding for the project on the grounds of insufficient public donations, putting a temporary hold on it. The state funding resumed along with an increase in public donations only after a lawsuit that went up to the Supreme Court.

The memorial hall is small and shabby compared with President Park’s achievements. But its significance is far from small; it will be an important base for the research and education of Korea’s contemporary history. Korea in the 1960s to the 70s, symbolized by the rule of President Park, achieved an

unprecedented transformation from one of the world’s poorest countries to a prosperous nation. Today, the growth of the Republic of Korea is globally recognized among the most brilliant success stories after the end of World War II. In this sense, the memorial project for President Park is tantamount to a celebration of Koreans, who have overcome an age of adversity to usher in a great era. The memorial is therefore a space for sharing the meaning of the blood and sweat we shed as well as the illustrious accomplishments we have achieved together.

President Park deserves to be an icon of the Republic of Korea. We were able to enhance our national prestige and make it to the center stage of world history, thanks to the successful industrialization accomplished during the rule of Park Chung-hee. Together with Samsung Group founder Lee Byung-chull, Hyundai Group founder Chung Ju-yung and POSCO founder Park Tae-joon, President Park brought about a miraculous era of prosperity for Korea.

As a result, developing countries all over the world today regard Korea as their benchmarking model. They try to learn from Korea’s economic development and the leadership of its rulers. Thus, the leadership of Park Chung-hee is a brand asset of the Republic of Korea, which is coveted by all countries aspiring to escape poverty and achieve prosperity. On the occasion of the opening of the Park Chung-hee Memorial-Library, we should start building a tradition of positive historical views and social integration as well as renewing our awareness of the history of the Republic of Korea.

In spite of the universal recognition of our successful nation-building efforts, there have been few positive appraisals or memorial projects honoring our political leaders. Most nations, regardless of whether they are prosperous or

fragile, create memorials of their national leaders to serve as the basis of national unity and historical inheritance. But we have been an exception to this worldwide practice. It has always seemed that the Republic of Korea achieved success without successful leaders.

It is hard to deny that the achievements of certain leaders have been highlighted and those of others denigrated according to political interests. The resultant division and damage to national integration have caused enormous social costs. There are presidential archives and libraries for former presidents Kim Young-sam and Kim Dae-jung and the Roh Moo-hyun Foundation is also actively working, but the nation still lacks state-level endeavors to build monuments or conduct memorial projects honoring former presidents.

Taking the opening of the Park Chung-hee Memorial-Library as a turning point, the nation should start making proper evaluations and undertaking memorial projects for our forgotten national leaders. Memorial projects for presidents would be living history and foundations for national integration.

They also would express our determination to share and inherit the meaning of the era in which we have lived, so as to build a greater country and hand it down to posterity.

In this regard, the Park Chung-hee Memorial-Library should be operated as a space to imbue the Korean people with pride in their country and inspire and motivate them to bravely face challenges for the future, rather than as an exhibition hall for historical mementos. It should also be developed into a mecca of research and education to provide wisdom and lessons to all developing countries that strive to build a prosperous nation by benchmarking the Republic of Korea, instead of a place to show off our past success. This is the way to make this memorial a great hall to properly evaluate and celebrate our nation’s trajectory through the rough tide of contemporary history.

[JoongAng Daily, February 21, 2012]

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The Korean Crisis of Authority

Hong Chan-sik Senior Editorial Writer The Dong-a Ilbo

Korean society is facing a sudden crisis of authority. The presidential system based on the executive, legislative and judiciary branches of government is being shaken to its roots. “Even a dog gets better treatment than the president in this country,” said Gyeonggi Governor Kim Moon-soo last week, describing the woeful status accorded the nation’s top leader. “Honorable” judges no longer exist in Korean courtrooms, where boos and calls for “proper judgment” are heard.

The already burgeoning distrust and contempt for lawmakers continue to amplify as the “common sense advocate” and Seoul National University Professor Ahn Cheol-soo has emerged as a high-profile leader-wannabe. The high approval ratings enjoyed by opposition parties in recent days are nothing more than a temporary bubble owing to the failures of the ruling party. By the

time the next elections are held four or five years from now, the situation could be reversed.

Even religious circles where “keep the faith” should remain the teaching of absolute truth also suffer from the lack thereof. According to a 2011 survey on the credibility of different social sectors conducted by the Jogye Order of Korean Buddhism, the religious sector trailed behind the civil society, medical sector, academia, and even large conglomerates. The clerics had to take comfort from the fact that they ranked higher than the administration, National Assembly and the legal profession. In a 2010 survey by the Christian Ethics Movement of Korea, only 17.6 percent of the respondents replied that they trusted the Korean church.

Schools also have been severely hit by the crisis of authority. According to the government statistics, there were seven cases of assault on teachers by students and parents in 2006, but the number increased more than 20-fold to 146 in 2010. Even elementary school students retort to their teachers, “Leave me alone, teacher, because we now have the Students’ Rights Ordinance.” The half-price tuition controversy has smeared all universities and branded as criminals everyone working for the institutions of higher learning.

Korea has experienced radical social changes amid rapid nation-building, industrialization and democratization. Still, until now, the social system has never been so rattled, nor has so much ridicule and contempt been voiced against authority. This worrisome phenomenon is partly due to political maneuvers to stir up public anger, but the blame goes basically to those who have managed state affairs and enjoyed power in various sectors.

The dismantlement of established authority may be a trend that reflects the powerful tide of changes that typify our times. Even so, it should be recalled

that history has repeatedly proven that a leadership vacuum resulted in an entire society driven into chaos with the most vulnerable classes suffering the most.

The greatest puzzle in the history of the Joseon Dynasty (1392-1910) is how a robust monarchy that flourished under the prominent ruler, King Jeongjo, in the latter half of the 18th century abruptly fell into a state of chaos and eventually relinquished its sovereignty. Joseon enjoyed the greatest economic and cultural prosperity, often dubbed a “renaissance,” during the reign of Jeongjo. After his death in 1800, Joseon began its steep descent.

The death of one competent king should not mean the demise of a nation.

Many historians attribute the sudden decline of Joseon to corruption in the ruling class. The queen’s family rose in power and they traded government positions for money. However, the more compelling reason for the dynasty’s disintegration should have been the lack of national authority.

At the time of his accession in 1776, Jeongjo had a fragile base of power so he devoted himself to consolidating monarchical authority. During his 24-year reign, Jeongjo visited his father’s grave as many as 66 times and during his trips he listened to the grievances of his people firsthand. This was a means of displaying the king’s authority. Jeongjo possessed a strong personal charisma and prominent scholarly ability, which overwhelmed his courtiers.

Jeongjo ushered in the golden age of Joseon with his strong power. His son, Sunjo, succeeded to the throne at the age of 10. The powerful in-laws who ruled on his behalf placed the interests of their family before those of the state.

With the core of power missing, everyone was busy looking after their personal interests. Random civil riots erupted and the state’s morale plummeted. Joseon fell helplessly in the face of the powerful tide of

imperialism that rushed to the Korean shore at this time.

One can only guess the consequences of the current state of disintegrating authority across our society. What seems certain, however, is that a vacuum in state authority invites confusion and distortions. Moreover, when internal power struggle grows increasingly intense ahead of elections, most members of society become oblivious to external situations and overly obsessed with internal affairs.

Unfortunately, these symptoms are already in sight. While the international community is groping for solutions to such imminent issues as global recession and security threats from a rising China, there is hardly any sense of crisis or urgency in Korea. As the current situation evokes sense of dĂŠjĂ vu, I earnestly hope that the tragic history of late Joseon is not repeated.

[February 15, 2012]

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We Need More Women in Politics

Hong Seung-ah Research Fellow Korean Women’s Development Institute

The quota system for women is an affirmative action to realize gender equality by setting a quota for hiring and promoting women in various sectors, including politics, economy, education and employment. As an institutional device to increase women’s participation in a male-centered society, it is a prerequisite to building a society in which there is no gender discrimination.

A total of 94 countries have introduced the quota system for women thus far, including 68 countries where political parties are voluntarily practicing the system. A foremost frontrunner in gender equality, Sweden requires 40 percent representation of both sexes at workplaces as well as in politics. Britain’s Labour Party and France’s Socialist Party have greatly contributed to increasing the proportion of female members of their legislatures by applying a 30 percent quota for women in party nominations for parliamentary

elections.

However, women’s political participation in Korea is far behind compared to that in other segments of society. According to the gender equality index released last year by the Ministry of Gender Equality and Family, Korean women’s political representation was 23.7 out of 100 points, which was discouragingly low compared to 89.3 in healthcare, 70.3 in education and vocational training, and 74.3 in culture.

Why is greater political participation of women important? Basically, it is because women can develop an agenda for gender equality and find solutions from women’s perspectives. For example, different solutions can be found when such prominent issues of national significance as childcare and low birthrate are approached from women’s viewpoints. For example, the issue of free childcare can be connected to the rights of children and working conditions of parents, rather than simply raising the maximum age of children eligible for support programs.

The same holds true for the nation’s low birthrate, a top priority issue. Women can take more comprehensive approaches to this issue by relating it to other pertinent problems, including child rearing leave, women’s career disruptions, flexible working hours and men’s participation in housework, instead of doling out benefits packages. The 18th National Assembly had a higher number of women lawmakers than previous legislative sessions, which led to a noticeable increase in women-related legislation.

The agenda of women is also changing significantly in line with social changes. As women’s social participation increases, the number of dual career families also rises and working parents find it difficult to combine their work with child rearing. Accordingly, support for childbirth and rearing has emerged

as a major social policy issue, with prospects for unification of the two Koreas not too remote.

Therefore, women’s agenda should comprise a wide array of issues such as low fertility, child rearing, harmony of work and family, equal employment, violence against women, unification, and peace. In order for these issues to be given greater weight in a new political framework, more women of diverse professional expertise and backgrounds will have to participate in politics.

Needless to say, what the Korean politics requires are women who have the ability and willpower to develop an agenda that addresses women-related issues and put it into practice through institutional and policy measures.

Some argue that the introduction of a quota system for women in politics will raise problems due to insufficient qualifications of female politicians. If they prove to be insufficiently prepared, however, their lack of opportunities to participate in politics would be the main reason. Those who have enough potential should be given the opportunity to participate in the development and promotion of women’s agenda to gain public support.

This process may well be regarded as an initial investment necessary for increasing women’s political participation. Skeptics also will not be able to shun women’s agenda in the face of popular aspirations for change and hope.

At the same time, women politicians will have to make efforts to strengthen their political muscles and competitive advantages. The key to a “new politics” presently pursued by the political circles across party lines may rest in expanding women’s participation.

[Kyunghyang Daily News, February 11, 2012]

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Are You Depressed?

Hwang Sang-min Professor of Psychology Yonsei University

They say our society has fallen into “depression.” The diagnosis is based on the “2011 Epidemiological Survey of Mental Disorders” released by the Ministry of Health and Welfare. According to this survey, the number of depression patients in our society has increased 63 percent in the past 10 years.

Some 1.3 million people have experienced depression during the past one year and one in every six adults aged 18 or over has suffered from mental disorders.

Some say that the surging rate of mental illness is due to excessive competition and stress that have accompanied high economic growth over a few decades.

Others say that Koreans’ mental health has recently worsened due to a widening gap between rich and poor, a growing sense of relative deprivation, family disintegration, and insecurities in later life. In other words, mental stress has intensified ahead of economic threats.

This diagnosis is too stereotypical, if not wrong. It is a vague interpretation that has failed to find out accurate reasons why Korean society has sunk into depression. Let’s say someone asks such questions as “How would you say you are doing?” or “Do you expect things will be better in the future?” What will be the response of a typical Korean who is suffering from depression? He may clearly seem lethargic, cynical or despairing. But this does not mean that the person has mental disorder. He simply does not know what he is living for, or how he should live.

The greatest reason Korean society has fallen into depression is that each and every person in our society feels uncertain about what he wants from life and the type of society in which he will live later in life. Everyone vaguely clamors for welfare, growth and fairness. Nevertheless, all of us know that we are blabbering nice words without believing what we say.

Those who are truly groping for a way out will ask, “What should I do?” They may get the answer, “Do what you like to do.” It sounds nice but it actually is a penny’s worth of advice to those who are seriously searching for an answer.

The real problem is that they do not know what they want to do.

An individual faces double agony in a society like this. When you blindly attempt to do what you really want to do, you will get stabbed from the other side. “Why do you do that?” “I just find it fun.” Then, the dagger flies straight toward you. “How can you make a living on that?” Hence you come to believe you won’t be able to make a living from doing what you want to do. What now?

Some Koreans do not know what they want to do, while others doing what they want to do are being told that they should not live like that. In a catch-22

situation, people choose an “easier life free from trouble” by taking a lukewarm, half-way attitude. They somewhat do either what they want or don’t want to do. Since what they really want is beyond their reach, they are going to take just similar things or copies.

Then they become depressed. While everyone struggled with a fierce desire for survival in the poverty-ridden past, today’s individuals cannot feel the taste of life at all. Out of a desire to lead an exciting life, they fervently pursue fun but end up being immersed in material pleasure, sensual stimulation and anxiety about being left behind. So they grow even more insecure and gloomy, far from leading an exciting life.

What really matters here is that each individual should find his/her own values in life. If each and every person can determine his/her true life values, Korean society can blow away the blues of depression. It’s time for each individual to look for his/her own proud and satisfactory values, instead of appropriateness and justification to look gorgeous in the eyes of others. When every individual can confidently identify his/her own values and accept other people’s different ways, the blues of our society will vanish. Then we will be able to create a happy society in which everybody can trust and cooperate with each other.

[Segye Times, February 22, 2012]

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- An Exhibition Named “As They Are” - A Tearful Literary Night in Central Asia - The Legacy of Mollendorff in Leipzig - Looking Forward to the Era of Hallyu 3.0

An Exhibition Named “As They Are”

Yang Seon-hui Editorial Writer The JoongAg Ilbo

I used to spend a great deal of time visiting art galleries to see paintings.

However, no master’s works ever succeeded to evoke an emotional response that was more than admiration. My inability to respond with my heart must have been due to my lack of sensitivity, rather than the artistry of the works on exhibit. Unemotional as I am, I was recently moved to the point of tears by paintings for the first time in my life.

It was at an exhibition entitled “As They Are,” held at the gallery of the Asan Institute for Policy Studies. The exhibition presented over a hundred paintings created in the style of children’s art — a style that has been emulated by many artists recently. The paintings in bright and vivid colors mingling together in harmony, ranging from abstract to representational style — the paintings freed from all ideas and thoughts, with no complicated calculations, no philosophies

and no repressed emotions — pierced through my heart and I felt a lump in my throat.

The three artists who painted these works were said to have second- and thirdgrade learning disabilities. Even when working on the similar genre, they produced completely different paintings. Among them, Kim Dae-hyeon, 24, was brilliant enough to be called a genius. He expressed perfect images with an ingenious use of colors. Choe Won-u, 31, who exhibited his representational paintings, impressed the viewers with his aesthetic use of shapes and colors. Kim Hyeong-tae, 28, depicted his objects using drawing techniques. It seemed their cognitive disabilities did not interfere with their creativity, and the paintings just showed their exceptional talent.

I have an artist friend who always tries to point me to good artistic experiences. Since last week, she kept telling me about an art exhibition that I must see. Last Monday, she eventually came to my office in her car and picked me up to go to the gallery together. She said she had seen these paintings at a national exhibition, which was sponsored by the Seoul Metropolitan Government to raise awareness of intellectual disabilities. She said, “The first time I saw those paintings, I felt like a Salieri in front of Mozart. These people, who could hardly be taught through art lessons, have created such perfect works solely by means of their senses! I was so awestruck! I even thought I, who have painted for 60 years, should better stop being an artist anymore.�

Afterward, my friend planned to pay a tribute to those Mozarts by holding an exhibition of three most talented artists among them. She wished to share her thrill and admiration at the works with as many people as possible. However, as with any exhibitions of unknown artists held in a remote corner of a city, few people came. My friend told me about her conversation with one of the young artists. She asked him what his dearest wish was, and he answered it

was to make a million won (less than a thousand U.S. dollars) a month.

These young artists belong to an art community for the intellectually handicapped. Each member earns about 120,000 won a month by painting on notebooks, postcards, calendars and others. When my friend asked them to show her their paintings for the exhibition, they said they had none. In their small and cramped homes, there is no space to store bulky paintings. In spite of all the unfavorable conditions they live in, the world in their paintings are peaceful, optimistic, bright and innocent. In their paintings, there is no place for anger or resentment at their hardships.

I asked myself, “What an earth do I know about intellectual disabilities?” Yes, I have read the novel “Dogani” (The Crucible), and yes, I have read a newspaper article a few days ago about a mentally handicapped girl who was locked in an iron cage for eight years in a welfare facility in Gwangju.

Likewise, we hear sad and angering stories of them left defenseless to violence and unable to resist against harassment.

I also thought of some people’s contradicting attitudes toward them. Last year, a film version of the novel “Dogani,” which is based on a true story of a welfare facility where horrible human rights infringement was practiced on its disabled inmates, created a great deal of righteous fury among people. Some were so enraged as to search for the personal information of the judge who had ruled in favor of the criminals and disclose it on the Internet. However, it could be also possible that these same people may participate in a violent demonstration to protest against a government decision to build a welfare facility for the handicapped in their neighborhood.

I thought to myself again: Have I ever stopped to remember that a Rain Man, a Forrest Gump, or some artistic geniuses among them can soften my hardened

heart and give me solace with their extraordinary talents? Has it ever occurred to me that they, too, could be the breadwinner of a family who has to make at least a million won a month? Have I ever truly tried to embrace them, who are both special and ordinary, “as they are� in our society? For the first time in a long while, I have been to an exhibition that gave me a precious opportunity to think about what makes humans human.

[February 10, 2012]

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A Tearful Literary Night in Central Asia

Jung Il-keun Poet; Professor of Korean Literature Kyungnam University

I am now a winter traveler staying in Kyrgyzstan, a landlocked country in Central Asia, which gained independence from the former Soviet Union in 1991. Wherever you are in this country, you can see lofty mountain summits covered with eternal snow. Tian Shan, meaning the “Heavenly Mountains,” is the name given to these gigantic mountains stretching 400 kilometers in width and 2,000 kilometers in length. Bishkek, the capital city, is serene and peaceful, somewhat oddly, after undergoing two bloody riots in recent years.

Perhaps, the unexpected peacefulness may be due to the snow falling ceaselessly.

About 18,000 ethnic Koreans – “Koryo-saram” (Корё сарам) – and about 900 Korean citizens currently live in this country. I am on a visit to this faraway land to offer “voluntary literary service” to the ethnic Korean community.

“Voluntary literary service” is my coinage. In fact, I am here along with a group of my students who have attended the “Academy for Young Writers” for the past two years. The purpose of our visit is to read classical Korean literary works to ethnic Koreans as well as teach local students Korean literature and writing in Hangeul amid a boom in studying Korean. They have started their new semester after a short winter break. I was happy to see their eyes sparkle with curiosity about Korean poetry and novels, not everyday Korean for practical use.

Kyrgyzstan has a grand epic celebrating the valor of a legendary hero named Manas. There are books about the famous general written in the local language but the oral tradition also remains alive, symbolizing the country’s love for poetry, especially given that the complete recitation of the “Epic of Manas” takes more than 10 hours.

Yesterday, we held an event named “A Literary Night: Spring in My Hometown” for the Korean community at the Korean Language Institute here.

It was a rather simple event for ethnic Koreans and visiting Korean university students to read children’s poems written by Lee Won-su (1911-1981) and sing the songs based on his poems. We were initially worried that there might not be enough participants due to biting cold and heavy snowfall, but people began to arrive – those named Kim Ludmila, Yi Olga, Elvira, Nayula, and so on – and around 50 people gathered. They read the poems, although in clumsy pronunciation, and sang the songs, asking the meaning of words they didn’t know.

“Oh, tree, a winter tree/ Standing in the shade covered in snow/ In this lonely cold winter/ You are alone whistling in the wind.”

Tears began welling up in the eyes of many participants as they sang this

familiar childhood song together. Perhaps, they were recalling the long harsh years they had endured on their own like solitary birch trees in this snowcovered land. The literary event that had started off in a calm atmosphere ended in a sea of tears. While singing “Spring in My Hometown” with hand in hand, nobody attempted to hide warm tears flowing down their faces. I also couldn’t stop crying. That night in Kyrgyzstan, I clearly realized why this song has been widely regarded as a “hymn of the Korean people.”

You could find similar tearful events of ethnic Koreans anywhere in Central Asia. But I was surprised to learn that it was the first literary event for the Korean community since Kyrgyzstan gained independence two decades ago.

An elderly lady named Yi Svetlana almost reproached us, saying, “Why didn’t you come earlier?” Director Jeong Min-gyu of the Korean Language Institute, wiping his tears, asked us to come back soon. I could see they have yearned not so much for Hangeul itself but for the cultural resonance conveyed by the Korean script.

[Hankook Ilbo, February 4, 2012]

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The Legacy of Möllendorff in Leipzig

Kim Tae-ik Editorial Writer The Chosun Ilbo

Last week, the exhibition “Korea Rediscovered!” opened at the Grassi Museum of Ethnography in Leipzig in the northeastern part of Germany. The city was one of the venues for a touring exhibition of selected Korean objects from 10 German museums. At the exhibition, the name Möllendorff, which was listed as the donor of an array of exhibits, resounded as a reminder of a tumultuous period in Korean history. It was the name of Paul Georg von Möllendorff (1847-1901; also known by his Korean name Mok In-deok), one of the first Westerners invited into the Joseon Dynasty 130 years ago to tell its people about the outside world and modernization.

The exhibition showcased dozens of artifacts that he either collected or used during his stay in Joseon, including a brush holder and a jewelry box made of jade, a women’s long hairpin, a medicine box, a colorful assortment of letter

paper and a padlock decorated with exquisite silver-inlaid patterns, as well as a Buddha’s statue and Goryeo celadon works. Back when Leipzig belonged to East Germany, these relics were covered in dust and stored in a museum. They finally came to light after Germany was unified in 1990 and started to have more active relations with Korea.

Having graduated from college in Halle, a city adjacent to Leipzig, Möllendorff came to Korea in 1882. A few years before, Joseon had signed a treaty of friendship with Japan on Ganghwa Island and opened its doors to the outside world. Subsequently, a number of countries asked for diplomatic relations with Joseon, but there was no one in the country who was well versed in writing diplomatic documents. It neither had a foreign ministry nor a customs office. Under these circumstances, Möllendorff was hired by King Gojong to manage these affairs and support the country’s diplomatic activities.

Möllendorff wrote, “As we arrived in Seoul, it seemed all its 400,000 citizens came out to see us, as if we were some weird animals.” In the formerly closed kingdom of Joseon, he established the first foreign language school and the government mint. In his time, Leipzig was one of the most prosperous and culturally developed cities in Europe. Having grown up in such a city, Möllendorff was a cosmopolitan who could speak five languages.

Although some historians criticize that he served in Joseon mainly to pursue his personal ambitions, it would have been quite natural for anyone who had left his homeland to work in an obscure Far Eastern country to have some aspirations for worldly success or prestige. What matters after all is that Korean rulers of the time had wisdom and insight to make good use of this foreigner’s ambitions to pave the future for their country.

Möllendorff had to leave Joseon after only three years, however. He could not

stand the situation in which Japan, England and China competed for hegemony over Joseon. Furthermore, Joseon’s royal court, swayed by the foreign powers, also turned its back on him. In theory, Joseon’s politicians were divided on foreign policy between those for and against openness. But in reality, what they truly fought for was the interests of their respective factions.

Leaving Joseon, Möllendorff wrote, “It would have been better if the king was a man of strong character. From now on, the king should refrain from allowing everyone who has a mouth to give him biased opinions. When the king hears reports on government affairs he should listen to the officials in charge and nobody else. Prior to any official appointment, he should gain approval from his cabinet.” Möllendorff would have never imagined that, over a hundred years after his stay in Joseon, his collection of Korean artifacts would be invited to such a magnificent exhibition in Leipzig.

Joseon, for its part, failed to accomplish modernization on its own and became Japan’s colony after years of turbulence and disgrace. Korea subsequently went through a war and division but successfully overcame adversities to eventually grow into one of the world’s major economies. It seems history advances while giving hardships to those who choose the wrong path and rewarding those who grasp opportunities in the hardships.

The relics in Leipzig donated by Möllendorff make us recall the lessons of history. And now, just like when Möllendorff arrived in Korea, we are again living in an age when it is more important than ever to understand and relate to the world around us.

[February 22, 2012]

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Looking Forward to the Era of Hallyu 3.0

Bae Young-dae Deputy Editor of Culture and Sports Desk The JoongAng Ilbo

Girls’ Generation, a leading K-pop group, reportedly has been invited to a popular French TV talk show to be aired on February 10. Last week, the ninemember vocal group appeared in three major TV talk shows on U.S. networks.

The Korean Wave, or hallyu, is taking the world by storm. Even in Eastern Europe and South America, our young musicians’ songs and dances have begun creating a sensation. Korean popular culture is obviously turning into a global phenomenon, excluding only the reclusive North Korea.

Until recently, TV drama series and pop music had led the overseas craze for Korean popular culture. Against this backdrop, the Ministry of Culture, Sports and Tourism launched the “K-Culture Promotion Task Force” on January 30.

The new initiative is part of the ministry’s efforts to broaden the culture export boom. The ministry declared the task force will help usher in the era of “hallyu

3.0,” setting its initial goal on the “creative development of traditional culture.”

Traditional Korean culture, which has been under-promoted in view of Korea’s national strength, certainly deserves re-evaluation. This sounds even more relevant considering that a successful blend of tradition and modern elements was the essential factor underlying the widespread popularity of not only “Dae Jang Geum” (Jewel in the Palace), the first hit drama series that triggered the Korean Wave, but also the more recent dramas such as “A Tree with Deep Roots” and “The Slave Hunters.”

Traditional culture is a treasure trove that can imbue the Korean Wave with sustainable vitality. In this regard, the “Story Theme Park” disclosed by the Korean Studies Advancement Center on February 7 is another encouraging sign. The “theme park” provides online search of stories excerpted from a great variety of diaries and journals written during the Joseon Dynasty (13921910). Though a fledging project, it may develop into extensive endeavors to upgrade the infrastructure of history-related content in ways similar to the translation of the Annals of the Joseon Dynasty into modern Korean and digitization of its content in the 1990s.

The era of hallyu 3.0 requires the strengthening of the nation’s cultural capacities based on the humanities. Experts in the humanities should be able to provide content to give the much-needed depth to Korean pop culture in diverse ways. To that end, key agencies such as the National Research Foundation of Korea, the Institute for the Translation of Korean Classics and the Presidential Council on Nation Branding should wrack their brains together.

The K-Culture Promotion Task Force will reportedly be led by the first vice

culture minister, with heads of the planning and coordination, and culture and arts departments and concerned working-level officials to form a sort of “hallyu think tank.� It should not end up falling into a bureaucratic routine at the beginning of the year.

There is an important question to be asked at this juncture. Would there have been hallyu, if the Republic of Korea had remained economically impoverished and politically unstable? The global community must be actively responding to our dynamic dance movements because they highly regard the successful economic growth and political democracy that we have achieved in the past six decades. Now, we also look forward to the reassessment of our 5,000-year-old history and traditions.

[February 9, 2012]

www.koreafocus.or.kr

- Economic Outlook of North Korea in 2012 - Korea-China-Japan Free Trade Agreement: Prospects and Issues - Widening Gaps in Income and Quality of Life: Trends in HQLI and Implications - What Business Can Learn from K-pop for Global Strategy

Economic Outlook of North Korea in 2012 Dong Yong-seung Research Fellow Samsung Economic Research Institute

I. Introduction In recent years, North Korea has calibrated its actions to become a socialist economic power by 2012, the centenary of the birth of Kim Il-sung, founder of the Democratic People’s Republic of Korea. The capital city of Pyongyang was spruced up; cooperation with China was strengthened; new power plants were built; the currency was redenominated; and efforts were made to resuscitate major industries. Moreover, science and technology development policies were given new emphasis.

Outwardly, the North Korean economy appeared to be in its best shape since the collapse of the Soviet socialist bloc in the early 1990s. Trade with China, the almost exclusive trading partner of the North, reached an historic high, and Pyongyang showed some signs of revitalizing with various construction projects. The Rodong Sinmun, the official newspaper of the Workers’ Party, also reported the resumption of operations at large industrial plants. All in all, no major obstacles appeared to be in the way of the North declaring itself “a strong and prosperous nation” on April 15, 2012, Kim Il-sung’s birthday.

Then, at noon December 19, 2011, North Korea’s Central News Agency announced the death of Chairman Kim Jong-Il. It seemed like time stopped in the reclusive state with a major hurdle in the run-up to proclaiming that it had joined the ranks of the world’s economic powers. After the official mourning period ended, North Korea appeared to be returning gradually to routine but

the shock of Kim Jong-Il’s death will continue for some time to come. After the April 15 anniversary events, the main concerns will pivot around Kim Jong-un’s leadership ability and the North’s economic orientation, rather than ushering in a “strong and prosperous nation.”

As yet no particular changes have been detected from North Korea. We recall that after the death of Kim Il-sung in 1994, North Korea did not attempt any political or economic changes. It simply followed the deceased leader’s “deathbed instructions” for three years in the “March of Tribulation.” Thus, a similar path can be expected, with the North carrying out Kim Jong-il’s last instructions.

This study previews the possible direction of the North Korean economy in 2012. A review of the North’s 2009-2011 policies will first be made because they laid the foundation of the North’s “bequeathed policies.” Second, the North Korean government’s recent policy announcements, including the joint New Year editorial of major official newspapers, will be examined. Third, the development of private markets in the socialist state will be observed because conflicts and compromises between the official and unofficial sectors will likely shape the practical course of its economy.

II. Experiments during the Past Two Years Kim Jong-un became the official successor to his father Kim Jong-il when he was named vice chairman of the Workers’ Party Central Military Commission at a party conference on September 28, 2010. But he presumably was designated the heir apparent around January 2009. Therefore, the economic steps North Korea took between January 2009 and December 17, 2011 became the foundation for Kim Jong-un’s takeover.

Policy experiments in North Korea during the past two years can be observed on two planes ― normalization of the official economic sector and the strengthening of economic cooperation with China. In the former, North Korea began a “150-day battle,” a campaign to raise agricultural and industrial production, in May 2009. North Korean authorities discarded formal economic plans and concentrated their resources and capabilities on sectors where actual output was possible. North Korean people mobilized for the first public work projects in many years were not entirely happy but they participated more or less gladly. However, the ensuing “100-day battle” was not as productive as the earlier drive and caused complaints from residents.

On November 30, 2009, when the second campaign was about to be completed, North Korea announced a 100:1 redenomination of its currency.

The outside world was surprised and hurried to determine the background and impact of the sudden measure, which Pyongyang installed within one week without much confusion. The Choson Sinbo, the official organ of the proPyongyang Korean residents’ association in Japan, published a special article on December 4, explaining that “the currency reform was aimed at protecting the interests of workers and stabilizing their lives.”

The article quoted a North Korean official outlining the three main objectives of the redenomination. According to the article, the first objective was to raise the value of the currency and thereby facilitate its smooth circulation. In order to protect the interests of workers, the official said, their wages were maintained at the pre-redenomination level, which effectively meant a 100fold increase. The other two objectives were ending an abnormal supply of money in circulation and giving the currency a new theme and ideological and artistic contents.

The currency reform, according to the article, was merely a step needed to realize the 2012 goal of building a strong socialist economy, rather than preparation for a market economy. The official was further quoted as saying: “In the past, the government partially allowed the use of markets because the state and enterprises were unable to supply enough materials needed for planned production. As the state has strengthened its capabilities, the function of the market as a supplementary economic space will be gradually reduced.�

The official predicted that prices would fall below the level seen immediately after the new economic measures of July 1, 2002, because the redenomination pushed up the value of the North Korean currency. He added that most economic activities would thereafter depend not on market forces but on planned supply and distribution, thereby reinforcing planned economic management.

Then, in an obvious attempt to strengthen economic cooperation with China, Kim Jong-il visited the neighboring country three times during the 2009-2011 period. On these visits, he not only held talks with Chinese leaders but toured major industrial locations in China’s three northeastern provinces of Liaoning, Jilin and Heilongjiang, the focal points of economic cooperation between the two countries. The two allies reached an agreement on the joint development of Rajin, the major part of the Chang-Ji-Tu (Changchun, Jilin and Tumen) project promoted by Jilin Province. China had sought a trade route to the East Sea through Rajin located close to the China-North Korea border, and North Korea, which had been rather reluctant to open Rajin for China, changed its policy during this period.

Moreover, North Korea invited Russia to participate in the development and opening of Rajin. During his visit to Russia, Kim Jong-il had discussions with Russian leaders on the establishment of a gas pipeline through North and

South Korea and Russia’s future use of Rajin Port. Moscow showed strong interest in the Rajin project because of its strategic value.

North Korea also became involved in Liaoning Province’s “Five Points and One Line” project aiming to develop five ports and build a railway line and roads. Most notably, the two countries agreed on the joint development of Hwangumpyong Island on the estuary of the Yalu (Amnok) River. They also agreed to build a new bridge across the river to enhance their economic connectivity. While China feels a greater need for the joint development of Rajin, North Korea is more enthusiastic about the Hwanggumpyong project. In an effort to attract investment from China and other countries, the North established the National Development Bank and reinvigorated the Joint Venture Investment Committee.

In spite of international sanctions, trade between North Korea and China increased rapidly from US$3.4 billion in 2010 to $6 billion in 2011 (provisional), enabling the North to exceed its average annual trade volume last year. North Korea earned foreign currency mainly through the exports of coal, iron ore and other mineral resources while importing daily necessities and raw materials for industrial production. The rapid increase of China-North Korea trade could be a result of a ban on inter-Korean economic exchange imposed by the South Korean government on May 24, 2010, two months after the sinking of the South’s Navy patrol craft Cheonan in the West Sea. It is noteworthy that North Korea exported $840 million worth of coal to China during the first nine months of 2011. The North has typically set its target for annual import volume and then adjusted its exports. The abrupt increase in coal exports during 2011 indicated that Pyongyang had no meaningful trade plan. The apparent lifting of the export ceiling for such an important item suggests that the North had abandoned its usual trade planning.

III. The New Year Joint Editorial Despite the death of Kim Jong-il a fortnight earlier, North Korea’s major newspapers followed the tradition of publishing a joint New Year’s Day editorial. The joint editorial provides a window to the North’s assessment of the past year and its policy direction in the year ahead. Given the realities in the North, it cannot be presumed the policies mentioned in the editorial will actually be implemented. Still, the joint editorial helps to at least identify which areas will receive the most attention.

In this year’s joint editorial, which devoted relatively fewer words to the economy than in previous years, the focus was placed on stronger efforts for self-sufficiency and increased cooperation with China and Russia. With regard to the task of self-supported economic revival, the article said that “the light industry and agriculture are the main thrust areas for the construction of a strong and prosperous nation,” “resolution of the present food difficulties is the most urgent task for constructing a strong and prosperous nation” and “the revolutionary enthusiasm of the workers can be verified by resolving the food problem.”

For the third straight year, North Korea is placing the highest priority on the normalization of its light industry and farming sector. This reflects an awareness that the normalization of the official economy depends on the ability to circulate light industry products through the state distribution system at government-set prices. It contrasts with the past emphasis on key industries such as power generation, railway construction, and iron and steel production.

There is no guarantee that light industry and agriculture will have a higher chance of success, but North Korean leaders seem to believe they are relatively

easier to push than the heavy industries sector.

The North Korean government is not seeking foreign investment to normalize the light industry and agriculture. It continues to emphasize “the flames of innovation from Hamnam (South Hamgyong Province),” “the party’s agricultural revolution policy” and “organic farming in our own method.”

These expressions clarify the determination to achieve economic recovery with independent ability enhanced through spiritual revolution. Regarding the light industry, the editorial also said that “the necessary raw materials will be supplied from our own resources for the development of light industry at the regional level.” These are all familiar words North Korea has traditionally used to stress its “self-sufficient economy.” As a means of achieving selfsufficiency, the editorial called for an “industrial revolution of the new century,” which obviously signifies technological innovation.

With regards to external relations, the editorial reviewed that “the great general’s (Kim Jong-il’s) historic visits to China and Russia last year were important occasions to secure world peace and stability of Northeast Asia and to develop our nation’s traditional friendly relations with the two countries.”

The editorial did not directly link Kim’s tours to any specific economic issues, but the emphatic mention of his visits to China and Russia may suggest the importance of strengthening cooperation with these countries, particularly the joint economic projects that Kim discussed with leaders of these countries.

North Korea is also envisaging improvement of relations with the United States, possibly through the six-party denuclearization talks, and must be counting on getting U.S. economic aid. The joint editorial thus indicated that North Korea’s economic policy would generally follow the tracks of the past but it did not suggest the possibility of revived economic cooperation with South Korea. Inter-Korean relations are expected to remain strained for the

time being.

IV. Degree of Market Development in North Korea The development of unofficial markets in North Korea can be measured by the increasing number of people who are fully engaged in commercial activities.

Markets have expanded horizontally and vertically in North Korean society and life without them has already become hard to imagine. Furthermore, more markets are opening at a rapid pace.

After the 2009 currency revaluation, North Korean authorities placed restrictions on markets, but they proved ineffective. In February 2010, the authorities closed Pyongsong Market in Pyongyang and Sunam Market in Chongjin, expecting ripple effects on markets in other areas. However, the government action ignited nationwide complaints over the shutdown of distribution channels for food and other daily necessities. The official rationing system had long been broken down since the “March of Tribulation” in the mid-1990s.

In order to placate the people, Pak Nam-ki, head of the party’s planning and finance department, was reportedly executed and Prime Minister Kim Yong-il delivered an official apology to the heads of Pyongyang resident cells. Turmoil ended with the reopening of markets. Even though the surprise currency reform could be undertaken within a week, the people did not accept the closure of markets. It can be said that markets have replaced the rationing system in North Korea.

At the center of this change is a new class of merchants. There is even a saying among North Koreans that “all people have become merchants.” North Korea

has had the three classes of workers, peasants and intellectuals. The rest are military personnel, party cadre members, students, and dependents on state support, but they do not constitute social classes. Since the 1990s, various types of merchants have emerged as markets appeared in North Korean society.

In the past, some of the workers, peasants and intellectuals were engaged in commercial activities for economic survival while they still maintained their traditional class status. The purely professional merchants of today are referred to as the intermediary class (kanchung), because they do not belong to any of the conventional social classes. They are mostly housewives aged 40 or older and retirees in their 60s or older. They were originally classified as “dependents,” or puyang, as they had no occupation and lived on state support.

As economic difficulties deepened, these people came out to work in markets to earn money for their family’s livelihoods.

People who operate private sales counters in markets are called changsakkun, meaning professional merchants. Some of these merchants have shifted from distribution to manufacturing and have become very wealthy. Therefore, it may be more accurate to classify the merchants as “self-employed business owners” or “entrepreneurs.”

It is hard to calculate the number of people in this category. However, given that there are more than 3,000 communities at ri level across North Korea and that each of these communities has at least one marketplace with 50 to 100 sales counters, the nationwide size of the merchant class can be roughly estimated. Considering there also are smaller places where commercial transactions take place, it can be estimated that some 500,000 to 1 million people are engaged in commercial activities in North Korea today. Markets are expanding rapidly around these people.

V. Conclusion As observed above, North Korean economy in 2012 is expected to witness conflicts and compromises between the authorities’ efforts to normalize the official sector and private commercial activities. An emerging feature of the North Korean economy is the “polarization” of provisions between Pyongyang and the provinces as resources for building a “strong and prosperous nation” will be concentrated in the capital during this year. The Kim Jong-un regime will have no other choice but to bolster the official sector as it proceeds under the so-called “bequeathed instructions” of Kim Jong-il. Meanwhile, various elements in the official sector will compete in demonstrating loyalty to the new leadership, possibly through tougher control of the people.

The North Korean people have become familiar with market operations, adapting themselves to the increasingly ambiguous division between the official and unofficial sectors of economy. Yet, they may have considerable expectations for better living under the rule of the new leader and reject a return to the past. The numerous merchants may expect that control on private commerce will be eased and the young leader will promptly remove impediments to business imposed by mid-level bureaucrats.

There will be actions and reactions, and control and relaxation in the market.

In this process, North Korean authorities would prefer addressing conflicts with instant measures rather than try to resolve the fundamental problems in their economy. With a new leader at the helm, the cycles of conflict and compromise will likely be shortened, which will increase overall instability.

[KDI Review of the North Korean Economy, January 2012, published by the Korea Development Institute]

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Korea-China-Japan Free Trade Agreement: Prospects and Issues Jeong Hyung-gon Senior Research Fellow Korea Institute for International Economic Policy

I. Introduction Despite fiscal crises in their export markets, Korea, China and Japan have maintained steady growth in the past few years. As of 2010, the combined gross domestic product (GDP) of the three countries amounted to US$12.39 trillion, or 19.6 percent of the global GDP. Furthermore, their intra-regional exports account for more than 20 percent of the global volume, with the Korean and Japanese economies becoming increasingly dependent on China.

The growing economic interdependence has led to a slew of horizontal and vertical production networks among industrial sectors of these countries.

Against this backdrop, the industrial sectors of these countries are attentively watching the ongoing discussions on a trilateral free trade agreement (FTA) that would further link their economies.

In 2003, three state-run research organizations ― the Korea Institute for International Economic Policy (KIEP), China’s Development Research Center (DRC) and the Institute of Developing Economies of the Japan External Trade Organization (IDE JETRO) ― formed a consortium on regional economic cooperation. They stressed the need for a joint study on the feasibility of an East Asia FTA and in 2009 their proposal was adopted at the Korea-ChinaJapan trilateral summit.

The research project has brought together government officials, academics and

corporate representatives from the three neighboring economies to discuss a wide range of FTA-related issues, including products, services, investments and regulations. Seven large-scale conferences have been held, the last in December 2011. The research findings are to be reported to the fifth East Asian trilateral summit in 2012, which will likely launch formal negotiations for a regional FTA. Many research organizations predict the market liberalizing scheme would deliver substantial economic benefits. A three-way FTA would be expected to stimulate intra-regional trade and investment, boosting competitiveness in manufacturing and service industries. The research organizations forecast that GDP growth and improved livelihoods would be seen in all three countries.

However, international competition would increase due to lower or eliminated tariff protection, putting weaker sectors at a greater disadvantage. Given the huge disparities among the three countries in terms of economic competitiveness, market openness and institutional development, negative effects could inevitably be substantial in some sectors. This essay discusses some of the key issues that need to be addressed by the three governments before introducing a trilateral free trade regime.

II. Key Economic Issues in Pursuing a Korea-China-Japan FTA 1. Intensifying Competition due to Similarities in Industrial Structures Due to similarities in their industrial structures, Korea, China and Japan are already competing fiercely against each other in both regional and global markets. A regional FTA would probably further intensify the trilateral rivalry, so the path to an agreement will likely be an uphill struggle.

In <Figure 1>, the export similarity chart on the left, using the Standard International Trade Classification (SITC) 1-digit level data, demonstrates a clearly converging trend among the three countries. On the right, a more detailed analysis using the SITC 3-digit level data also indicates a generally increasing pattern of product similarities in exports, albeit less conspicuous than in the 1-digit level analysis. <Endnote 1> The two charts show that the three countriesâ&#x20AC;&#x2122; export structures are gradually assimilating, with intra-industry division of labor increasingly accelerating. In other words, export competition is intensifying among the three nations in the regional and global marketplaces.

Of special note is the high degree of export similarities that Korea shares with both Japan and China, compared to the Sino-Japanese similarities. It means

that Korean firms would likely experience much higher competitive pressure compared to the pressures that their Japanese or Chinese competitors would encounter if the three countries enter into a free trade agreement. Currently, Korea is competing with Japan mostly in high-end technology products, while it is also engaged in a fierce competition with China in low-end manufactured goods. <Endnote 2> Because a trilateral FTA would expedite assimilation in industrial structure by accelerating economic cooperation through horizontal and vertical division of labor among the three economies, competition will likely intensify further. In particular, the negative ripple effects of increased competitive pressure on each national economy would raise concerns since the trilateral competition would mainly occur in goods that each country regards as their economic backbone and engine of export-led growth.

Also, despite the conspicuous similarities in their industrial structures, the three countriesâ&#x20AC;&#x2122; levels of technological and capital development widely vary.

Under those circumstances, a regional FTA would accelerate vertical division of labor, meaning that a country with low technological development would see a decline in surplus production in the short term; eventually, this country would likely have to specialize in low value-added products. If a certain industry falls off the countryâ&#x20AC;&#x2122;s export priority list due to newly added competitive pressure, the negative impact of an FTA would continue to deepen.

The three economies already demonstrate a high tendency of vertical division of labor according to their disparate levels of technological and capital resources. If fiercer export competition in the region results in the crowding out of a countryâ&#x20AC;&#x2122;s production capacity, negative repercussions in its domestic market would increase. Market concerns for these negative possibilities may

impede progress towards an East Asian regional FTA. 2. Concerns about Added Competitive Pressure: Comparative Advantages and Tariff Rates by Industry As discussed above, Korea, China and Japan are already facing an intense competition in the global market. Their cash cow products would be the most affected items in a trilateral free trade regime. Similarities in their industrial structures, coupled with geographical proximity, would likely augment the effects of trade liberalization. Workers engaged in less competitive industries would suffer mounting restructuring pressure. This section discusses possible negativities that an East Asia FTA would bring to each country in terms of industry-specific tariff rates, comparative advantage indicators and trade balances.

1) Tariff Rates The three countriesâ&#x20AC;&#x2122; tariff rates in terms of the six-digit Harmonized System (HS) codes differ widely. Korea and China impose tariffs of 5-10 percent on 58.8 percent and 43.5 percent of their imports, respectively. Japan, however, does not impose any tariffs on 52.5 percent of its total inbound shipments [Refer to Table 1]. Compared to Koreaâ&#x20AC;&#x2122;s non-tariff policy applied to 14.1 percent of its imports and Chinaâ&#x20AC;&#x2122;s zero-tariff treatments to 6.7 percent of its imports, Japan already has an open economy, confident of its highly competitive industries. A regional FTA, therefore, would provide Japan with enhanced access to Korean and Chinese markets, with little addition in competitive pressure on its domestic producers.

2) Comparative Advantage Indices and Tariff Rates by Industry <Table 2> shows the revealed comparative advantage (RCA) indices and tariff rates by industry. The three countries commonly tend to impose higher tariffs on industries in which they have low comparative advantage. A more detailed look at industrial outputs may lead to a slightly different view of comparative advantage indicators and corresponding tariff rates. However, it is generally agreed that these industries would tend to be more vulnerable to a regional FTA, which would slash or eliminate import tariffs.

3) Trade Balances by Industry <Table 3> shows bilateral trade balances between Korea, China and Japan.

Korea in 2000 posted a deficit against China mainly in agricultural and primary processed imports. In 2009, Koreaâ&#x20AC;&#x2122;s import of Chinese textile, nonmetal mineral, and steel and metal products outpaced its exports, posting large deficits in those segments. Vis-Ă -vis Japan, Korea posted a surplus in agriculture and processed minerals, but the volume has been declining over the decade. In the same period, Korea had widening deficits in rubber and chemical, steel and metal products, and general machinery. China continues to enjoy large surpluses from agricultural and clothing trade with Japan, but posts a hefty deficit from imports of Japanese steel and metal, electronics and

electricity products, and precision machinery.

4) Chinaâ&#x20AC;&#x2122;s Vulnerabilities to Trilateral FTA The following sections will provide country-specific analyses based on each countryâ&#x20AC;&#x2122;s tariff rates, comparative advantage indices and trade balance data by industry. According to a 2008 report from the trilateral research consortium of KIEP, DRC and NIRA (National Institute for Research Advancement of Japan), China would have fewer industries threatened by regional trade liberalization than Korea or Japan. Nonetheless, Chinese chemical, automobile and machinery industries would be exposed to increased competitive pressure.

Those industries demonstrate low comparative advantages.

In the rubber and chemical products, the revealed comparative advantage indices for China, Japan and Korea are 0.50, 0.92 and 0.84, respectively, meaning that China is least competitive. China is rapidly accumulating deficits from Korean and Japanese rubber and chemical imports. In <Table 3>, China’s deficit in rubber and chemical imports from Japan increased from $4.46 billion in 2000 to $14.65 billion in 2009, while its comparable deficit with Korea also rose from $3.64 billion to $13.08 billion in the same period. To stave off competition, China imposes a tariff as high as 8.61 percent on rubber and chemical imports. The figure compares to Japan’s 1.41 percent on equivalent items. The low-tariff environment of an FTA would likely put Chinese rubber and chemical manufacturers at a greater disadvantage.

Likewise, Chinese transport machinery sector is less competitive. The RCA figure for Chinese transport machinery remains at 0.32, compared to 2.40 of Japan and 1.37 of Korea. China’s deficit from transport machinery imports from Korea and Japan is already substantial and on a steady upward slope.

According to <Table 3>, China’s trade deficit in transport machinery vis-à-vis Japan surged more than ten-fold from $750 million in 2000 to $7.95 billion in 2009, while its comparable deficit with Korea also soared from $110 million to $ 2.56 billion over the decade. According to the “World Tariff Profile 2010” released by the World Trade Organization, China imposes a 12.75 percent tariff on transport machinery imports, which is significantly higher than Korea’s 7.58 percent. Japan imposes a 0.02 percent tariff on transport machinery imports and maintains a zero-tariff policy on automobiles.

The precision machinery sector in China would also likely be vulnerable to FTA pressures. The RCA indices of the sector stand at 0.96 for China, compared to 2.24 for Korea and 1.41 for Japan. Balance of payment figures show that China in 2000 incurred a $210 million surplus from trade with Korea but after a decade it posted a deficit of $13.08 billion. Against Japan,

Chinese deficit also enlarged from $1.01 billion in 2000 to $8.01 billion in 2009. Tariff rates in <Table 2> show that China imposes the highest tariff of 9.72 percent on its precision machinery imports, compared to Korea’s 6.94 percent and Japan’s 0.22 percent.

In sum, Chinese companies in the rubber and chemical, transport machinery and precision machinery industries would experience markedly higher competitive pressures from an FTA with Korea and Japan. The new trade regime may pose an important challenge to the Chinese companies in those industries, which are seeking to transform their production lines into highvalue added output.

5) Japan’s Vulnerabilities to Trilateral FTA Japan’s weaknesses to regional market liberalization are found chiefly in agriculture and fisheries industry. Labor-intensive manufacturing sectors such as textile and apparels also lag behind Korea and China. However, with the exception of these industries, Japanese exports are generally more competitive than those of Korea and China across the board. Thus, Japan would be in position to realize substantial economic benefits under a trilateral FTA. Among the three nations, Japan and China are expected to be the main beneficiaries of the new trade regime, which in particular would allow greater access for China to the advanced Japanese market. Their bilateral trade is already of critical importance for both economies: China is the largest export destination for Japan, while Japan is China’s third largest export market and top import partner. The enormous volume of their bilateral trade is attributed to the mutually complementary nature of their industrial production based on increasing division of labor. Against these backdrops, a China-Japan FTA or a Korea-China-Japan FTA would mainly benefit the two economies. According to the KIEP-DRC-NIRA research dated December 2008, a Japan-China FTA is

estimated to raise Japan’s GDP by 0.5 percentage point, which is more than double the economic benefit expected from Japan’s trade liberalization with the ASEAN, the United States, or the European Union.

In Japan, agriculture and fisheries, processed food, leather, textile and apparel industries are found to be less competitive than their Chinese or Korean counterparts. Japan’s agriculture and fisheries RCA indicator stands at 0.06, compared to 0.39 of China and 0.11 of Korea. In 2009, Japan saw deficits amounting to $2.66 billion with China and $0.54 billion with Korea in this segment. In addition, Japan recorded a $20.16 billion deficit from textile and apparels trade with China in the same year. Outside of these two sectors, however, Japan does not record large-scale deficits vis-à-vis either Korea or China.

The Japanese government has traditionally provided strong protection for its least competitive industries. These industries’ lobbying against detrimental policy changes has been intense and effective, which raises fears that it will become a major threat to the upcoming trade liberalization process.

Additionally, despite their brisk economic activities, Japan and China are involved in a thorny territorial dispute in the South China Sea, which may further slow down progress in trade liberalization.

6) Korea’s Vulnerabilities to Trilateral FTA During the past several decades, Japan has been Korea’s top trading partner.

Korea’s trade deficit with its next-door neighbor has widened so dramatically in recent years that it is the biggest gap with any single country. A free trade arrangement would likely enlarge the chronic deficit even further.

Korean opponents to a trilateral free trade deal with China and Japan argue that a drastic cut in import tariffs on Japanese products would stifle the growth

of the local manufacturing sector, with Japanese imports rapidly overwhelming Korean manufacturers. As shown in <Table 3>, Korea posts large deficits from Japanese imports of rubber and chemical, steel and metal, and general machinery products. In the rubber and chemical sector, the figure more than doubled from $3.35 billion in 2000 to $8.8 billion in 2009. The two countries’ RCA indices in this sector are similar, with Korea at 0.84 and Japan at 0.92.

However, Korea imposes an 8.49 percent tariff, compared to 1.41 percent of Japan.

In the steel and metal industry, Korea’s deficit more than tripled from $2.08 billion to $7.52 billion over the past decade. In spite of their similar RCA indices in this sector, with Korea at 1.23 and Japan at 1.30, Korea’s tariff rate stands at 5.50 percent, compared to Japan’s 1.05 percent. Korean companies in the nonmetal industry oppose free trade with Japan because they already trail behind their Japanese competitors in technology and their domestic market share is protected by high tariffs.

The general machinery industry also seems to be vulnerable to competitive pressure from Japan, because it is already heavily dependent on high-end Japanese imports. Korea’s deficit in general machinery imports from Japan reached $5.76 billion in 2009. The deficit is continuing to widen despite Korea’s 6.17 percent tariff compared to the zero-tariff policy in Japan. Korean automakers and auto parts manufacturers are also concerned that Japanese automobiles would swarm into the domestic market.

The electronics industry also expects an increase in Japanese imports, which would force many small and medium-sized firms to restructure. Whereas the large companies armed with well-known brand names and cutting-edge technologies are expected to remain intact, their smaller peers in the early stages of technological development would be prone to severe losses.

Manufacturers of displays and semiconductors advocate an FTA with Japan because they have competitive advantages over their Japanese competitors and Japanese imports of these products are already duty free.

In terms of tariff rates alone, 68.9 percent of Korean shipments to Japan are currently duty free while merely 32.2 percent of Japanese exports to Korea are subject to zero tariffs. If Japan does apply tariffs on Korean goods, they are mostly below 5 percent. In contrast, Korea’s tariff imposition tends to be higher; 52.4 percent of Japanese imports are subject to 5-10 percent tariffs.

Therefore, Korea’s economic benefit in the manufacturing sector from free trade with Japan would likely be limited.

Even though Korea’s textile and apparel industries are considered more competitive than their Japanese counterparts, the competitive edge is diminishing. Korea’s trade surplus in the sector has deceased from $1 billion in 2000 to $320 million in 2009. Chinese manufacturers dominate the Japanese textile and apparels market, carving out an 80 percent market share, while Korean sales to Japan only account for 1 percent. Therefore, benefits for Korean textile and apparel makers from tariff cuts following a free trade deal may be rather insignificant.

Free trade between Korea and China would not be a boon for Korean manufacturers, either. According to the trilateral research consortium’s 2008 study of the weighted average tariff rates that reflect the two countries’ bilateral trading patterns, China’s tariff rate on Korean imports stood at 4.5 percent, compared to the 7.3 percent tariff Korea imposes on its imports from China. In agricultural trade, in particular, Korea imposes a weighted average tariff rate of 52.5 percent on Chinese imports, compared to China’s rate of 24.6 percent. On manufacturing imports, Korean duty stands at 4.5 percent on average, only slightly lower than China’s 4.6 percent imposed on Korean

imports.

The study also found that Korea mainly sells to China intermediate goods, which are already subject to low tariffs, whereas China mainly exports agricultural and fisheries products and consumer goods to Korea despite heavy tariffs imposed by the Korean government. Statistics show intermediate goods account for 76 percent of Koreaâ&#x20AC;&#x2122;s exports to China. Therefore, with an FTA erasing or diminishing tariff-based protectionism, Korea would less likely benefit from trade liberalization than China.

III. Conclusion As discussed above, the trilateral cooperation towards a Korea-China-Japan FTA should require serious endeavors from all parties to deal with conspicuous industrial vulnerabilities and wide disparities in tariff levels. Some of these prominent issues are likely to prevent sweeping elimination of trade barriers.

China, in particular, maintains adamant opposition to any market liberalization in the service sector. It would take long tedious efforts to devise a framework that ensures mutual benefits for all the three economies.

Furthermore, an FTA is an economic alliance based on mutual trust between the signatories, as well as an economic pact to eliminate tariff barriers and facilitate exchange of products and services. Given the political implications of the new form of economic cooperation, the three neighbors also need to deal with prickly political issues along the road to an FTA, in addition to sensitive economic problems. For example, Korea and Japan embarked on negotiations on a bilateral FTA in December 2003, but suspended the talks a year later when public sentiment in Korea deteriorated following the Japanese premierâ&#x20AC;&#x2122;s visit to Yasukuni Shrine, which honors Japanâ&#x20AC;&#x2122;s war heroes including

World War II criminals. To reach an agreement for increased economic cooperation, the three countries are required to make sustained efforts to maintain amicable diplomatic and security relations.

In their summit meeting held in May 2010, the leaders of the three countries agreed to enhance future-oriented cooperation in pursuit of good neighborliness, mutual trust, comprehensive cooperation, and common interest and development. They also mapped out the “Trilateral Cooperation Vision 2020” to consolidate the three-way partnership and accelerate cooperative measures. While preventing political factors from hindering advancement in trilateral partnership, it is important to strengthen the functions of the Trilateral Cooperation Secretariat, established in Seoul in September 2011 to facilitate three-way cooperative procedures. The secretariat should play a key role in expanding cooperation and consolidating mutual trust among the three neighbors.

Endnotes 1. International organizations frequently employ SITC data for analyses of trade patterns. For example, refer to OECD (2009), “Trans-Border Urban Cooperation in the Pan Yellow Sea Region.”

2. Institute for International Trade (2008), “An analysis of trade patterns for products of different technology levels among Korea, China and Japan.”

References Christopher M. Anderson et al. (2008), “A game-theoretic analysis of competition among container port hubs: The case of Busan and Shanghai.”

Denny Roy (2005), “The sources and limits of Sino-Japanese tensions.”

Elizabeth Wishnick (2009), “Competition and cooperative practices in SinoJapanese energy and environmental relations: Toward an energy security ‘risk community’?”

James Holmes et al. (2010), “Ryukyu Chain in China’s Island Strategy.”

James Manicom (2008), “Sino-Japanese Cooperation in the East China Sea: Limitations and Prospects.”

Joint Report and Policy Recommendation on the Possible Roadmaps of a Free Trade Agreement between China, Japan and Korea, December 2008.

Korea Institute for International Economic Policy (2005), “Korea-Japan FTA: Toward a Model Case for East Asian Economic Integration.”

Mariner Wang (2007), “Port Cooperation and Competition among Korea, Japan and China.”

Nazery Khalid (2006), “Port Development Boom in China.”

OECD (2009), “Trans-Border Urban Cooperation in the Pan Yellow Sea Region.”

T.J. Pempel (2000), “International Finance and Asian Regionalism,” The Pacific Review, vol. 13, no. 1.

Russell Hsiao (2010), “Aims and Motives of China’s East China Sea Live Fire Drills.”

Toshi Yoshihara (2010), “The Japanese Archipelago through Chinese Eyes.”

UNCTAD Comtrade Database Wei Yim Yap et al. (2006), “Development in Container Port Competition in East Asia.”

Guan Zhixiong (2003), “China’s WTO and FTA Strategies,” New Chinese Economics.

Institute for International Trade (2008), “An analysis of trade patterns for products of different technology levels among Korea, China and Japan.”

Kim Ki-seok (2005), “Regionalism in East Asia and Japan’s dilemma in external economic policies,” National Strategy, vol. 11, no. 4, Sejong Institute.

Jeong Hyung-gon et al. (2010), “Changes in comparative advantages in trade

between Korea, China and Japan: Policy implications,” KIEP Global Economy Today, KIEP Jeong Hyung-gon et al. (2011), “Trilateral Cooperation Secretariat: Its role and tasks to promote economic cooperation among Korea, China and Japan,” KIEP research paper.

Cho Jae-wook (2008), “China-Japan cooperation mechanisms and East Asian economic integration,” National Strategy, vol. 14, no. 3, Sejong Institute.

[Foreign Relations, No. 100, January 2012, published by the Korean Council on Foreign Relations]

www.koreafocus.or.kr

Widening Gaps in Income and Quality of Life: Trends in HQLI and Implications Kim Dong-yul and Cho Ho-jung Senior Research Fellow Senior Researcher Hyundai Research Institute

I. Definition and Significance of the Quality of Life “Quality of life” is the total amount of satisfaction that makes one’s life valuable and abundant. It is measured mainly based on objective elements such as income, health, labor, education, environment, and safety. Based on Jang Yeong-sik et al. (2007), which analyzed the quality of life indices with eight specific indicators in eight categories, including health, GDP, education, job security, environment, family life, safety, and digital opportunity, Korea ranked 17th among the 30 OECD member countries. The Korea Development Institute (2010) created indices based on 15 indicators in seven categories, such as life expectancy, health and safety, for comparison among OECD countries. In the KDI study, Korea placed 27th in 2000 and again in 2008.

Amid a growing awareness of the fact that happiness is not proportionate to

income or economic ability, there has been the increasing need to analyze whether the quality of life correlates with income growth. Although Korea’s per capita GDP grew about 1.8 times from 1995 to 2010 (US$12,000 to $21,000), there is widespread skepticism over whether happiness and satisfaction have increased in comparable proportions. Unlike the previous research, where rankings were decided by comparing Korea with other OECD member countries, this research focuses on how much the quality of life in Korea improved between 1995 and 2010, based on the Hyundai Research Institute’s own index.

II. Components and Calculation Method of the Quality of Life Index 1. Components of the Quality of Life Index The Hyundai Research Institute Quality of Life Index (HQLI) is comprised of four categories that are closely related to human life ― financial stability, social relationships, health/welfare, and living conditions. The four categories consist of 10 factors that affect an individual’s life according to existing documentary

research:

income,

education

level,

family,

safety,

information/culture, health, social security, housing, environment, and transportation.

The four major categories and the number of specific indicators composing each category are: financial stability (4); social relationships (6); health/welfare (4); and living conditions (6).

Financial stability â&#x20AC;&#x201C;The factors and their specific indicators are: income (unemployment rare and Gini coefficient) and education level (number of students per teacher and average years of education).

Social relationships â&#x20AC;&#x201C; The factors and their specific indicators are family (divorces and suicides per 100,000 people), safety (major crimes and traffic accidents

per

100,000

people)

and

information/culture

performances and wire/mobile telephones per 10,000 people).

(exhibitions,

Health/welfare – The factors and their specific indicators are health (life expectancy and the number of health care providers per 100,000 people) and social security (public expenditure on social welfare against GDP and public pension subscription rate).

Living conditions – The factors and their specific indicators are housing (housing distribution rate and per capita living space), environment (CO² emission per capita and sewerage access) and transportation (registered vehicles per capita and road extension per vehicle).

2. Calculation of the Quality of Life Index Assigning a weight to each specific indicator, the quality of life indices have been calculated and compared on a yearly basis from 1995, the base year with an index value of 100, to 2010.

1) Weight of Indicators All of the 10 factors have a weight of 10 and two indicators of each factor have a weight of 5 each.

2) Calculate ‘Weighted’ Indices (Original Indices) Based on the weight assigned to 20 specific indicators with 1995 as the basis, the rate of change by year up to 2010 was measured and turned into indices.

- Indicators of positive effects: [1 + (indicator value of applicable year – indicator value of 1995) / indicator value of 1995] * 5 - Indicators of negative effects: [1 – (indicator value of applicable year – indicator value of 1995) / indicator value of 1995] * 5 - Calculate the quality of life index with the total of the “weighted indices.”

3) Calculate ‘Weighted’ Indices (Standard Indices) After calculating the 5-year moving average value of each of the 20 specific indicators, the yearly rates of change up to 2010 are measured and compiled into indices with 1995 as the base year. In order to adjust indicators that may be overly or inadequately highlighted due to their high rates of change, the rate of change on a 5-year moving average was used.

- Indicators of positive effects: [1 + (5-year moving average of applicable year – 5-year moving average 1995) / 5-year moving average 1995] * 5 - Indicators of adverse effect: [1 – (5-year moving average of applicable year – 5-year moving average of 1995) / 5-year moving average of 1995] * 5

- Calculate the quality of life index with the total of the “weighted indices.”

- Five-year moving averages of specific indicators from 1995 to 2010 are calculated as in the below formula. The specific indicator values for 20112012, which are necessary for the moving average of 2009 and 2010, are drawn through the HP filtering. The specific indicator values of 2011-2012 are based on the average of the most recent five years that have been drawn through the HP filtering. * 5-year moving averages of specific indicators indicator value of applicable year

III. Analysis of the Quality of Life Index (HQLI) 1. Trend of HQLI The nation’s per capita income swelled 1.8 times from 1995 to 2010 and the quality of life index also improved from 100 to 132.3 during the same period.

But the gap in growth rates between income and quality of life widened.

Despite three economic crises at home and abroad, Korea’s per capita income rose 1.8 times from 1995 to 2010. In U.S. dollars (nominal), the nation’s per capita income grew from $11,779 in 1995 to $20,756 in 2010. In Korean won (real), the income increased from 11.96 million won to 21.32 million won during the period.

Meanwhile, the quality of life of Koreans improved 1.3 times during the same period, from 100 in 1995 to 132.3 in 2010, at a slower pace than real income growth and fell during economic crises. Noteworthy is a decline to 95.1 during the currency crisis in 1997. Also, during the 2003 credit card debacle and the 2008 global financial crisis, the index either dropped or remained flat. The

standardized quality of life index, which reduced high fluctuations due to economic crises, gradually improved to 126.6.

This shows that the speed gap is widening in the improvement of income and quality of life.

Among the four categories composing the quality of life index, health/welfare and living conditions improved significantly while financial stability deteriorated during the 15-year period under study. The health/welfare category, which consists of health and social security, and the living conditions category, which consists of housing, environment and transportation, both played a pivotal role in improving the quality of life of Koreans. The health/welfare index was the main driver. It nearly doubled from 20 in 1995 to 41.5 in 2010. The living conditions index also increased more than 1.5 times from 30 to 41.6 during the same period.

On the other hand, the financial stability index slipped from the 1995 level due to job insecurity and worsening income distribution caused by economic crises. Also, the social relationships index remained flat because of the rising trends in divorce and crime. The financial stability index rather dropped from

the base value of 20 in 1995 to 18.0 in 2010, while the social relationships index slightly moved up from 30 in 1995 to 31.2 in 2010.

In terms of the standardized index, health/welfare and living conditions also helped improve the overall quality of life while financial stability and social relationships fell below the 1995 levels. The standardized indices of health/welfare nearly doubled from 20 in 1995 to 39.4 in 2010 and living conditions also rose from to 30 to 40.3. In the same period, the standardized index for financial stability slipped from 20 to 19.2, while social relationships fell from 30 to 27.7.

- Indices of the 10 Factors

2. HQLI Trend by Category 1) Financial Stability Following the sharp fluctuations in income during the 1997 currency crisis, the credit card debacle of 2003 and the global financial crisis of 2008, the financial stability index in 2010 dropped below the 1995 base level. Among the four categories of HQLI, the financial stability index stood below the base value of 1995, lowering the quality of life. Among the factors of financial stability, the income index fell from the base value of 10 in 1995 to 5.4 in 2010, while the education index went up from 10 to 12.6 during the same period.

Amid an increasing frequency of international and domestic economic crises, the

unemployment

rate

rose

and

income

distribution

deteriorated.

Consequently, financial stability tumbled from the 1995 level with no improvement in the 15-year period up until 2010. In the income factor, unemployment rate weakened with the index falling to the negative area during the currency crisis compared to the 1995 base value of 5. The index remained below the 1995 level in the 2000s to record 1.2 in 2010. The Gini coefficient also fell from the 1995 base level of 5 to 4.2 in 2010. Indeed, the unemployment rate soared from 2.1 percent in 1995 to 6-7 percent during the currency crisis and has since remained above 3 percent. The Gini coefficient, which represents income inequality, also increased from 0.251 in 1995 to 0.289 in 2010, negatively impacting the quality of life.

Meanwhile, education level steadily improved in both quantity and quality.

The number of students per teacher (elementary school) and the average years of education improved continuously from the base level of 5 in 1995 to 6.7 and 5.9, respectively, in 2010.

2) Social Relationships In the social relationships category, the family and safety indices plunged, seriously damaging the quality of life. But thanks to the steady improvement in information/culture, the social relationships index maintained the 1995 level. While the family and safety indices dropped to -2.1 and 3, respectively, far below the base level of 10, the information/culture index jumped three-fold to 30.3.

Due to the rising crime rate and weakening family ties, the indices of safety and family steadily fell from 1995, lowering the quality of life most conspicuously among the factors in the social relationships category. With the soaring number of major crimes, the crime index dropped from 5 in 1995 to 2.8 in 2010. Traffic accidents per 100,000 people increased from 5 to 5.8.

The indicators of divorces and suicides per 100,000 people sank from 5 in 1995 to 2.3 and -4.4, respectively, in 2010. Both indicators fell sharply during economic crises. The number of major crimes more than doubled from 803 (per 100,000 people) in 1995 to 1,995 (as of 2009). The suicide rate, which is a specific indicator of the family factor, also continued to rise from 10.8 per 100,000 people in 1995 to 31.2 in 2010.

On the other hand, thanks to the advancement of wireless telecommunications equipment and quantitative increases in performance culture, the level of information/culture improved about three times in the 1995-2010 period, contributing the most to enhancing the quality of life in the pertinent category.

As the income level improved, the number of exhibitions and performances per 10,000 people and the subscription rate of wire/wireless telephones soared from 5 in 1995 to 14.5 and 15.9, respectively, in 2010, helping greatly to improve the quality of life.

3) Health/Welfare Along with the steady improvement in health and social security systems, the health/welfare index more than doubled during 1995-2010, contributing the most to better quality of life among the four major components of the quality of life index. The social security index jumped from the base value of 10 in 1995 to 26.6 in 2010, and health index also rose notably from 10 to 14.9 during the same period.

Amid the steady income growth and rising living standards, health continued to improve since 1995. By specific indicator, life expectancy went up from 5 in 1995 to 5.5 in 2010, while the number of health care providers per 100,000 people sharply rose from 5 to 9.4 in the same period. This is because the life expectancy of Koreans increased from 73.4 years to 80.8 years and so did the number of health care providers per 100,000 people from 462 to 870 during this period.

Social security, thanks to the expansion of welfare such as medical care and pension, also improved. While the enrollment rate in public pension ascended from the base value of 5 in 1995 to 10.1 in 2010, public expenditures on social welfare compared to GDP also jumped from 5 to 16.5 during the same period.

Indeed, with the swelling number of national pension enrollments since 1999, the subscription rate of public pension doubled from 42.4 percent in 1995 to 84.9 percent in 2009. The governmentâ&#x20AC;&#x2122;s public welfare expenditure also shot up from 3.2 percent compared to GDP in 1995 to above 10 percent in 2010, raising the overall quality of life.

4) Living Conditions Housing, environment and transportation, the three main indicators of living conditions, have all improved since 1995, becoming primary causes of the overall higher quality of life along with health/welfare. Compared to 1995, the living conditions index improved about 1.4 times. Housing climbed from the base level of 10 in 1995 to 14.8 in 2010, and environment and transportation also rose from 10 in 1995 to 13.7 and 13.1, respectively, in 2010.

While the living conditions represented by housing, environment and transportation achieved an overall improvement since 1995, environmental pollution and traffic congestion increasingly aggravated. The housing distribution rate and the size of living space per person continued to improve over the 15-year period of 1995-2010 from the base level of 5 to 6.6 and 8.3, respectively. In the environment factor, however, carbon dioxide (CO²) emission per person increased from 9.9tCO² in 1995 to 12.5tCO² in 2010, driving the pertinent index down from 5 to 3.7. But the access to sewer systems rose from 45.2 percent to 90.1 percent, resulting in a double rise in the index from 5 of 10, during the same period. In transportation, the number of registered vehicles per person climbed from 5 in 1995 to 9.7 in 2010, while the road extension per vehicle fell from 5 to 3.4 due to limited road extensions compared to the growth rate of vehicles.

IV. Implications To enhance financial stability, the first priority is to improve income stability by “creating jobs” and “improving income distribution.” Even though the official unemployment rate is not so high, it is urgently necessary to devise measures to create more decent jobs and improve income distribution in order to lower the effective unemployment rate.

In order to raise the employment rate, which has been on a downward slope recently, and lower the effective unemployment rate, jobs should be increased in the service sector, such as the legal, medical and tourism industries, which should shift to high value-added businesses. To improve income distribution and social integration, it is necessary to reinforce social security nets, prohibit unreasonable discrimination against irregular workers, establish fair trade practices between large conglomerates and small and medium-sized companies, and continue to implement measures for nurturing major universities in each region and expediting specialized regional development.

In the social relationships category, family and safety factors need immediate attention. In particular, the growing trends in divorce, suicide and crime urgently call for preventative measures. The rates of divorce and suicide have steadily risen since 1995, and are the highest among OECD member countries.

In order to reduce the divorce rate, society-wide efforts are necessary such as shedding new light on family values, encouraging men to share household chores, supporting balance of work and family, expanding childcare facilities, and providing financial aid for childcare.

Also, in order to lower the rapidly rising suicide rate in all age groups, and reduce crimes, social programs to encourage community awareness must be

expanded. Over the past 15 years, the suicide rate has nearly tripled to 2.5 times higher than the OECD average. More time and money should be invested in taking care of the mental health of the people. Considering that the suicide rate is particularly high in rural areas with more elderly residents, including Gangwon Province, house call service programs for single elderly households need to be strengthened.

Health/welfare has improved considerably but still needs measures to enhance sustainability such as improving the efficiency of welfare spending and securing financial resources. In view of the strong demand for welfare and the huge potential growth in welfare expenditure, it is necessary to devise a sustainable system to meet these requirements in the long term. This includes efforts to strengthen the effectiveness of welfare-related spending and reduce the burden on state budgets incurred by new welfare measures. According to a recent survey, those in their 20s and 30s have high preference for welfare. This means efforts need to focus on creating jobs for young adults, reducing the burden of college tuition and enhancing the effectiveness of policies related to housing and childcare support.

In the category of living conditions, urgent efforts are needed to raise energy efficiency and reduce the emissions of environmental pollutants, including carbon dioxide, recognizing the importance of green growth and the development of green technology and green industry. Taking a lesson from the recent power shortages and blackouts, more incentives are needed for the development of technology to raise energy efficiency and related products.

[ Weekly Economic Review, No. 476, February 3, 2012, published by the Hyundai Research Institute ]

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What Business Can Learn from K-pop for Global Strategy Seo Min-soo Research Fellow Samsung Economic Research Institute

I. Introduction The world is sitting up and taking notice of K-pop, the driving force behind the “New Korean Wave” (sin hallyu), which is reinvigorating the international popularity of modern Korean culture started by TV dramas. Girls’ Generation appeared on the popular American talk show “The David Letterman Show” on January 31, and the number of views for K-pop videos on YouTube reached some 2.3 billion in 2011.

So, how did K-pop move from the fringes of the world pop music market to succeed globally, despite language and cultural barriers? To identify the factors behind the success of K-pop, a “cultural diamond” model was created. Its four corners are 1) Creators ― Entertainment companies who produce and promote K-pop music and train performers; 2) Distribution ― social media channels that spread K-pop internationally; 3) Consumers ― the fans who enjoy and share information about K-pop music and performers; and 4) Contents ― the K-pop style of singing and dancing that is constantly refreshed.

Now Korea’s major cultural product, K-pop is creating massive added value.

Other fields of business need to take the strategic values of K-pop ― the songs, the singers and the fans ― as a stepping stone for the development of new products, establishment of new marketing strategies, and exploration of new markets.

First, businesses should try to develop products derived from K-pop to create added value. Game developers and animators should create products that feature K-pop characters and contents, while producers of musicals and TV dramas should explore ways to incorporate K-pop songs and the singers.

Second, products that will attract K-pop fans should be developed. To attract more tourists, it is necessary to create tourist products that combine K-pop content with sightseeing and shopping, and turn places strongly associated with K-pop into landmark sites. Third, to make the most of publicity and marketing, collaborative efforts should be made with K-pop singers, who are known for their fashion and sense of style. Fourth, new marketing strategies should be adopted, such as using K-pop stars as models to advertise products that are closely connected to pop music. Lastly, K-pop fans can be used to pave the way for Korean products overseas. Using YouTube and other social media, the major medium for the spread of K-pop, plans for the overseas entry of Korean products need to be fine-tuned according to region.

The success of K-pop can be attributed to the systematic creation of stars, trained thoroughly from the outset with the global market in mind and from a long-term perspective. Taking lessons from this example, a third and fourth Korean Wave can be triggered, raising awareness of Korea and leading to the diversification of exports.

II. K-pop Floods the World Stage K-pop fever began in the late 2000s when Korean boy bands and girl groups (commonly called â&#x20AC;&#x153;idol groupsâ&#x20AC;? in Korea) began to make forays into major Asian markets such as Japan, China and Thailand. These groups built on the efforts of the singer BoA, who was a huge success when she entered the Japanese market in 2001.

Fans of K-pop can now be found not only in Asia but in the United States and Europe as well. In August 2011, Billboard established a new K-pop chart, and in France, England, Spain and other parts of Europe tickets for K-pop concerts sold out quickly. Such activity prompted major newspapers to publish articles on the K-pop phenomenon, i.e. the Financial Times on February 10, 2012; the New York Times on October 24, 2011; and Le Figaro on June 9, 2011.

The online response has also been explosive. Online viewing of the songs and videos of Korean idol groups has greatly increased, and YouTube, the world’s biggest video site, has established a channel devoted to K-pop in recognition of its mushrooming popularity. In 2011, K-pop related material attracted some 2.3 billion views in 235 countries. In addition, the use of “K-pop” as a search term on Google increased ten-fold in 2011 compared to 2004. In contrast, “Jpop” searches fell by one third in the same period.

As K-pop spreads, amateur cover versions of the songs are rapidly spreading online in the form of user-created content (UCC) videos. Imitating K-pop song and dance has already become something of a trend in Thailand and other parts of Southeast Asia, and young people in Europe and the United States are showing signs of picking up the fad.

III. Strategic Value of K-pop The K-pop Korean Wave Index shows that Korean pop music has peaked in popularity some 10 years after the first steps to take the genre abroad.

Compared to the early peak in 2004 when the index reached 100, in 2011 the index rose to 262, marking a 2.6-fold increase in seven years.

K-pop is a strategic asset for Korea. It not only creates economic added value but also has the spillover effect of raising recognition of Korea and Korean products. It is estimated that the economic effect reached 4.98 trillion won in 2010. This indicates a need to carefully analyze the factors behind the success of K-pop, identify the implications for business, and explore ways to apply them to various businesses. Valuable lessons can be learned from K-pop, which has moved from the fringes of the world pop music market to succeed globally despite language and cultural barriers.

IV. Success Factors Behind K-pop The cultural diamond model used in sociology was employed to analyze the factors behind the success of K-pop. The diamondâ&#x20AC;&#x2122;s four corners carry major determinants to the success:

1) Creators: Entertainment companies developed systemized training and carefully laid plans to advance into overseas markets; 2) Distribution: The time and cost for entering overseas markets is shortened with the use of social media such as YouTube, Facebook and Twitter, through which contents are spread spontaneously; 3) Consumers: The rapid spread of the popularity of Kpop can be attributed to fans who are typically tech-savvy and eager to share information and opinions; and 4) Contents: K-pop stars display highly polished levels of singing and dance and attractive looks. They attract fans and maintain their popularity by constantly trying to release new songs and refining their style.

1. Creators: Systemized Production Entertainment companies have developed a systemized process of nurturing stars and carefully crafting long-term preparations to advance into overseas markets. From casting to promotion, the whole process is methodically organized and singers are trained from the outset with the international market

in mind. The practice of putting countless numbers of hopefuls through training to select the cream of the crop is one of the keys to K-pop’s competitiveness.

1) Casting: Finding Diamonds in the Rough No effort is spared at finding the right people under the belief that working with good material is the road to success. Trainees are selected through various channels, including auditions and recommendations from celebrities. “When we choose people, we first look at their talent along with their hidden potential,” says Yang Hyun-suk, head of YG Entertainment. Through global auditions, would-be stars are also chosen from other countries. SM Entertainment, for example, has since 2006 held annual overseas auditions in the United States, Canada, Thailand and other countries. These auditions attract as many as 30,000 hopefuls annually, and so far some 100 people have been chosen for training.

2) Training: Long-term Investment in Cultivating Top-class Entertainers The entertainment companies are highly discriminating gatekeepers, selecting only the very best trainees to turn into pop stars. The chosen few are drilled not only in song and dance but also foreign languages, and go through character building and psychological consulting programs. Underage trainees are strictly forbidden from smoking or drinking alcohol and violators are dismissed.

The trainees must endure a difficult and rigorous program where they are continuously evaluated through survival-style competitions, and push themselves hard to come out on top. The evaluation process includes a concert held every fortnight to test the trainees’ talent and foreign language ability.

When forming new groups, the members are not selected first. Rather, the image of the new group is decided first and different combinations of members

are tested to find the ones who fit the concept. The singing, acting and dancing roles are divided according to each member’s strengths to create synergy in the group.

The entertainment companies invest a considerable amount of time and money on training. The average training period is five years, during which time the company bears all living expenses and costs. The members of Girls’ Generation spent five years as trainees, Big Bang six years, and Dong Bang Shin Ki (TVXQ) seven years. Return on this heavy investment comes when some of the trainees become stars and that money in turn is invested in the next batch of trainees.

3) Production: Global Sourcing Renowned experts in each field of album production are recruited to raise the quality. Ideas for songs are collected externally from the planning stage. SM Entertainment invites about 300 composers from around the world to participate in two conferences held annually in Korea. In this way, professionals from different countries and fields of expertise are widely employed in the production stage. As an example of such international cooperation, Girls’ Generation’s song “Genie” (Sowoneul malhaebwa) was composed by Design Group from Europe with lyrics and arrangement by Yu Yeong-jin in Korea, and choreography by Rino Nakasone Razalan, a JapaneseAmerican.

4) Global Promotion: Cooperation with Local Partners To minimize the risk and uncertainty associated with entering foreign markets, Korea’s entertainment companies form partnerships with local agencies and record companies. For example, when entering the Japanese market, they formed partnerships with influential companies such as Universal Japan and Avex. The overall concept was created in Korea and promotion and

distribution plans were adjusted by the Japanese partners to suit the local market.

As a strategy to overcome cultural barriers, localized versions of albums are released and local tastes and culture are reflected in the lyrics, music videos and fashion. As a result, K-pop songs recorded in the local language are often used in local TV dramas, advertisements and films.

2. Distribution Method: Active Use of Social Media K-pop is delivered simultaneously around the world by making active use of social media such as Facebook, YouTube and Twitter. As news spreads rapidly through these channels, the time and cost of entering foreign markets can be reduced. In the early days, BoA took five years to succeed in Japan and Dong Bang Shin Ki four years, but more recently Girls’ Generation reached the top of Japan’s Oricon chart as soon as their first album was released there.

K-pop stars also use social media to communicate directly with their fans worldwide, keeping them abreast of their latest activities. Super Junior have 3.85 million Facebook friends, Girls’ Generation 2.46 million, Big Bang 2.07 million, and 2NE1 1.93 million.

Taking social media as a platform for consumption of K-pop, the entertainment companies are trying to develop suitable contents for distribution online. They maintain employees whose job is real time monitoring of social media to gain an idea of the popularity of their stars and the buzz about them. Before releasing an album, music video teasers are put online to make news and spark the interest of fans. YG Entertainment aired GD&TOP’s new album showcase live on YouTube to an audience of 390,000 fans.

As the influence of YouTube grows, tremendous amounts of effort are put into making attractive music videos of the new songs. For the Girls’ Generation video of “The Boys” SM Entertainment employed the matrix camera technique.

3. Consumers: Tech Savvy and Active The main consumers of K-pop are young people who are at home with social media and IT devices. While fans of Korean TV dramas are mostly middleaged women, the majority of K-pop fans are young women in their teens and twenties. Rather than listening to albums, they get their dose of Korean music and music videos online and on mobile devices.

K-pop fans are active receptors of cultural influence who express themselves freely. They don’t just listen to the music; they also create ways of having fun with it. For example, cover dance videos of K-pop songs have become a wellestablished form of online entertainment among K-pop fans. In parts of Europe and South America, where little K-pop promotion has been conducted, online fan clubs have appeared, making up part of the estimated 3.3 million K-pop fan club members worldwide.

4. Contents: Songs, Dance and Visuals K-pop stars have captivated world audiences with a combination of strong singing skills, dance choreography and attractive appearances and styles. They are highly competitive and constantly try new ways to reinvent themselves. A fusion of Western pop music style and Asian sentiment and simple melodies, Korean pop songs have universal and mass appeal. Songs such as the Wonder Girls’ “Nobody” and Tiara’s “Bo Peep” feature a repetitive hook with catchy

rhythms and simple melodies.

On stage, K-pop concerts are a feast for the eyes. The idol groups perform perfectly orchestrated group dances interspersed with feature movements such as Girls’ Generation’s shuttlecock kicking dance. With each new song released, the singers come up with a new fashion style.

To succeed internationally, efforts are made to clearly distinguish K-pop from American pop and Japanese pop (J-pop). Instead of the provocative and violent elements found in mainstream genres such as R&B and hip hop, K-pop is more innocent and passionate. In this regard, Melvin Brown, producer for Lady Gaga, has said he feels that K-pop has potential in the American market, considering that American and European audiences are looking for something new. While J-pop singers cultivate a cute image, Korean music critic Lim Jinmo believes that singing ability is what really makes K-pop stand out. “BoA made it in the Japanese market because of her singing, which can sometimes be lost in the midst of powerful dance moves,” Lim said.

V. Strategies for Commercial Application of K-pop Five strategies are suggested for defining the basic elements of K-pop and applying them to other businesses. The basic elements are the songs (popular melodies), the singers (ability as entertainers, appearance) and the fan base (SNS users). New products and new promotion strategies should be developed based on the songs and the singers, and new markets developed targeting the fans. New products refer to K-pop spin-off products that will draw a large number of fans; new promotion strategies refer to collaborations with K-pop artists and using the singers as models in advertising to make the most of their popularity; and new markets refer to overseas markets targeting K-pop fans

and SNS users in different regions.

The potential connection between K-pop and other industries can be explored based on an analysis of front-end and back-end production inducement coefficients and a survey of management executives.

1. Added Value Created by Spin-off Products The game and animation industries can benefit by developing products based on K-pop contents and stars, and hence target the teen to twenties age group both in Korea and overseas. For example, hit songs can be used as background music for games or the singers may be featured as characters. “Dance Central,” a virtual dance game for MS Xbox 360, featuring songs by famous acts such as Usher and Lady Gaga, has sold over one million copies around the world.

In the animation field, there is a popular series that follows the progress of a singing hopeful on the road to becoming a star. The soundtrack and theme song of the Japanese animated program “K-ON!” released under the name of the main character, made news when it actually reached number one on the Oricon chart.

In the same light, K-pop songs and artists can be used in musicals and TV

dramas to tap overseas markets. Like “Mama Mia,” the hit musical based on the songs of the Swedish group ABBA, one-source multi-use cultural products can be developed by turning K-pop contents into stories with popular appeal.

In 2004, when PMC Production created a musical based on the movie “Temptation of Wolves” (Neukdae-ui yuhok), which in turn was based on an Internet novel, it incorporated the hit songs of Korea’s first generation idol groups such as SES, HOT, and GOD. Employing K-pop stars or adopting related subject matter, TV dramas and the performing arts can help pave the way to international markets. In 2011, the Japanese production of the musical “200 Pounds Beauty” (Minyeo-neun goerowo) featured Park Gyu-ri from the popular girl group Kara and enjoyed a sell-out run.

In addition, a wide range of K-pop merchandise such as photo books, posters, T-shirts, and bags can be developed for the teen and twenties market. At the 2011 Super Junior concert in Japan, sales of souvenir goods, including 25,000 sports towels, 40,000 silicon bands and 60,000 capsule toys, reached some 2 billion won.

2. Development of Crowd-drawing Products 1) Concert Tourism on K-pop Themes Tourist products that link concerts or live K-pop related performances with sightseeing and shopping should be developed. It is estimated that more than one million tourists will visit Korea in 2012 for big events featuring Korean Wave stars. Compared to the average tourist, these visitors spend some 1.5 times more money in Korea.

Tourism products targeting fans of Korean popular culture include tours of filming locations and fan meetings. JTB, a Japanese travel company, organizes

an annual K-pop package tour in partnership with a local duty free store. The main item in the package is the “Family Concert,” held exclusively for the visitors, which in 2011 featured big-name artists such as Big Bang, Kara, Beast, and FT Island. Fan meetings are also held within the department store featuring showcases of the stars’ favorite items, displays of outfits worn in TV dramas, and star photo zones. A three-day package drew some 2,000 Chinese tourists in 2011.

In addition, a broad range of shopping items favored by Korean Wave tourists should be made available. A general survey of tourists showed that shopping was the main purpose of visiting Korea for 60.9 percent of respondents, followed by sightseeing (52.9 percent), food (38.5 percent), beauty treatments (7.9 percent), and concerts and performances (5.9 percent).

2) K-pop Clusters as Tourist Resources Turning K-pop related places into landmark sites is seen as another way to draw tourists. Like Nami Island, featured in “Winter Sonata,” and Yangju in Gyeonggi Province, a shooting location for the TV drama “Dae Jang Geum” (Jewel in the Palace), music related sites can be turned into tourist clusters. In cooperation with SM Entertainment, the city of Osan plans to build a studio to film music videos, a K-pop international school, a concert hall, and a pop culture museum.

Entertainment tourism is also evolving with the establishment of concert hall and shopping complexes dedicated to Korean Wave themes. Turning the Samseong-dong and Cheongdam-dong area, where the entertainment companies have their offices and many Korean celebrities live, into a tourist attraction can benefit the department stores and shops in the neighborhood.

In a similar fashion, already popular tourist areas can attract even larger

crowds by establishing places where K-pop can be enjoyed. For example, in Japan a theater dedicated to the girl group AKB48 was opened in 2005 on the eighth floor of the Don Quijote store in the popular Akihabara electronics district in Tokyo. Performances are held almost every night under the concept of “idols you can meet,” resulting in a comfortable and friendly image for the group. In addition to the small theater, with 170 seats and standing room for 80, there is an AKB48 shop on the fifth floor of the same building, featuring an array of goods ranging from albums to photographs and character dolls.

3. Collaboration with K-pop Stars The promotional effect can be maximized through collaboration with K-pop stars known for their style and fashion sense. The singers’ images may be projected onto the products by encouraging their involvement from the product development stage. The involvement of internationally popular K-pop stars in the product development processes is in itself enough to create a buzz.

These days, major business corporations in various fields pursue active collaboration with pop artists. The global fast fashion brand H&M has been working with Madonna and cosmetics brand Elizabeth Arden with Britney Spears. The K-pop band Big Bang has worked with American hip hop artist Ludacris to produce and endorse a line of headphones called Soul by Ludacris, also known locally as the “Big Bang headphones.” In this way, celebrity involvement in the design of fashion and beauty products or in the audio enhancement of IT and electronic products can make the most of marketing and promotion efforts.

Celebrity collaboration can also help distinguish a product from others. The Louis Vuitton shoes designed by American hip hop artist Kanye West sold out as soon as they were launched on the market, despite their $1,000 price tag.

4. K-pop Celebrity Endorsement Korean products can be made more appealing in international markets by using K-pop stars with the right image as advertising models. Idol stars are particularly effective in this respect as young fans in their teens and twenties like to know everything about their favorite stars and emulate them, very often using the same products that they use. Advertising for everyday consumer goods such as food and beverages, cosmetics and fashion can be tailored to different markets by using the celebrities who are popular in each region. In the latter half of 2011, the food company Chungjungone selected Kara to endorse its red vinegar drink “Hongcho” in Japan and saw sales jump to 47 billion won, a 15-fold increase over the first half of the year.

IT companies and automakers are also using K-pop stars to convey their technological capabilities. In early 2011, Intel chose Girls’ Generation to advertise its 2nd Generation Core Processor to raise its brand awareness and show its new technology in a fun and easy way to consumers in Asia and Europe. The video features episodes of Girls’ Generation using Intel technology in their everyday lives.

Indirect publicity is sought through sponsorship of concerts and music video production. Products are exposed in the form of product placement in the videos or through advertising before or after music video broadcasts. When entering the American market, HiteJinro sponsored a beer and soju drinking scene in the music video of the hip hop group Far East Movement.

Cultural marketing is also growing as businesses sponsor more big events such as K-pop concerts and cover dance competitions.

5. K-pop Fans as a New Global Market As K-pop spreads among young people around the world, K-pop fans are forming an attractive new “global segment.” In other words, these young fans of diverse nationalities are seen as a new global market. In the words of Lee Soo-man, head of SM Entertainment, “A virtual nation that defies the traditional concept of nation is rapidly emerging. Fans worldwide who watch and listen to SM content on Facebook or YouTube are citizens of the SM nation.” Mostly in their teens and twenties, K-pop fans are likely to be trendsetters in their respective countries. This indicates the possibility of expanding markets in the future.

Hence, Korean companies can use the K-pop fan base to gain a foothold in new markets for their products. While Korean products have already built a consumer base in some parts of Asia, the Middle East, South America and Europe are emerging as new export markets. Indeed, under the influence of the new Korean Wave driven by K-pop, exports to the Middle East recently reached $10 billion for the first time and exports of consumer goods to South America have jumped 49.9 percent.

Strategies for entering foreign markets need to be fined-tuned according to the region, and good use should be made of YouTube and other social media, the main channels for the spread of K-pop. YouTube’s music video statistics give an indication of which songs are popular in which countries and how they can be used to differentiate markets. On the YouTube world map, countries are marked in one of five shades of light to dark according to the frequency of views of a certain video. The map shows that videos of popular Japanese and Chinese acts are mostly viewed in the singers’ home countries while those of K-pop artists are viewed around the world, which provides useful information for establishing business strategies for each market.

Reflecting the characteristics of emerging and advanced markets, strategies for market expansion could make use of K-pop fans in different ways. In newer markets such as the Middle East and South America, the popularity of K-pop is linked with Korea’s national image and, thanks to the consequent increase in awareness of Korea, sales of Korean products rise accordingly. In established pop music markets such as the United States and Europe, the emphasis is taken away from Korea to focus rather on the name value of the entertainment companies producing K-pop or the features of related products.

VI. Implications ● Toward the ‘Born Global’ Concept Under “born global” strategies, products are developed with the global market in mind and distribution and operation systems are established with local partners. In this line, entertainment companies can raise their chances of success by recruiting trainees for pre-selected target markets, teaching them the language and etiquette of the country concerned and producing music and choreography accordingly.

A global strategy should be seen not just as a way to enter foreign markets but the pursuit of open innovation whereby research and development and supply of key resources is carried out on a global level. K-pop songs are created to appeal to global consumers with the help of world-renowned experts in composition, lyrics, choreography, style and concept. In the same way, businesses should seek to complement their weaknesses with resources in the global market rather than trying to be an expert in all areas before entering international competition.

● Going Global with Korean-style Products Departing from the notion that traditional culture is the only Korean-style culture, K-pop is a success in the global market thanks to its sophisticated expression of Korean-style traits such as dynamism and high-spiritedness.

Even companies that deal mainly with the domestic market can learn a lesson from K-pop’s formula for global success to reinterpret and recreate Koreanstyle traits in preparation to advance overseas. Local retail, food and beverage chains and multiplex cinemas, which have reached a high level of expertise through domestic competition with leading firms, are also making bold moves into the global market.

Cultural products such as musicals, games and variety programs, as well as fashion and beauty products, tourism and Korean food are all potential resources for the third Korean Wave, following TV dramas and K-pop. ● Stressing the Basics in Cultivating Talent The K-pop system is notable for its cultivation of global stars through emphasis on the basics. It is acknowledged that the success of today’s K-pop stars is attributed not only to marketing and visual appearance, but also strong competence in the basics. This comes from years of training in basic skills, which in this case include music, dance choreography, composition, and foreign languages.

The established process is to select people with the basic skills and potential to grow as key members of the organization. To ensure that the talents of the individuals translate into results for the company, the trainees are

systematically educated and coached according to their individual abilities and strengths and weaknesses. The entertainment companies that have been at the forefront of the K-pop boom have brought out the best in their artists through such methodical management and by ensuring that their everyday lives are well-ordered. â&#x2014;? Bold Strategies from Long-term Perspectives The unchanging formula for success in business is to build competence and raise accessibility for consumers from the long-term perspective rather than seeking quick profits. It should not be forgotten that K-pop is what it is today because of strategic long-term investment despite the poor foundation for such contents at the outset. Companies entering emerging markets and newer companies with comparatively weak brand awareness should focus efforts on raising accessibility for local consumers and securing opportunities for brand exposure.

[CEO Information, No. 841, February 15, 2012, published by the Samsung Economic Research Institute]

www.koreafocus.or.kr

- Two Key Persons Behind the Birth of 50-year-old Industrial City Ulsan

Two Key Persons Behind the Birth of 50-year-old Industrial City Ulsan

Kim Chang-hyeok Senior Reporter The Dong-a Ilbo

Activity around Ulsan seemed unusual in early 1962. Large ships loaded with machinery and construction materials went in and out of the coastal town, which didnâ&#x20AC;&#x2122;t even have any notable port facilities. The former Soviet Union grew nervous. It was no wonder. Ulsan at the time was just a typical rural town with a population of about 85,000.

Moscow suspected that the United States might be building a naval port or a military base and dispatched a submarine to the international waters in front of Ulsan to monitor the activity. The surveillance continued for five years thereafter, according to sources at Japanâ&#x20AC;&#x2122;s Ministry of Defense.

Had the Soviet Union paid better attention to news coming out of Seoul, it

would have remembered that on January 15, 1962, Chairman Park Chung-hee of the Supreme Council for National Reconstruction unveiled the nation’s first five-year economic development plan and selected Ulsan to become Korea’s first industrial city. On February 3, ground was broken for the construction of the Ulsan Industrial Complex. Hence, “Ulsan Industrial City” was born.

A few days ago, Ulsan observed the 50th anniversary of its industrial birth.

The anniversary celebration was just days after Korea’s annual trade volume topped US$1 trillion, of which Ulsan claimed $100 billion. This means Ulsan alone exported more than Iran or Denmark did.

I went to Ulsan to see the golden anniversary celebration and on the way there, I thought the saga of the city could be told in three episodes: Ulsan envisioned

by Park Chung-hee in 1962; Ulsan as the scene of a fierce labor struggle on Goliath Crane (Hyundai Heavy Industries) that I witnessed in 1990; and Ulsan today where citizens enjoy swimming competition in the Taehwa River.

First, I saw the “Ulsan of Park Chung-hee” through his two key aides. Ulsan city invited these two men to the commemoration ceremony and conferred honorary citizenship on both of them. They are Oh Won-chul, 84, former senior presidential secretary for economic affairs, who drew up the blueprint for Ulsan Industrial Complex; and Kim Eui-won, 81, former national land planning chief of the Ministry of Construction, who directed the construction of the complex.

Oh Won-chul was a typical technocrat in the Park government, which began in 1963. President Park highly regarded his ability, referring to him as “Oh gukbo,” meaning he was a “national treasure.” A chemical engineering major at Seoul National University, Oh joined the Army as an engineering officer when the Korean War broke out in 1950. He served as an industry bureau chief

of the Ministry of Commerce and Industry at the early stage of developing Ulsan industrial city and took the lead in the heavy and chemical industry policy as a senior presidential secretary for economic affairs from 1971 to 1979.

I met Oh at a Japanese restaurant on the second floor of Ulsan Hyundai Hotel.

Incidentally, Hyundai Group used this place as a press room during the peak of labor disputes in the late 1980s and early 1990s. At the time, group executives used to linger around the press room with money envelopes to “buy off” the reporters.

I said, “I’m overwhelmed with many old memories myself today, so I guess you must be filled with emotion. Looking at Ulsan today, we must say it has had sea change, indeed.” “(Laughter) It sounds like a compliment for me. I think so, too. But I don’t have a particular emotion about it. We engineers just do our utmost with the only hope that we would not fail,” Oh replied. The following are excerpts from our conversation.

- I heard that it was decided to build Korea’s first industrial complex in Ulsan at suggestions made by businessmen like Lee Byung-chull, the founder of Samsung Group.

“That’s half true and half not true.”

- What do you mean?

“Punishment of businessmen who amassed wealth through illegal means began under the government of the Democratic Party, before the May 16

revolution in 1961. The revolutionary government put pressure on them by putting them in prison but none of them had money for immediate use. Yet, they were the only ones who had experience of running a factory. Economic development was a revolutionary pledge··· So we explained our economic development plan to those business people who were accused of illicit fortune making, then told them to choose either to go to prison or to help economic development.”

- What is the other half?

“That’s General Van Fleet. The business people who were released from prison agreed to make active efforts to cooperate for the economic development plan and created the Council for Promotion of Economic Reconstruction. Since it could sound disgraceful that illicit fortune makers created such an organization, the council included those who didn’t commit wrongdoings. That is the Federation of Korean Industries of today. Anyway, we sent these people over to the U.S. and Europe for an inspection tour and General Van Fleet helped them look around factories in the U.S. General James A. Van Fleet was the commander of the Eighth U.S. Army during the Korean War. He is called a ‘hero of the Korean War.’ He lost his only son, who was a fighter-bomber pilot, in the Korean War. He is also the founder of Korea Society, which was created to promote amity and cooperation between Korea and the U.S.” - It seems General Van Fleet played a big part.

“General Van Fleet was the only figure in the U.S. who supported the May 16 revolution. He threw himself into the matter with enthusiasm but other Americans shook their heads, saying, ‘What you have got is just a shopping list to buy machinery, not a plan for economic development.’ Then they asked, ‘Where would you build the factories? What about your electricity, water, port,

and transportation facilities?’ We could not give any answer for those questions. So we said, ‘We will prepare everything and then contact you.

Please pay a visit and see.’ After returning from the U.S., we rushed to have the groundbreaking ceremony for Ulsan Industrial Complex. In other words, what we hurriedly made to attract the ‘Van Fleet Delegation’ was the Ulsan Industrial Complex.”

- It was right after the announcement of the first five-year economic development plan, wasn’t it? And then, in 1964, Korea’s exports finally broke past the US$100 million mark.

“Mr. Park Choong-hun, then minister of commerce and industry, reported to President Park that the target was $100 million, but upon returning to his ministry, he told his staff that the president ordered us to reach $120 million.

And we did reach $120 million. Korea’s basic policy, no its national policy, is very clear. That is, we should pursue export-first policy. This will remain true even 100 years later. Human resources are the only asset we have and by what else can we make a living? And industry is the only area where we can create added value based on just human resources. Our nation struggled to reach $100 million in exports back then, and now has accomplished $1 trillion in total trade volume. This is a historic achievement, which I dare say is greater than the unification of Three Kingdoms by Silla. Of this, Ulsan accounted for $100 billion. How come I don’t hear any praise for it? This deserves applause and compliments from the whole world. It deserves a big celebration, not just a routine festival.”

- Is there anything particular that you recall on a day like this?

“I called then Hyundai Motor CEO Chung Se-yung on the carpet so often. At first he called on me to say he would enter into a joint venture with

Volkswagen. Volkswagen was selling about 80,000 cars in Asia and he said that was enough for him to start an automobile factory. But I said no. I told him to make a people’s car. I told him to manufacture a car that can endure 10 years and improve the model again and again to achieve a full domestic production by 1976. I even handed him President Park’s directive memo and said a joint venture with Volkswagen was impossible.”

Oh was discharged from military service as an Air Force major before embarking on his civilian career as the factory manager of Shibal Automobile Company, the first carmaker in Korea. He also worked as the factory manager of Guksan (meaning “home-made”) Automobile Corporation. “Anyhow, Ulsan was a test board to demonstrate the revolutionary government’s commitment to deliver on its pledge for economic development,” Oh said. While Oh was an industrial strategist, Kim Eui-won was an urban strategist. Then the national land planning bureau chief at the Ministry of Construction, Kim later served as president of Kyungwon University. Kim arrived in Ulsan a day before the 50th anniversary and looked around the city.

- When was the last time you were here?

“It was 40 years ago.”

- When you first began developing the city, what did it look like?

“It was just a vast stretch of empty plain, with virtually nothing. Looking out the window at the night view of the petrochemical complex from my hotel room last night, I really···” He couldn’t continue.

- All said and done, there still must have been some background to choosing Ulsan as the starting point of national economic development and Korea’s first

industrial city.

“We noted its geographical advantages. Ulsan also had a fertilizer plant of Lee Byung-chull, a sugar factory of Samyang Corporation, and an oil refinery that had been moved from Wonsan by the Japanese during the colonial period. That was enough as the base for an industrial district, we thought. Mr. Lee Byungchull especially noted the port condition. Ulsan does not need a breakwater.

Do you know how much money it takes to build a breakwater? It needs an enormous amount. As you see, Ulsan has no breakwater even now.”

- It seems that suggestions of business people jump-started the project.

“Mr. Lee Byung-chull was chairman of the Federation of Korean Industries at the time but that was even before the word chaebol came into being. Though he was accused of making fortune through illicit means, he just owned a liquor brewery that he had been running since the colonial period, a fertilizer plant in Ulsan and a textile factory in Daegu. Lee asked a favor of Kim Jong-pil, who was then director of the Central Intelligence Agency, to arrange a meeting for him with Chairman Park Chung-hee of the Supreme Council for National Reconstruction. Then he said, ‘You talk about economic development but is that a job that can be done by soldiers? That job after all should be done by businessmen like us. Why do you keep our hands tied down?’ Mr. Lee at the time already had the idea of developing Ulsan along with a few other business people. In fact, the Japanese had considered making Ulsan their gateway to Korea right after their forcible annexation of Korea. In Japan, opinion was divided between Ulsan-Japan and Busan-Japan ferry routes before they finally decided on Busan.”

- Did President Park visit Ulsan frequently?

“The development of Ulsan took a total of 14 years. President Park made regular visits once every two months. Later he made weekly visits to the Seoul-Busan Expressway construction sites, but until that time Ulsan was the only place President Park visited so frequently and regularly.”

Ulsan, thus born, regards itself nowadays as the industrial capital of the Republic of Korea and a major source of national wealth. It is not too much to say that the “Miracle of the Taehwa River” compares to the “Miracle of the Han River.” Ulsan boasts $40,000 of per capita income, the nation’s highest.

Of course, there were times when the city resembled a battleground due to fierce struggles for labor rights. While workers staged strikes to appeal their suffering in the industrialization process, some even mounting a protest sit-in upon the Goliath Crane, the government and businesses had to quiet them by bringing riot police from Seoul as well as nearby areas like Busan and South Gyeongsang Province. And the city itself was known as Korea’s “polluted city.”

Yet, after 50 years, Ulsan in 2012 is demonstrating its potential for “sustainable development.” Park Maeng-woo, the city’s third-term mayor, said in his first inaugural address 10 years ago, “When I leave after completing my tenure, I would like to be remembered as the mayor who saved the Taehwa River, the lifeline of Ulsan.” Jeong Jae-rak, a local correspondent of the Donga Ilbo, who has observed the change on the scene, said, “In his address at the groundbreaking ceremony, Chairman Park Chung-hee said, ‘On the day when black smoke of industrial production rises up into the sky, we will realize the day of hope and development has arrived for our nation and country.’ But Ulsan has overcome black smoke and is being reborn as an eco-industrial city.” When you see Ulsan, you get to believe in advancement.

[February 6, 2012]

www.koreafocus.or.kr

- ‘A Hearth Runs beneath These Homes’ - Jongmyo, the Coveted Royal Shrine

‘A Hearth Runs beneath These Homes’

Hwang Yun-jeong Staff Reporter Yonhap News

“Globetrotters’ Travels to Joseon”

By Kyujanggak Institute for Korean Studies, Book Pot, 432 pages, 23,800 won Joseon, a fiercely reserved country located on the tip of the Eurasian continent, had a reputation for rebuffing foreigners, barring them from setting foot on its soil. However, despite its self-imposed isolationist policy, a considerable number of foreigners managed to enter this reclusive kingdom and leave behind a legacy of their own.

“Globetrotters’ Travels to Joseon” is the sixth installment in a series of books on liberal arts by the Kyujanggak Institute for Korean Studies. This particular volume features an assortment of foreigners who ventured to the Hermit

Kingdom. Among them were Yin Feng (Korean name Yun Bong), the Ming Dynasty envoy who returned home with 200 crates of bribes; the Japanese envoys who made generous bulk purchases of Joseon’s horses, writing brushes and lambskin; the Myanmar soldiers who fought for Ming China during the 1592-1598 Japanese invasions; and Sten Bergman, a Swedish zoologist who studied wild animals in Korea near the end of the Joseon Dynasty and during Japanese colonial rule.

Every story has its own unique charm. Arguably, the most attention-grabbing are the travel logs of Westerners whose lives were governed by a completely different set of cultural and social surroundings from those of Joseon.

The journal of Hendrick Hamel, in particular, is one of the most dramatic narratives. Hamel lived in 17th-century Joseon for more than a decade after he was stranded on Jeju Island during a storm. He meticulously recorded his life as an alien ― the joys and despairs he experienced on unfamiliar Oriental terrain ― along with the customs and cultures of the times.

One entry says, “A single man caught having an affair with a married woman will have his face plastered with limestone paste, an arrow bolted through his ears and turned into the streets with a small drum strung on his shoulders to beat out his shame to the public.” Hamel also writes, “Ovens run beneath Joseon homes and are lit daily throughout the winter.”

The Western missionaries stationed in Joseon also are survived by their detailed accounts of the land and its people. Bishop Marie-Nicolas-Antoine Daveluy of France, who served as the fifth bishop of the Joseon Diocese, writes of the country’s characteristically strong familial ties: “The people of Joseon deeply love and cherish their children. No child, regardless of gender, is abandoned here. Joseon people know to acquiesce to the teachings of nature

and candidly accept their fate. Europeans should be ashamed for abandoning their offspring in times of poverty.â&#x20AC;?

However, the Westerners who experienced Joseon towards the end of the Korean Empire (1897-1910) or under Japanese rule were prone to inaccurate or blatantly biased opinions of Korea and its people. One example is Bergman, the Swedish zoologist who studied animals of the peninsula with a mandate from the Japanese government-general. He claimed that while the Japanese pursued public and national interest, Koreans were more preoccupied with personal or individual affairs. Essentially, Koreans seem proud of their timeold history but are generally counterproductive and often pass time socializing with a long smoking pipe in their mouths, Bergman wrote.

The photos, illustrations and picture postcards featured on each page of the book are an added perk. They highlight the time travel to a Joseon seen through foreign eyes.

[February 7, 2012]

www.koreafocus.or.kr

Jongmyo, the Coveted Royal Shrine

Kim Ki-cheol Staff Reporter The Chosun Ilbo

“Royal Spirits Reveal the Secrets of Joseon”

By Lee Sang-ju, Next Thoughts, 296 pages, 14,000 won In 1924, Jongmyo royal shrine was burglarized. The stolen items were none other than the royal seals of the kings Deokjong and Yejong. Sunjong, the 27th and last king of Joseon, was extremely distraught and ceaselessly inquired about the whereabouts of the seals.

In contrast, the two people actually responsible for the loss appeared completely unperturbed. Vice Minister Shinoda Jisaku of the Yi Royal Household Office (“Yiwangjik” which governed affairs concerning the royal family of the Joseon Dynasty under Japanese occupation) and his Korean subordinate, Yi Hang-gu, were caught frolicking at Hyochangwon, a royal

burial ground north of Seoul, playing golf. Yi later threw a fit when he faced criticism from the local press. He retorted that one should not be condemned for failing to lament the loss of “something not for immediate use.”

Hardly surprising is the fact that Yi Hang-gu was the eldest son of Yi Wanyong, one of the five cabinet members of Joseon who signed the Protectorate Treaty of 1905, which paved the way for Japan’s annexation of Korea five years later. Under normal circumstances, he would have been executed for unpardonable negligence but tepid was the support for a forlorn colony that had forfeited its sovereignty.

Located at 155 Jongno, Jongno-gu, Seoul ― not more than five minutes away from Jongno 3-ga subway station ― Jongmyo is an essential part of the Korean cultural heritage. Memorial tablets of past monarchs and their deserving retainers are housed here. The royal ancestral shrine of the Joseon Dynasty was inscribed on the UNESCO World Heritage List in 1995. It was also the recipient of tremendous praise from award-winning architect Frank Gehry.

However, perhaps due to an inherent somberness, the shrine is not as popular with tourists as Gyeongbok or Deoksu palaces. This particular collection of unofficial historical episodes concerning the shrine seems to reflect an effort to alter these preconceptions by invoking a sense of familiarity and comfort.

Jongmyo consists of two main buildings, the Main Hall (Jeongjeon) and the Hall of Eternal Peace (Yeongnyeongjeon). The Main Hall holds the spirit tablets of 19 kings and 30 queen consorts of Joseon, while the Hall of Eternal Peace, a smaller annex, has tablets of 15 less worthy kings, posthumous kings and crown princess, and their 17 spouses, originally enshrined at the Main Hall but relocated as time passed. The hall also holds the spirit tablet of Imperial

Crown Prince Uimin, popularly called King Yeongchin, the last crown prince of Joseon.

Strangely, a shrine of King Gongmin, who ruled toward the end of the preceding Goryeo Dynasty, occupies a clearly visible spot on the right-hand side immediately past the main entrance of the wooded shrine compound. The shrine is believed to have been so positioned for political purposes. By showing respect for a ruler of the overthrown Goryeo, the founder of Joseon, Taejo, tried to soothe its people and thereby consolidate his own legitimacy and the heavenly mandate for his newborn dynasty.

In his address to the nation on his accession to the throne in 1392, Taejo said, “The Wang family was no longer able to maintain their monarchy after King Gongmin departed without an heir. To avoid confusion, we undertake the wish of the heavens, with the advocacy of the people.” The shrine houses a portrait of King Gongmin and his wife, Princess Noguk of Yuan, and a painting of horses known to be a work of the Goryeo king.

Prince Gwanghae and his mother, Lady Kim, were among those who were denied veneration at Jongmyo. Prince Gwanghae was officially the son of King Seonjo and Queen Euiin. However, his biological mother was a concubine of Seonjo and her status fell short of a place at the royal shrine, even though she gave birth to the king.

The prince decided to quash the rules and tradition in order to place his mother’s spirit tablet in the royal shrine. Besides fulfilling his filial obligation toward his mother, he probably sought to strengthen the monarchy and proclaim legitimacy for his succession. His father Seonjo, the son of a royal concubine himself, also harbored a strong desire for legitimacy and thus wanted a legitimate son to succeed to the throne.

When Seonjo sired a son through his queen consort, therefore, Prince Gwanghae understandably felt threatened though he had been formally invested as crown prince. The birth of his stepbrother, Prince Yeongchang, prompted him to move to reinforce his position as heir to the throne. And he obviously believed he could sidestep the controversy over legitimacy if his biological mother was promoted to a queen, albeit posthumously.

The spirit tablet of Lady Kim was evicted later from the royal shrine when her son was disposed from the throne in a coup against his tyrannical misrule. The ousted king was demoted to a prince and when he died, he was buried near his mother’s grave in present-day Namyangju, Gyeonggi Province. It was the illfated prince’s wish to be laid to rest at the foot of his mother whom he had lost at a young age.

Besides kings and queens, meritorious officials who demonstrated outstanding loyalty to the crown or made distinguished contributions to the country are also venerated at the shrine. It was an utmost honor for Joseon courtiers to be included in this roster; it also entailed great privileges for their descendants to attain the so-called “protected appointments” to join officialdom without passing state examinations as well as immunity from punishments. A total of 95 meritorious subjects were initially inducted into the shrine but the number was eventually pared down to 83.

Four retainers of King Taejo, the founding ruler, were initially honored to accompany their monarch at the royal shrine. But Taejong, the third ruler, added three more, including Nam Eun, who had revolted against himself.

Taejong was conscious of the fact that the founding ruler of the preceding Goryeo Dynasty was accompanied by six loyal subjects at his memorial shrine. Since Taejo had seven attendant courtiers at the memorial shrine, all the

succeeding kings of Joseon had fewer courtiers enshrined to accompany them.

The spirit tablet of Yi Wan-yong was once housed at the royal shrine.

Following Sunjong’s death in 1926, former senior courtiers of Joseon convened a meeting to recommend nine loyal subjects to be enshrined in his honor. Under pressure from Japan, Minister Han Chang-su of the Yi Royal Household Office recommended Yi Wan-yong, who as the prime minister of Joseon had masterminded the signing of the treaty for Japan’s annexation of Korea. Han included Yi on the shortlist although he failed to garner sufficient votes.

The final decision was deferred amid a barrage of opposition from enraged senior courtiers. Yi’s spirit tablet was nonetheless slipped into the shrine on further meddling from Japan, but was ultimately removed after Korea’s liberation from Japanese rule in 1945.

[February 18, 2012]

www.koreafocus.or.kr

- Peter Beck: “Every cloud has a silver lining.”

Peter Beck: “Every cloud has a silver lining.”

Ha Tae-won Editorial Writer The Dong-a Ilbo

The scene was a hearing of the U.S. Senate Committee on Foreign Relations’ Subcommittee on East Asian and Pacific Affairs in February 2009. It was a time when the North Korean front was looking increasingly bleak for Washington.

Pyongyang was threatening to test-fire intercontinental ballistic missiles and the six-nation talks aimed at the North`s denuclearization were on hold indefinitely. With its patience quickly wearing thin, the Barack Obama administration was seriously reconsidering its policy options on the reclusive nation.

Testifying was a tall American gentleman whose outlook on the situation was surprisingly sanguine. “Every cloud has a silver lining,” he said, quoting in his

fluent Korean a popular Korean proverb with equivalent meaning. Experience has taught him how to deal with Pyongyang. Start with low expectations, he advised, because big expectations lead to bigger disappointments.

The man was Peter Beck, a 45-year-old Californian who has lived in Korea on five different occasions since he first stumbled upon the country on a backpacking trip in May 1987. This time, he has returned on more permanent grounds as the Asia Foundation representative for Korea. His term is three years but can be extended.

Headquartered in San Francisco, the Asia Foundation is a non-profit, nongovernmental organization devoted to building a “peaceful, prosperous, just and open Asia-Pacific region.” The foundation’s Korea office, created in 1954, has provided thousands of tons of paper for newspapers and books for Korean children. The office also supported Seoul National University’s 10-year development projects and played a pivotal role in the opening of the Institute of Foreign Affairs, the predecessor of the Institute of Foreign Affairs and National Security. The amount of funding from the Korean branch has surpassed $93 million (104.5 billion won).

The foundation’s new representative in Korea sat down with The Dong-a Ilbo at his Gyeongun-dong office in Jongno on January 26. He described the previous three weeks as a “whirlwind.” But as a true Californian native, Beck saw everything in a positive light. When asked about how he felt being back in Korea ― he left for the United States in 2006 after completing his term as head of the International Crisis Group ― Beck said it took 23 years but he has finally achieved his dream.

The seeds were planted in 1987 when he interned at the foundation’s headquarters as a sophomore at University of California at Berkeley. Beck

soon took time off to travel, happy to get free plane tickets through his mother, who worked for United Airlines. It turned out that his parents contributed more than that; Beck made the fateful trip to Korea on their advice that Northeast Asia seemed safer to visit than Southeast Asia. Armed with nothing more than a copy of Lonely Planet as his guide, Beck admits he was a complete stranger to Korea and could not place it on the map. This all quickly changed.

During his one-week stay at Gwanghwamun, in central Seoul, lodging at an old inn, Beck bore witness to the passionate democracy movements in Korea.

He came back again and again, once in 1988 as an exchange student and then to attend graduate school in 1989. For two years in the mid-1990s, he interned for Chung Jae-mun, a lawmaker of the New Korea Party. At this time he also worked as an interpreter for the National Assembly’s Committee on Foreign Affairs, Trade and Unification. Beck calls Chung his adoptive father.

Q. What are your plans as the head of the Korea office?

A. There have been disputes on whether the office should be kept open now that Korea has reached developed nation status with complete political democracy. The foundation’s Japan office, which opened around the same time as the Korea office, has been closed. The situation is the same for the offices in Taiwan, Hong Kong and Singapore. To date, the Seoul office is the foundation’s only branch that remains active in a fully developed Asian country.

As you may know, we are working with government-led organizations such as the Korea Development Institute and the Korea International Cooperation Agency to support Korea’s development cooperation projects in developing nations. As such, we hope to continue working with government organizations and civic groups to assist Korea’s mission so that other nations may follow its

example.

Q. Has Seoul changed much from six years ago?

A. Cheonggye Stream feels a little artificial but it marks a tremendous improvement from the old days when an overpass ran along it. It was also quite impressive to see the streets of Samcheong-dong connected with Insadong, home of the unique Bukchon (“Northern Village” referring to a neighborhood of traditional Korean houses) culture. I get drunk on the scent of makgeolli and coffee from the hanok houses, seeping out into streets steeped in traditional Korean culture.

On Korean politics, Beck did not bother to mince words. “It is in utter chaos,” he said, using Korean words as he said he failed to find an English equivalent that would better sum up the situation. Most of all, he was horrified and disappointed over how electric saws and tear gas were deployed as drastic means of confrontation.

Beck has a 10-year-old daughter named Julia (whose Korean name is “Ae-ri”) with his wife; they met while he was teaching English on the side at a language institute in Seoul. Beck will be on his own as a so-called “wild-goose father” until June, when Julia’s school term ends and the family can reunite in Korea. Beck’s home in Seoul is in Okin-dong, in Jongno district. Flashing a picture of his two-story home on his smartphone, Beck gave it two thumbs up.

“It`s wonderful,” he said.

Q. Do you agree with their political views?

A. I honestly was not aware of their political orientation. I am a liberal American, much more so than President Barack Obama. However, I am

different from the Korean left wings. My perspective on United States and South Korea relations or the North Korean issue is closer to that of the conservatives in Korea. My views shift even further to the right on security issues. I am, for instance, not opposed to building a naval base in Jeju Island. I believe there is an up to 95-98 percent chance that North Korea was behind the sinking of the Cheonan.

After he left Seoul in 2006, Beck once served as secretary general of the Human Rights in North Korea, a conservative civic group in the United States.

Beck calls the time from 2006 to his Asia Foundation appointment the days of the “Beck Satgat” (a play on early 19th-century poet Kim Byeong-yeon, who roamed the countryside wearing a bamboo hat called a satgat). He said he was “wandering through the wilderness,” looking for a cause.

Beck quickly went through a series of jobs in academia, which he describes as “temping.” He was professor at American University, a Pantech fellow at Stanford University and visiting researcher at Keio University in Japan. He eventually narrowed his field of expertise to North Korean issues. Having watched South Korea survive a military dictatorship and achieve democratization and economic development, Beck now wants to see the same happen in the North.

Starting in 1996, the Asia Foundation has sent more than 150,000 books to North Korea. Most are on agriculture, library science, English education and commerce laws. They were shipped to prestigious North Korean schools such as the Kim Il-sung University, Grand People’s Study House and Pyongyang University of Science and Technology. Beck hopes to visit North Korea during his term to check up on how the books are being used and devise new programs for assisting the North Korean residents.

Q. President Obama did not mention North Korea much in his State of the Union address in January.

A. Washington seems to be growing a bit passive toward resolving the North Korean quagmire. There appeared to be some progress between North Korea and the United States on food support before Kim Jong-il abruptly passed away. I am now concerned the relations are again losing momentum.

Q. North Korea seems unlikely to abandon its nuclear weapons arsenal.

A. Even so, we must not say it is unrealistic to demand denuclearization.

Expecting Pyongyang to abandon its nuclear weapons programs may be impractical but the denuclearization demands must not cease. More realistic goals may be freezing the programs and promoting non-proliferation.

Q. The Kim Jong-un regime has taken off with power bequeathed to a third generation.

A. North Koreaâ&#x20AC;&#x2122;s sudden collapse could bring about overwhelming chaos. The United States and South Korea must be able to offer the Kim Jong-un leadership new options. And the options must not in any way resemble Syria, where its people were mercilessly massacred. The Myanmar model, under which the nation is voluntarily walking the road to democracy, is more ideal.

When you look at the Jasmine Revolution in the Middle East and North Africa, there is no reason to believe the same could not happen to North Korea.

Beck is an avid stamp collector whose favorites are those made in Korea. He said he was first drawn to the beauty of Korean stamps when he was corresponding with his family in the United States in 1989. He is now a proud owner of more than 100,000 Korean stamps. His specific area of interest is

stamps manufactured during the Korean Empire. “It’s a well known story but a modern postal system was first introduced in Korea in 1884 when the Korean Postal Service was established. There were a total of 392 post offices in Korea when it forfeited its diplomatic rights to Japan under the Protectorate Treaty of 1905.”

It was once Beck’s life ambition to collect stamps with postmarks from each of those 392 offices. So far, he has stamps from 150. He said he placed some outrageously high bids for stamps from the Korean Empire, joking that his wife does not know exactly how much he paid for some of the rare collectors’ items. “She would be far from pleased if she found out,” he said. “I literally spent hundreds of millions of won on them, but I had to give it up when I was roaming the world as Beck Satgat.”

Beck did not discuss his financial state but he clearly suggested how financially challenging it is to live as a “Korea specialist.” Korea may be one of the world`s dozen or so major economies and has hosted a G20 summit, but U.S. academia is a harsh place for those seeking teaching positions as Korea experts. There is also almost no one who has specialized exclusively in Korea at any of the major American think tanks or in U.S. politics.

Wrapping up the interview, Beck said his dream now is to see Korea rising as a leading member of the global community. His enthusiasm made me wonder what is next in store for this “Uncle Long Legs,” who fell in love with this small Asian country after his fateful trip a quarter century ago. www.koreafocus.or.kr

COPYRIGHT Korea Focus is a monthly webzine (www.koreafocus.or.kr), featuring commentaries and essays on Korean politics, economy, society and culture, as well as relevant international issues. The articles are selected from leading Korean newspapers, magazines, journals and academic papers from prestigious forums.

The content is the property of the Korea Foundation and is protected by copyright and other intellectual property laws. If it is needed to reprint an article(s) from Korea Focus, please forward your request for reprint permission by fax or via e-mail.

Address: The Korea Foundation Seocho P.O. Box 227, Diplomatic Center Building, 2558 Nambusunhwanno, Seocho-gu, Seoul, 137-863, Korea Tel: (82-2) 2151-6526 Fax: (82-2) 2151-6592 E-mail: koreafocus@kf.or.kr ISBN 978-89-86090-84-0

Publisher Kim Woo-sang Editor Lee Kyong-hee Editorial Board Kang Byeong-tae Chief Editorial Writer, The Hankook Ilbo Kim Hak-soon Senior Writer & Columnist, The Kyunghyang Daily News Kim Yong-jin Professor, Ajou University Yun Chang-hyun Professor, University of Seoul Hahm In-hee Professor, Ewha Womans University Kim Ho-ki Professor, Yonsei University Choi Sung-ja Member, Cultural Heritage Committee Hong Chan-sik Chief Editorial Writer, The Dong-a Ilbo Robert Fouser Professor, Seoul National University Peter Beck Korea Represetative, Asia Foundation â&#x201C;&#x2019; The Korea Foundation 2012 All rights reserved