October 27, 2023 13:31
Korea signed a wide range of business deals with contractors in Saudi Arabia and Qatar during President Yoon Suk-yeol's recent state visit to the Middle East. Korean construction companies, automakers and petrochemical companies are competing globally and are widely viewed as optimum partners for Middle Eastern countries. Korea has now inked US$79.2 billion worth of deals in the fields of energy, infrastructure, electric vehicles and defense with companies in Saudi Arabia, Qatar and the UAE over the last two years.
According to the UN Industrial Development Organization, Korea ranks third in the world after Germany and China in terms of manufacturing competitiveness as of 2018, up from 17th place in 1990. It ranks first in shipbuilding and displays, fourth in petrochemicals and sixth in cars, machine tools and steel. Korea is also virtually top-ranked in terms of memory chips and rechargeable batteries and is the world's eighth-largest arms exporter. This was possible due to the innovative efforts and sweat of Korean entrepreneurs and workers.
But whether Korea will retain that competitiveness 10 to 20 years down the road is doubtful. Last year, it saw a record high number of export products lose competitiveness, requiring the country to rely on imports instead. Nine out of Korea's top 10 exports to China lost competitiveness. Korea used to achieve a surplus in trade with China since the two countries established diplomatic ties in 1992, but this year it is expected to shift into deficit. There are 136 Chinese companies on the Fortune Global 500 list, and only 16 are Korean. Last year, Taiwan, home to chipmaker TSMC, beat Korea in terms of per-capita GDP. Korea's exports are precariously dominated by semiconductors, continues to be at the mercy of the volatile chip market.
It is extremely difficult for a country to regain its lead once it is overtaken by a rival. Unless it pursues ceaseless innovation, a country will fall behind in the global race, and the technology gap will keep widening. Korea must respond to climate change and other global trends and continue to revolutionize and fuse industries. The outdated education and rigid labor system need to change, while red tape must be scrapped to spur creativity and a spirit of experimentation.
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