Advices from Professors

Reform of systems priority to benefit from FTA with the U.S.

The Korea Economic Association held an international academic forum under the subject of "The Prosperity for All People Aug.9-10 at the Hoam Professors Hall located on the Seoul National University Gwanak campus with a number of member of the association presenting their papers on major government policies including the Korea-U.S. free trade agreement under negotiation.
Dr. Chung Woon-chan, former chancellor of the SNU, who heads the association as chairman, said in his opening speech, government policies often were sacrificed by the whims of uniform way of thinking and hasty application of ideas, pointing to the Korea-U.S. Free Trade Agreement as a good example.
Blaming both government planners and those opposed to the trade agreement, he said the government should consider a long-term interest, while not ignoring short-term disadvantages that the agreement will have, assuming a middle-roader position. He said proponents of the FTA have no idea on harm the agreement will have, upholding the ideal of free trade and wanted the earliest conclusion of the FTA. He also pointed out that those opposed to the agreement don't seem to have a full understanding of the trading mechanism, unaware of the advantages of free trade, concerned only with short-comings of the agreement for the country.
"Government policies should harmonize ideals and realities and focus on long-term national interest and at the same time not take lightly short-term problems, taking a middle roader position,"the former SNU chancellor claimed.
Dr. Jwa Seung-hee, professor at the SNU Int'l Graduate School, said, in his presentation entitled, "New Analysis of Korea's Economic Development,"that a long dull growth of the Korean economy from the 1980s has been due to egalitarian policies, denying segregation. All policies focused on egalitarianism including balanced regional development plans, regulations to prevent the concentration of economic power, the protection and fostering small-medium companies, fair wealth distribution, policies aimed at balanced education, among others, have all deprived dynamism of the Korean economy.
He also claimed that another big problem has been negative views on the rapid economy growth that the country achieved in 30 years following the Korean War. He said some have totally denied the merits of the economic development since 1950 under the name of reform. He said any reform efforts should learn from the merits of the past economic development and correct mistakes.
Dr. Jwa also pointed out that the government has been giving out an impression that its been favoring the poor-income bracket while defaming businesses, media, schools, regions and successful people in its policies. Such horizontal world view violates the principles of progress, he charged.
In the meantime, Dr. Kim Jung-soo of the Kyunghee University International Graduate School, in his presentation entitled, "The course of the Korean economy and policies for liberal economy,"said the FTA represents liberal policies following the economic development led by exports and the admission to the OECD. He said the government first set up new systems for open and liberal policies as its efforts toward that direction based on old systems cannot work. Mexico, often cited as the text case of failure in its FTA with the U.S., failed because it was unable to achieve structural reform, along with the FTA and its economy has been unable to grow.
The FTA can play a catalytic role when it is coupled with an effort to heighten the economic structure, the professor said. He also stressed that the public will suspect the government if it tries to pursue the FTA based on free competition, with policies for balanced education and the protection of nationalistic systems.
Dr. Park Young-cheol, professor at the SNU International Graduate School, in his presentation entitled, "Monetary Policies in the Open Economy,"said a small country like Korea with fluctuating foreign exchange rate system can be affected by current account balance and variable foreign exchange rates, along with speculative fund flows. Under such condition, the monetary policies can always be a big force to control prices. Under such a small economy such as Korea's, the authorities can have only two means to combat inflation monetary and budgetary policies. nw

Dr. Chung Woon-chan of Seoul National University, and also chairman of the Korea Economic Association.