a nation on the move

January 2005

Ministry of Finance and Economy, Republic of Korea

Dynamic Korea : A Nation on the Move

Jinmyung Kim Jinmyung Kim

Dynamic Korea: A Nation on the Move 2

I. Vision

II. Challenges

III. Responses and Strategic Initiatives

IV. Future Prospects

V. Managing Changes

Table of Contents


1. Comprehensive Plan of the Vision1. Comprehensive Plan of the Vision

Dynamic KoreaDynamic KoreaDynamic KoreaDynamic Korea

Regain economic vitality and improve the welfare of the needy

Political, Administrative and Social ReformPolitical, Administrative and Social Reform

Innovation Integration

Northeast Asian Economic Hub

Upgrading Technology & Manpower

Market Reform

Enhancing Social Well-being

Vision

Two pillars forachieving vision

SevenStrategic Initiatives

Short-termAction

BalancedNational Development

Stable Labor Relations


I. Vision


• New and unpredictable changes in internal and external environment require dynamic responses

2. Core Concepts: Dynamism & Opportunities2. Core Concepts: Dynamism & Opportunities

Why Dynamism?Why Dynamism? Why Dynamism?Why Dynamism?

Impediments to Dynamism

Vested Interests

Creation of New Creation of New OpportunitiesOpportunities

IndividualIndividualIndividualIndividual• Participation: Participating in major political and social decision-making processes • Competition: Demonstrating talents and capabilities in a fair and competitive environment• Innovation: Fostering ideas and creativeness in an open environment

• Participation: Participating in major political and social decision-making processes • Competition: Demonstrating talents and capabilities in a fair and competitive environment• Innovation: Fostering ideas and creativeness in an open environment

RegionRegionRegionRegion • Balanced territorial development through productive competition among regions• Balanced territorial development through productive competition among regions

What opportunities?What opportunities? What opportunities?What opportunities?

NationNationNationNation• Stable growth of about 5%• An economic hub in Northeast Asia and a G-10 status

• Stable growth of about 5%• An economic hub in Northeast Asia and a G-10 status

Political Leadership

Re-igniting

Dynamism



Interaction between Innovation and IntegrationInteraction between Innovation and IntegrationInteraction between Innovation and IntegrationInteraction between Innovation and Integration

InnovationInnovation

IntegrationIntegration

AcceleratingInnovation

•Synergistic Interaction

• Enhancing productivity• Reducing social conflicts• Increasing economic stability

Inducing Integration

• Creating jobs• Developing human capital• Securing welfare resources

For ‘Dynamic Korea’, upgrading ‘innovation & integration’ capabilities is critical For ‘Dynamic Korea’, upgrading ‘innovation & integration’ capabilities is critical

Innovation

Refers to individual and organizational changes to increase productivity

Refers to changes in institutions and policies affecting incentives and capabilities to innovate

Integration

Refers to efforts to lessen potential social tensionarising from innovation

Refers to efforts to remove factors of socio-economicinequality, unleashing innovative potential of all

⇒ Through proper policy measures, innovation and integration can be harmonized, creating synergy

Innovation

Refers to individual and organizational changes to increase productivity

Refers to changes in institutions and policies affecting incentives and capabilities to innovate

Integration

Refers to efforts to lessen potential social tensionarising from innovation

Refers to efforts to remove factors of socio-economicinequality, unleashing innovative potential of all

⇒ Through proper policy measures, innovation and integration can be harmonized, creating synergy

3. Two Pillars for Achieving the Vision: Innovation & Integration3. Two Pillars for Achieving the Vision: Innovation & Integration



1. Challenges to the Korean Economy1. Challenges to the Korean Economy

Rapid Rapid globalization globalization

Rapid Rapid globalization globalization

Emergence of Emergence of ChinaChina

Emergence of Emergence of ChinaChina

Tensions on the Tensions on the Korean PeninsulaKorean Peninsula Tensions on the Tensions on the Korean PeninsulaKorean Peninsula

Slowdown in Slowdown in growth growth

momentummomentum

Slowdown in Slowdown in growth growth

momentummomentum

Increased Increased social tensionsocial tension

Increased Increased social tensionsocial tension

• Fast growth of China in both traditional and hi-tech sectors • China’s increasing share of foreign investment into East Asia• Fast growth of China in both traditional and hi-tech sectors • China’s increasing share of foreign investment into East Asia

• Increased systemic risk due to political uncertainty in the Korean peninsula • Intensified geo-political complexity in Northeast Asia • Increased systemic risk due to political uncertainty in the Korean peninsula • Intensified geo-political complexity in Northeast Asia

• Financial and corporate sectors under-prepared to meet “global standards” • Increased pressure to liberalize agricultural and service sectors (DDA, FTA)• Financial and corporate sectors under-prepared to meet “global standards” • Increased pressure to liberalize agricultural and service sectors (DDA, FTA)

• Reduction in labor and capital inputs

• Inadequate technological and institutional capabilities

• Reduction in labor and capital inputs

• Inadequate technological and institutional capabilities

• Intensified conflicts across regions, genders, generations and income groups

• Insufficient social safety net for the unemployed, and worsening income distribution

• Intensified conflicts across regions, genders, generations and income groups

• Insufficient social safety net for the unemployed, and worsening income distribution

Current problems are structural in nature and due to continuing challenges Current problems are structural in nature and due to continuing challenges


II. Challenges


1. Responses to Challenges1. Responses to Challenges

Following the efforts of the past year, now is the time to accelerate change Following the efforts of the past year, now is the time to accelerate change

• Need to step up changes in the face of intensifying global competition for ‘innovation and change’

Understand the direction of responses and changes Understand the direction of responses and changes

Integrate capacity of the

society

Integrate capacity of the

society

Implement counter-measures and changes swiftly

Implement counter-measures and changes swiftly

Rapidly Changing Global Economic Environment

(no clear global forerunner)

Big Challenges, New OpportunitiesBig Challenges, New Opportunities Big Challenges, New OpportunitiesBig Challenges, New Opportunities

Dynamic Response

A second-tier nation

A leading nation in the 21st century

Road MapRoad Map

Key Strategies Prepared

Key Strategies Prepared

Strengthening growth momentum

Becoming a Northeast Asian Economic Hub

Market reforms, etc.

Strengthening growth momentum

Becoming a Northeast Asian Economic Hub

Market reforms, etc.

Failed Response

ImplementationImplementation

Preparation for Change Completed Preparation for Change Completed Preparation for Change Completed Preparation for Change Completed

Challenges demand proactive responses and decisive actions Challenges demand proactive responses and decisive actions


III. Responses and Strategic Initiatives


2. Medium and Long-Term Strategic Initiatives (I)2. Medium and Long-Term Strategic Initiatives (I)

Each initiative serves to overcome more than one challenge, for example:

- Northeast Asian Economic Hub: effective in overcoming globalization, rise of China, relation with North Korea, and growth momentum

- Balanced National Development: effective in coping with social tension and growth momentum problems

- Market Reform: effective in overcoming growth momentum, globalization, and social tension

Strong synergies are expected among 7 initiatives to cope with challenges, for example:

- Political, Administrative and Social Reform: serves as the driving force for all other initiatives and guarantees policy effectiveness

- Cultivating Manpower: enables all initiatives by providing adequately skilled workforce

- Northeast Asian Economic Hub: reinforces market reform while drawing on successful market reform of its own

Each initiative serves to overcome more than one challenge, for example:

- Northeast Asian Economic Hub: effective in overcoming globalization, rise of China, relation with North Korea, and growth momentum

- Balanced National Development: effective in coping with social tension and growth momentum problems

- Market Reform: effective in overcoming growth momentum, globalization, and social tension

Strong synergies are expected among 7 initiatives to cope with challenges, for example:

- Political, Administrative and Social Reform: serves as the driving force for all other initiatives and guarantees policy effectiveness

- Cultivating Manpower: enables all initiatives by providing adequately skilled workforce

- Northeast Asian Economic Hub: reinforces market reform while drawing on successful market reform of its own

Effects of 7 Major Strategic InitiativesEffects of 7 Major Strategic InitiativesEffects of 7 Major Strategic InitiativesEffects of 7 Major Strategic Initiatives

Social Tension

Rise of China Slowdown in Growth

Globalization

North

Korean

Issues

TechnologyManpower

Northeast Asian Hub

Balanced National

Development

Political,Administrative,

and SocialReform

Political,Administrative,

and SocialReform

MarketReform

Reform and Integration

Reform and Integration

PublicWelfare

LaborManagement

Relations

Bre

akin

g t

hro

ug

h

5 M

ajo

r C

hallen

ges

Imp

lem

en

tin

g

7 M

ajo

r In

itia

tives



NortheastNortheastAsian Asian

Economic HubEconomic Hub

NortheastNortheastAsian Asian

Economic HubEconomic Hub

Complete integration into the global economy for entering a new era of peace & prosperity in Northeast AsiaComplete integration into the global economy for entering a new era of peace & prosperity in Northeast Asia Achieve complete openness: Expand FTA, Open agricultural market and service sectors Strategic inducement of foreign investment: Lift remaining restrictions, Improve investment incentives Strengthen internal capabilities for a logistical, financial, and R&D hub in the region

Achieve complete openness: Expand FTA, Open agricultural market and service sectors Strategic inducement of foreign investment: Lift remaining restrictions, Improve investment incentives Strengthen internal capabilities for a logistical, financial, and R&D hub in the region

Upgrading Upgrading Technology & Technology &

ManpowerManpower

Upgrading Upgrading Technology & Technology &

ManpowerManpower

Increase investment and consolidating institutions for the advancement of science and technology and accumulation of human capital Increase investment and consolidating institutions for the advancement of science and technology and accumulation of human capital

Establish an advanced national system for technological innovation - Increase R&D investment, - Integrate technological, human resources, and industrial development policies - Establish a new system for industry-academia collaboration Education reform: Increase diversity and specialization through decentralization & deregulation

Establish an advanced national system for technological innovation - Increase R&D investment, - Integrate technological, human resources, and industrial development policies - Establish a new system for industry-academia collaboration Education reform: Increase diversity and specialization through decentralization & deregulation

Stable Labor Stable Labor RelationsRelations

Stable Labor Stable Labor RelationsRelations

Establish a cooperative system between business and laborEstablish a cooperative system between business and labor

New agreement in the Tripartite Committee: Initiate talks at national, local, and occupational levels Strengthen preventive measures for labor disputes, Encourage resolution through private channels

New agreement in the Tripartite Committee: Initiate talks at national, local, and occupational levels Strengthen preventive measures for labor disputes, Encourage resolution through private channels

2. Medium and Long Term Strategic Initiatives (II)2. Medium and Long Term Strategic Initiatives (II)



MarketMarketReformReformMarketMarketReformReform

Establish a transparent and fair corporate and financial system meeting global standardsEstablish a transparent and fair corporate and financial system meeting global standards

Enhance corporate governance: Introduce holding company system Restructure the financial industry: Privatize financial institutions

Enhance corporate governance: Introduce holding company system Restructure the financial industry: Privatize financial institutions

2. Medium and Long-Term Strategic Initiative (III)2. Medium and Long-Term Strategic Initiative (III)

Enhancing Enhancing SocialSocial

Well-beingWell-being

Enhancing Enhancing SocialSocial

Well-beingWell-being

Ensure minimum living standard for all, and encourage sound economic activitiesEnsure minimum living standard for all, and encourage sound economic activities

Stabilize real estate market: Implement a comprehensive plan, Rationalize tax code, etc. Expand the social safety net : Extend the coverage of welfare, Reinforce welfare delivery system, etc. Promote social equality: Enhance female participation and representation etc. Lower private educational costs: Encourage on-line learning, etc.

Stabilize real estate market: Implement a comprehensive plan, Rationalize tax code, etc. Expand the social safety net : Extend the coverage of welfare, Reinforce welfare delivery system, etc. Promote social equality: Enhance female participation and representation etc. Lower private educational costs: Encourage on-line learning, etc.

Political,Political,Administrative,Administrative,Social ReformSocial Reform

Political,Political,Administrative,Administrative,Social ReformSocial Reform

Remove barriers to ensure fair competition and innovationRemove barriers to ensure fair competition and innovation

Political and Social Reform: Abolish corruption and cronyism, Ensure transparency of NGOs and non-profit organizations Administrative Reform: Fiscal and tax reform for accountability, equity and increased local autonomy

Political and Social Reform: Abolish corruption and cronyism, Ensure transparency of NGOs and non-profit organizations Administrative Reform: Fiscal and tax reform for accountability, equity and increased local autonomy

BalancedBalancedNationalNational

DevelopmentDevelopment

BalancedBalancedNationalNational

DevelopmentDevelopment

Open an era of “balanced development” driven by regional autonomyOpen an era of “balanced development” driven by regional autonomy

Decentralization: Transfer of education and law enforcement, Balance national and local taxes etc. Construct a new capital in Choongcheong Province Pursue new agricultural policy: Promote enterprise-type farming, Modernize production and distribution

Decentralization: Transfer of education and law enforcement, Balance national and local taxes etc. Construct a new capital in Choongcheong Province Pursue new agricultural policy: Promote enterprise-type farming, Modernize production and distribution



[Box 1] Northeast Asian Economic Hub and FTA[Box 1] Northeast Asian Economic Hub and FTA

Free Trade AgreementFree Trade AgreementFree Trade AgreementFree Trade Agreement

Current Within 1∼2 years Mid to long-term plan

Chile(Feb.04)

Japan

Singapore

ASEAN

Mexico

Peru

Israel

Koreaㆍ Chinaㆍ Japan

EU

US

New Zealand

Panama

India

Australia

Canada

EAFTA

Prepared Roadmap for FTA promotion & Lauched FTA Promotion Committee (Aug. 2003)

Prepared Roadmap for FTA promotion & Lauched FTA Promotion Committee (Aug. 2003)

Economic Welfare

Politi

cal S

tab

ilit

y

ㆍCu

ltu

ral

Un

ity

Low

High

High

•

Degree ofCooperation

Northeast Asian Economic HubNortheast Asian Economic HubNortheast Asian Economic HubNortheast Asian Economic Hub

Cooperation with North Korea

Regional Cooperation

Enhancing Internal

Capabilities

• Environ- ment

• GaesungIndustrial Complex

• FTA• Energy• Railways• IT• S&T

Pursue regional cooperation in political, social and cultural areas as well as in economic area

Pursue regional cooperation in political, social and cultural areas as well as in economic area

New era of peace &

prosperity in Northeast Asia

Early start of negotiations agreed.

(Jun. 2003)

At early stageof discussion

Promotion Workshop (May

2003)

Joint study being conducted

• Tourism• Cultural

Exchange

• Monetary• Financial • Industrial

• Logistics• Finance• R&D



[Box 2] Regional and National Development[Box 2] Regional and National Development

Tourism, Health, BT, Animation

Textiles, Electronics, AutoMachinery, Petrochemicals, Shipbuilding, NT

Three Free Economic Zones

Busan ㆍ Jinhae

Gwangyang

Incheon

Cultural Industry, Bio, Auto Optical Fiber Cable, Machinery

Honam

Kangwon

Youngnam

Finance, Logistics,Electronics, IT, Bio

Seoul Metro-Area

Logistics, Financial Services, etc.

Information, Bio, Tourism

Jeju

* 6 Industrial districts for foreign companies* 4 Free Trade Zones* 523 Industrial Complexes

Cultivating regionally specialized industries toward a multi-core, balanced territorial development

Cultivating regionally specialized industries toward a multi-core, balanced territorial development

BT, Telecom equipment,Semiconductor, Display

Choongcheong

Seoul

Free International City

Northeast Asian Hub

Planned Site of New Capital

* New territorial Development Vision announced on Jan. 29, 2004



3. Capabilities to Achieve the Vision (I)3. Capabilities to Achieve the Vision (I)

University Graduates as Portion of Total Population

(IMD 2001)

Japan

47%

Internet Accessibility (IMD 2003)

Korea*

Taiwan

3rd

7th

Korea*

40%

* 3rd among 30 countries with population of more than 20 million

* 3rd among 30 countries with population of more than 20 million

US

39%

Taiwan

38%

Proportion of Knowledge Intensive Manufactures (OECD 2000)

Ireland

11.7%

Korea

14.0%

Germany

19.0%

Highly Highly skilled skilled human human

resourcesresources

Highly Highly skilled skilled human human

resourcesresources

• Highly educated population - 40% of population aged 25∼34 are university graduates (Ranked 3rd globally as of 2001)

• Abundance of highly educated female workforce

• Highly educated population - 40% of population aged 25∼34 are university graduates (Ranked 3rd globally as of 2001)

• Abundance of highly educated female workforce

World-class World-class IT IT

infrastructureinfrastructure

World-class World-class IT IT

infrastructureinfrastructure

• Rapid buildup of world-class IT infrastructure - Internet accessibility (Ranked 3rd globally) - Proportion of Internet Users (Ranked 2nd globally) - High-speed Internet (Ranked 1st globally) - Share of mobile users is approx. 70%

• Rapid buildup of world-class IT infrastructure - Internet accessibility (Ranked 3rd globally) - Proportion of Internet Users (Ranked 2nd globally) - High-speed Internet (Ranked 1st globally) - Share of mobile users is approx. 70%

Broad Broad industrial industrial

base base and hi-techand hi-tech

leading leading companiescompanies

Broad Broad industrial industrial

base base and hi-techand hi-tech

leading leading companiescompanies

US Malaysia

1st

6th

* High-end technology and mid-upper end technology manufacturers

OECD avg

8.4%

• High proportion of knowledge-intensive manufacturing: - Ranked 2nd among OECD countries - global leader in IT home appliances, mobile phones, semiconductors, etc.

• Broad industrial base with global leading firms - Semiconductor (DRAM): Samsung (1st), Hynix (3rd) - L C D: LG Phillips (1st), Samsung (2nd) - Automobiles: Hyundai-Kia (9th) - Shipbuilding: Hyundai (1st), Samsung (2nd), Daewoo (3rd) - Steel: POSCO (4th)

• High proportion of knowledge-intensive manufacturing: - Ranked 2nd among OECD countries - global leader in IT home appliances, mobile phones, semiconductors, etc.

• Broad industrial base with global leading firms - Semiconductor (DRAM): Samsung (1st), Hynix (3rd) - L C D: LG Phillips (1st), Samsung (2nd) - Automobiles: Hyundai-Kia (9th) - Shipbuilding: Hyundai (1st), Samsung (2nd), Daewoo (3rd) - Steel: POSCO (4th)



FlexibilityFlexibilityFlexibilityFlexibility

Sound Sound Government Government

BudgetBudget

Sound Sound Government Government

BudgetBudget

• Relatively flexible to reform and change

- Evidenced by the extensive reform efforts and innovative policies

following the financial crisis of 1997

• Relatively flexible to reform and change

- Evidenced by the extensive reform efforts and innovative policies

following the financial crisis of 1997

• Balanced and sound government budgeting

- Accumulated Budget Deficit/GDP(%) = 22.1 (OECD Average = 73.0)

• Balanced and sound government budgeting

- Accumulated Budget Deficit/GDP(%) = 22.1 (OECD Average = 73.0)

3. Capabilities to Achieve the Vision (II)3. Capabilities to Achieve the Vision (II)

National Debt/GDP Ratio(2001)

Korea USFinland

OECDAverag

eSourceSource: OECD

22.1%

51.5%59.7%

73.0%

LocationalLocationalAdvantageAdvantageLocationalLocationalAdvantageAdvantage

• Strategically located at the center of Northeast Asia, one of the three largest economic zones in the world

- accounting for nearly 20% of world GDP

• Gateway to major markets - Proximity to China, Japan, Southeast Asia, Central Asia

• Strategically located at the center of Northeast Asia, one of the three largest economic zones in the world

- accounting for nearly 20% of world GDP

• Gateway to major markets - Proximity to China, Japan, Southeast Asia, Central Asia

World GDP Share of 3 Economic Zones

4 Northeast Asian

Economies

20.0

EU NAFTA

25.5

36.7

SourceSource: DRI-WEFA

19.825.1

33.320012016 ~ 2020



1. Future Prospects (I)1. Future Prospects (I)

Korea’s Competitiveness & per capita GDPKorea’s Competitiveness & per capita GDPKorea’s Competitiveness & per capita GDPKorea’s Competitiveness & per capita GDP

30

20

10

10,000 20,000 30,000

US

GDP per capita( Based on US$,2002)

WEFNational

Competitiveness Ranking(2002) Singapore

Japan

Germany

UK

France

Taiwan

Malaysia

China

Spain Korea, 2002

India

Canada

Australia

Sweden

Ireland

1997

Narrow the gap with advanced economies and become a G-10 nation

2008 approx. 2010


IV. Future Prospects


9.2%12%

Foreign Investment toGDP Ratio(accumulated)

2003

2007

2002

2008

10th

8th

Level of Scienceand Technology

2002

2008

20th

10th

Corporate Management Efficiency Ranking

EconomicEconomicHubHubinin

NortheastNortheastAsiaAsia

EconomicEconomicHubHubinin

NortheastNortheastAsiaAsia

• Developing into a logistical, financial and R&D hub - Gwangyang and Busan: maritime hubs in Northeast Asia; Incheon International Airport: 3rd largest international airport in the world - Come up as one of three Asian financial centers, specializing in asset management - Utilizing the economic free zones as international business centers * Accumulated foreign investment to GDP ratio: 9.2%(2002) → 12%(2007)

• Developing into a logistical, financial and R&D hub - Gwangyang and Busan: maritime hubs in Northeast Asia; Incheon International Airport: 3rd largest international airport in the world - Come up as one of three Asian financial centers, specializing in asset management - Utilizing the economic free zones as international business centers * Accumulated foreign investment to GDP ratio: 9.2%(2002) → 12%(2007)

Science andScience andTechnologyTechnologyForerunnerForerunner

Science andScience andTechnologyTechnologyForerunnerForerunner

• Consolidation of science & technology research capability, and transition to an open reform system - R&D investment: approximately KRW17 trillion(2002) → over KRW30 trillion(2007) - Research personnel: approximately 180,000(2002) → 250,000(2007) - Level of science and technology: 10th(2002) → 8th(2008) (Source: IMD) - Competitiveness of higher education: 28th(2002) → 10th(2010) (Source: IMD)

• Consolidation of science & technology research capability, and transition to an open reform system - R&D investment: approximately KRW17 trillion(2002) → over KRW30 trillion(2007) - Research personnel: approximately 180,000(2002) → 250,000(2007) - Level of science and technology: 10th(2002) → 8th(2008) (Source: IMD) - Competitiveness of higher education: 28th(2002) → 10th(2010) (Source: IMD)

GlobalGlobalBusinessBusiness

EnvironmentEnvironment

GlobalGlobalBusinessBusiness

EnvironmentEnvironment

• Establishment of a transparent & fair market, and a business- friendly environment

- Elimination of restrictions limiting competition; establishment of an advanced corporate governance model * Corporate Management Efficiency Rate: 20th(2002) → around 10th(2008) (Source: IMD) * Market Concentration Rate: 43%(2002) → Under 40%(2006)

• Establishment of a transparent & fair market, and a business- friendly environment

- Elimination of restrictions limiting competition; establishment of an advanced corporate governance model * Corporate Management Efficiency Rate: 20th(2002) → around 10th(2008) (Source: IMD) * Market Concentration Rate: 43%(2002) → Under 40%(2006)

1. Future Prospects (Ⅱ)1. Future Prospects (Ⅱ)



HighHighLivingLiving

StandardsStandards

HighHighLivingLiving

StandardsStandards

BalancedBalancedDevelopmentDevelopment

BalancedBalancedDevelopmentDevelopment

• Balanced development of metropolitan & provincial, urban & rural areas - Select a site and initiate construction for the new capital

- Open the 1st phase of the Seoul-Busan express railway system in April 2004

- Balance the budget ratio between the central and local governments - 55:45

- Increase farm household income by 50% until 2008

• Balanced development of metropolitan & provincial, urban & rural areas - Select a site and initiate construction for the new capital

- Open the 1st phase of the Seoul-Busan express railway system in April 2004

- Balance the budget ratio between the central and local governments - 55:45

- Increase farm household income by 50% until 2008

• Improving the quality of life

- 5-day work week

- Construction of more than 2.5 million homes and 700 thousand rental apartments

- Development of new suburbs near Seoul metro area

- Decrease of the unemployment rate to 5% for the young workforce within five years

- Increase of national expenditure on the raising of children (30% as of 2003)

• Improving the quality of life

- 5-day work week

- Construction of more than 2.5 million homes and 700 thousand rental apartments

- Development of new suburbs near Seoul metro area

- Decrease of the unemployment rate to 5% for the young workforce within five years

- Increase of national expenditure on the raising of children (30% as of 2003) 200

32008

7.7%5%

Youth Unemployment Rate

MajorMajorTradingTrading

EconomyEconomy

MajorMajorTradingTrading

EconomyEconomy

• Export structure based on High-tech & high value-added brands - The 8th largest trading nation by 2010 (trade amount: US$750 billion)

- Number of global leading products: 353 (2003) → approx. 1,000 (2008)

- 10 next-generation businesses will significantly contribute to exports

• Export structure based on High-tech & high value-added brands - The 8th largest trading nation by 2010 (trade amount: US$750 billion)

- Number of global leading products: 353 (2003) → approx. 1,000 (2008)

- 10 next-generation businesses will significantly contribute to exports200

22010

12th

8th

Trade Volume

2002

2008

90%100%

Farm/Urban Income Ratio (per capita)

1. Future Prospects (Ⅲ)1. Future Prospects (Ⅲ)



1. Need to Manage Change1. Need to Manage Change

“Change Management” is critical to achieve “Dynamic Korea”

Process of Managing ChangeProcess of Managing ChangeProcess of Managing ChangeProcess of Managing Change

• Awareness of crisis• Consensus to overcome difficulties• Awareness of crisis• Consensus to overcome difficultiesRecognizing the Need Recognizing the Need

to Changeto ChangeRecognizing the Need Recognizing the Need

to Changeto Change

Entrenching ChangeEntrenching ChangeEntrenching ChangeEntrenching Change

• Sharing the vision• Establishing principles and procedures• Sharing the vision• Establishing principles and procedures

Cultivating change-leading group Fostering and sharing success cases Recalibrating policy, procedure and system

Cultivating change-leading group Fostering and sharing success cases Recalibrating policy, procedure and system

• Fair compensation and rewards• Feedback on change management process • Fair compensation and rewards• Feedback on change management process

CurrentStage

of Korea▶

Clarifying ObjectivesClarifying Objectivesand and

Establishing VisionEstablishing Vision

Clarifying ObjectivesClarifying Objectivesand and

Establishing VisionEstablishing Vision

ImplementingImplementingChangeChange

ImplementingImplementingChangeChange


V. Managing Change


Perception on Korea’s ProspectPerception on Korea’s ProspectPerception on Korea’s ProspectPerception on Korea’s Prospect

2. Conditions for Change (I)2. Conditions for Change (I)

Source: KDI-Gallup Survey (General Public)

성장 잠재력 저하

세계화의 충격

Source: KDI-Gallup Survey (General Public)

(Unit: %)

Increased Social

Tension

Rapid Rise of China

Tensions onthe Korean Peninsula

can overcome challengeChallenge is severe

73.3

58.9

68.3 69.6

90.4 90.1

67.3

87.0

55.156.3

Slowdown inGrowth

Momentum

Rapid Globalization

Better

26.0

Same Worse

29.3

44.7

(Unit: %)

Perception of the challenges and potential to overcomePerception of the challenges and potential to overcomePerception of the challenges and potential to overcomePerception of the challenges and potential to overcome

Many indicated a positive view on the prospect of the Korean economy

Many indicated a positive view on the prospect of the Korean economy

Many indicated a positive view on the potential to overcome challenges despite the severity

Many indicated a positive view on the potential to overcome challenges despite the severity

Positive perspective on Korea’s future



2. Conditions for Change (II)2. Conditions for Change (II)

Foreign Investment Inducement

(Foreign Investors)

Financial Reform(Experts)

59.3%

40.7%54.8%

45.2%

PositiveNegative PositiveNegative

Decentralization (Experts)

Expanding Welfarefor the Needy

(Experts)

80.2%

19.8%

68.3%

31.7%

Positive Negative PositiveNegative

Shared view on the direction of change and key policies

SourceSource: KDI-Gallup Survey (December 2003)

Survey on the key policiesSurvey on the key policiesSurvey on the key policiesSurvey on the key policies



2. Conditions for Change (III)2. Conditions for Change (III)

Experts

GeneralPublic

SourceSource: KDI-Gallup Survey (December 2003)

(Question) Do you think change-leading groups have been formed in each of the following sectors?

ForeignInvestors

Government Officials

26.523.4

19.2

Politicians

4.2

15.26.2

NGOs

56.460.764.2

Businesssector

46.8

81.9

46.5

Academia

39.8

49.7

Percentage of Positive Response

52.5

Perception on the formation of change-leading groups Perception on the formation of change-leading groups Perception on the formation of change-leading groups Perception on the formation of change-leading groups

Formation of change-leading groups in various sectors



Thank you

Thank you!

a nation on the move

Business

vision dynamic korea

dynamic responses

vision challenges responses

critical innovation

nation stable growth

social conflicts

potential social tension

leading nation