“The future of Korea’s exports”
February 19, 2016
The record dip in Korea’s exports in January, down 18.5 percent, has sent shivers down the spines of Koreans whose custom it is to measure economic development in terms of trade. The challenge is serious; but will the solution be investing more to promote what Koreans manufacture, or rather, will it be making a fundamental shift in the country’s strategy?
The exponential advancement of technology is changing the world so quickly we can barely keep up. I recently sat on the panel at the seminar “The Future of the Republic of Korea” and heard Global Future Studies Association Chairman Lee Nam-sik remark: “Uber, the world’s largest taxi company, owns no automobiles; Facebook, the world’s greatest media source, creates no content; and Alibaba, the strongest retailer, has no inventory.”
His comment on the paradoxical nature of an information-driven economy came together in my head with the news of Korea’s drop in trade. Would it be possible for Korea in the future to become the biggest trading nation in the world and not export any products?
At the lowest level, the increase in Korean manufacturing in China, Vietnam and elsewhere suggests that this transition is already taking place. Korean companies take advantage of their strengths in finance, marketing and scale of production to create a global manufacturing system. But that trend has had clear negatives for ordinary Koreans who have seen good jobs vanish either because factories have gone abroad or because they have been more completely automated.
What is Korea good at? It is not a particular technology that only Koreans have, but rather the ability of Koreans to build complex integrated systems for the planning of industrial development, design, manufacturing, marketing and sales. In the past, Koreans moved fast to seize opportunities without losing sight of their long-term goals to be successful in shipbuilding, automaking, smartphones and household appliances.
The Korean ability to integrate technologies so as to produce a solution to a complex problem is something that itself can be exported as a package.
Let me give an example. One of the largest emerging markets in the world over the next 15 years will be the conversion of sprawling cities focused on heavy manufacturing, which were constructed using Western-style automobile-centric city planning, into sustainable eco-cities. There are hundreds of these cities in India, China and elsewhere in the developing world that will become uninhabitable in the near future because of pollution and other sustainability issues. They will all have to be completely rebuilt as sustainable cities that can support millions of residents.
The market for such projects will be immense, and Korea could be the country that will do the work because Korea is making the same transition. But this work will be a fundamentally different kind of business than the standard export-based growth that many are accustomed to.
First, Korea should rapidly convert all its major cities into the most advanced eco-cities in the world, using Korean technologies to meet its needs and using its strengths in the adoption and implementation. The creation of cities that are truly sustainable is not a matter of obtaining cutting-edge technology, but rather of integrating technology with institutional innovation.
Moreover, the project has much to do with culture: creating a new cultural paradigm that appeals to young people. The eco-city includes the development of new online communities and networks for collaboration – another strong-point for Koreans.
The product is Korea itself.
We must move beyond the terrible irony of Korea producing solar cells for export but not using them domestically. Read more of this post