South Korea: Finding its Place on the World Stage

Five essays from leading thinkers explore the country’s present and future.

October 2015 | by David Delaney

As the “Asian miracle” continues to unfold, perhaps the most intriguing—and least understood—of the region’s fast-growing economies is South Korea. During the four decades following the Korean War, it evolved from one of the most abject states in the region to one of the most vibrant, a manufacturing powerhouse that has virtually eradicated poverty, malnutrition, and illiteracy. In a region of fast growth, since the 1960s Korea has increased its per capita GDP more quickly than any of its neighbors.

Despite these successes, the country remains largely unknown to outsiders. It attracts few foreign tourists, and English speakers are still rare. Geographically, Korea finds itself squeezed among three titans: China, Japan, and Russia—a position that confers great challenges and, potentially, great benefits. Economically, the country is poised at a critical juncture. The closest European equivalent is Italy, which was threatened for several centuries by neighboring Austria, France, and Spain.

But since 1945, geography has turned to Italy’s advantage, providing at least its northern half with booming markets, sources of industrial and technological cooperation, and wider scope for Italian influence. South Korea’s great opportunity is to do the same, turning geography from a fear into a source of hope. It won’t be easy. Neither history nor geopolitics seems likely to smooth the way. But the chance is there.

For a start, dozens of countries would dearly love to find themselves next door, as South Korea is, to the world’s second- and third-largest economies. Japan is hugely rich, while China is developing rapidly. South Korea shares many elements of culture with these two giants and has the added advantage, in each case, of not being the other giant. The challenge for South Korea is to make itself flexible and skilled enough to grab this opportunity and keep hold of it, while showing enough diplomatic deftness to prevent politics from spoiling the party.

The economic basis to exploit this good geographical luck already exists: China has overtaken the United States as South Korea’s top trading partner. South Korean firms have done well in China, and more than half a million South Korean citizens work or study in China already. In India, South Korean firms have prospered much more readily than have their Japanese competitors, having proven more adaptable to Indian conditions and management culture.

Seoul’s experience of the global economic crisis proved the linkage. Like China, South Korea suffered a double whammy. The country was hit first by an inflation scare in early 2008 and then by the second blow of the post-Lehman collapse in world trade. But now the rebound is happening faster than in the Western economies, as the loosening of monetary policies and injections of fiscal stimulus have had a quicker impact in Asia than in the debt-laden West.

The political requirements to benefit from its geographic position, however, are much trickier. The bitter history of Korea’s colonial occupation by Japan from 1910 to 1945, and domination for even longer, continues to cast a dark shadow over the relationship. With China, Mao Zedong’s support for North Korea during the Korean War, and his successors’ support for the state since, is a source of mistrust. Disputes among Chinese and Korean scholars over the legitimacy of the current border between China and North Korea aggravate those suspicions, as do the recurrent arguments over the true historical origin of the Korean nation more than a millennium ago. More relevant, however, is the emerging rivalry between the three great powers of Asia, which threatens to marginalize middle-sized powers such as South Korea.

Economically, Asia—especially East Asia— has become much more deeply integrated into the global economy over the past 20 years. China’s emergence in the 1990s as a final-assembly hub for parts and components made elsewhere in the region, and as a big market for machinery and raw materials, drove this integration. Since the late 1990s, India has also begun to join in, though from a lower base, as its economy has become more open to trade and its domestic investment rate has soared.

 

Executive Editor

 Ms Anna Sullivan

Ms Anna Sullivan