Korea Needs Leadership to Boost Trade

      November 28, 2012 13:04

      Korea is expected to become the world's eighth-largest trading country this year. The U.S., China, Germany, Japan, France, the Netherlands and the U.K. are ahead, but Italy, Hong Kong and Canada lag behind. Korea has risen steadily in status from 13th place in 2000.

      The reason the country was able to boost trade volume despite the global financial crisis was because companies aggressively developed new technologies and tapped into new markets abroad, while the weak won made Korean products competitive. Free trade agreements with the U.S., EU and ASEAN also played a major role.

      But it is unnerving to see Korea's total trade volume in the first nine months of this year fall 1.3 percent from the same period of 2011 to US$797.9 billion. Its global rank has increased simply because other countries' trade volume has fallen even further, and there is no guarantee that it will be able to keep the momentum.

      The recent strengthening of the won against the dollar is weakening the price competitiveness of Korean exports. And a growing number of countries are raising tariffs and implementing other protectionist measures that pose risks to export-dependent nations like Korea.

      Also, Korea has a very small range of major exports, such as electronic parts and gadgets, petrochemicals and cars, and the share of small and mid-sized companies in total exports has fallen from 53 percent in 2003 to the 30-percent range.

      The country needs to find new growth engines, nurture new products and help small and mid-sized companies become more competitive players in the parts and materials industries. It also needs to work to build a social harmony through equitable distribution of wealth and show strong leadership to make the country more prosperous and steer it in the right direction. The future depends on how effectively the country controls these external and internal economic variables.

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