Low Economic Freedom Means Business Hub has Long Way to Go
Low Economic Freedom Means Business Hub has Long Way to Go
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  • 승인 2005.02.01 12:01
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That Korea took a mediocre 45th place out of 161 countries in economic freedom is hardly news by itself. But it becomes a different story if this country is really serious in becoming a regional business hub, as the government has trumpeted. Hong Kong and Singapore, Korea's biggest rivals, were ranked the world's two freest economies for the 11th consecutive year by the Heritage Foundation. Seoul even trails such former socialist nations as the Czech Republic (33), Slovakia (36) and Poland (41) in the U.S. think tank's 2005 Index of Economic Freedom. The IEF survey, which ranks countries on the basis of 10 criteria, including financial control and trade policy, is the international confirmation of the local business community's longstanding complaints about economic regulation. And its latest result should be a little embarrassing for the administration, which, from President Roh on down, has called for making Korea a good country to do business in. Frankly speaking, however, Korea's dream of becoming East Asia's business center can be little more than just a dream for now. One of the biggest stumbling blocks, as the report pointed out, is its political instability. If the security threat from the socialist North represents a fundamental ideological confrontation between the right and left, the political strife within the South reflects a more delicate conflict between the center right and center left. Problem is, these political fights affect economic policies. Most typical of this is the ongoing duel between government and chaebol over economic priority -- reform vs. market, or distribution vs. growth. The Roh administration's attempts to reform large, family-controlled conglomerates' economic dominance have only backfired, resulting in a near freeze of domestic demand. Government officials call for more operational transparency and corporate governance of global standards. But the giant business groups want Seoul to let them grow further in their own ways and reform later, if needed, according to market principles. This cannot be solved by black-and-white and once-for-all approaches. Both sides are advised to take centrist and gradual steps, but if compromise is hard to come by, the market should have the final say. In this vein, the government's economic stimulus package based on huge fiscal spending not only has its limitations but could entail serious adverse effects as well. In a market economy, recovery should come as a result of reinvigorating the private sector and the government's role is to create the necessary environment. If the government wants a greater role by mixing it with a socialist system, then it ought to give up the goal of becoming an business hub.

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