20070328

Discussion - 3 challenges for Korea

(my answer to a question regarding the critical challenges Korea will face in the 10 years to come)

I were to select 3 challenges, I would pick :
- one that policies can solve but are addressing counterproductively nowadays (the Brain Drain / Capital Drain),
- another one that policies are having a difficult time tackling (China and regional competitivity), and
- yet another one, utterly unpredictable (North Korea).
The fourth challenge (Demographics) could partly find, in the previous 3, solutions more sustainable than today's massive imports of South East Asian wives for the rural poor.

The most vital challenge is NK. I'm not worrying about nukes but about a brutal social / political / economical collapse, and I keep warning my Korean friends about what I call a "Albania Scenario" : they only benchmark with Germany's reunification, but they should also consider post-Hoxja's Albania, the only case vaguely similar to Kim Il-seung / Kim Jong-il's Xanadu (a country run like a sect, a people unable to live in a democracy, nor to survive in a free market).
=> Worst case scenario : a third Bush-Cheney term, with Shinzo Abe's neofascist clique to wrap it up.
=> Best case scenario : Beijing manages to coerce Pyongyang into tougher reforms (at last)


The Brain Drain / Capital Drain issue could prove more critical than it seems - the golden youth of the country is switching continents and it starts showing.
=> Worst case scenario : Korea's "undeclared emigrants" (the name I give to those who have a home and spend quite a lot in Korea but have other homes, passports and niceties overseas) reduce dramatically the time and budget they devote to their country (ie after the burst of the real estate bubble). Korea is left with a few wealthy people, an impoverished middle class and an ever increasing poverty. Even top chaebols could change nationalities (individuals as well as companies).
=> Best case scenario : Seoul decides to leverage on its diaspora (ie a "coming out / coming home" - more transparency vs less taxes and a lighter military service) to strengthen its links with the US, the Middle East and even Europe. Korea must be loved by its own people again. It must also become the herald of cultural diversity in Asia far beyond the shameful exploitation of the international fad for its disposable celebs.

Regional competitivity remains a priority for this administration, but if Korea wants to become a hub, it will need much more focus (ie too much intranational competitivity and confusion). Especially with the return of ultranationalists in Japan and a much fiercer competition from China, whose revisionists have other ideas in mind : beyond the rewriting of Koguryo history, Beijing intends to create a new regional capital of Korea in China !
=> The system of regional clusters and the strengthening of partnerships with Europe could pay.

Gloomy, but Korea's main asset remains its people. That's one of the reasons why it shouldn't risk losing its most promising talents to the rest of Asia or to the US. Also : Korea should stop selling its soul for short term profits, exports and investments : that would be the best way to become a suburb of Shanghai.

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