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POWER ON THE PACIFIC RIM : Next Step : S. Korea Hindered by Its Self-Image : Region's second-biggest free-market economy could become the France or Britain of East Asia. But first the nation must overcome its pessimism.

May 21, 1991|SAM JAMESON | TIMES STAFF WRITER

SEOUL — At a joint-venture auto-parts factory south of here run by General Motors and the South Korean conglomerate Daewoo, visitors are given a briefing that starts with the story of how a local warlord repulsed an invasion by Japan in the 16th Century.

The point becomes clear only at the end, when the narrator declares: "Once again Korea is at war with Japan--in auto parts. And once again victory will be ours."

The presentation, which company officials say is intended mainly to boost the morale of the factory's workers, also illustrates this country's determination not only to avoid subjugation but also to deny its old colonial master hegemony in the Asian-Pacific region.

In fact, South Korea is so preoccupied with Japan that some analysts say it risks missing out on the broader challenges of the emerging "Age of the Pacific" and the role South Korea might play in it.

"In government, there is no long-term thinking being done on any subject," especially Korea's role in Asia, maintained Korea University professor Han Sung Joo, a frequent government consultant.

As the region's second-biggest free-market economy, some say South Korea could become the France or Britain of East Asia. A relative handful of academics and others see the country as a model for less-developed Southeast Asian nations, using its successful experience in building a dynamic economy as a magnet to attract those countries and enhance its own influence. Some even see it eventually rivaling Japan in per capita gross national product.

Most Koreans, however, fret over a long list of real and perceived shortcomings that tend to feed a national inferiority complex and color visions of Korea's path to the approaching millennium. High on the list of concerns is what they see as a dangerous erosion of U.S. influence in the Pacific, leaving them increasingly at the mercy of the Japanese economic juggernaut.

Pessimism, indeed, now grips South Korea.

"The euphoria that developed at the (1988) Olympics has disappeared, and we are back to our normal selves--an inward-looking people," Prof. Han said.

Problems at home have become an obsession. They include workers' demands for big wage increases, a technological gap that has slowed the growth of manufactured exports, the return of trade deficits, a new round of inflation, speculation in real estate that has driven up housing costs, emerging bottlenecks in infrastructure such as port facilities and highways, a continuing search for a way to at least live in peace with Communist North Korea and internal political unrest.

Pessimists even find fault with an economic growth rate--9% last year, even after adjusting for inflation, and 6.8% the year before, during what were considered particularly troubled times--that would be cause for wild celebration in virtually any other country.

"Our entire economy is equal to only a single year's growth in Japan," bemoaned Sogang University professor Rhee Sang Woo. "How can we say that Korea is an economic power? Never!"

(Indeed, in 1990, the Japanese economy expanded by $260.6 billion--or more than South Korea's total GNP of $238 billion.)

"A decade ago, our strength was based on low wages and well-trained labor. But now, we are losing both advantages," Rhee added.

"Just to stay in the game is not easy, particularly when the Japanese are developing so much technology," agreed Lee Hong Koo, Seoul's new ambassador to Britain.

While its GNP is only 8% of Japan's $2.9 trillion, South Korea's global exports last year amounted to 23% of its neighbor's. Shipments to the United States equaled 22% of Japan's. In steel, shipbuilding, semiconductors, textiles, cement, petrochemicals and lower-end electronics, it has eaten significantly into Japan's overseas markets.

It is the only Japanese rival in Asia with industrial conglomerates that can come close to competing with Japan's in size. And its risk-taking businessmen have preceded the nation's diplomats in pioneering new markets.

Education levels, moreover, promise to surpass those of Japan. This year, the number of freshmen entering junior colleges or four-year institutions of higher learning equaled 46% of the country's high school graduates, a rate significantly higher than Japan's 36%. The workweek remains at 54 hours even after a recent cutback. And a new drive is under way to plunge into high technology.

"This is one of the most exciting, interesting economies in the world. I tell our businessmen, 'This place is going to go crazy! Get in here!' " said U.S. Ambassador Donald Gregg. "This is an extraordinary country, but most Koreans don't realize it. They always think of themselves as a shrimp among whales."

Economists such as Koo Bohn Ho, president of the governmental Korean Development Institute, predict that the per capita GNP, which was $5,569 last year, could nearly triple in the next 10 years to $16,000. That would produce a GNP of $800 billion.

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