UPDATE: This story couldn’t be more perfectly timed for argument I make in this post. (H/t to Zach Keck.) This one sentence captures a lot of what is wrong with the political economy in Korea: “Compelling conglomerates to unwind their intricate cross shareholdings would ‘expose companies to hostile foreign takeovers,’ Park Geun Hye told reporters.”
Wow. So globalization is for ‘foreigners’ but not for us. We should be allowed to capture 20% of the US or EU auto market, but we don’t want anything like GM buying Daewoo or Lonestar-KEB ever again on our own turf. Foreigners should be excluded from Korea’s biggest firms, even though those firms are hugely dependent on foreign sales and Korea’s growth generally is dependent on foreigners’ willingness to run near-permanent trade deficits with Korea. Talk about biting the hand that feeds you. The sheer selfishness and xenophobia of that line is shocking. And I don’t believe for a second that that is really Park’s own belief. She used to support greater reform, and Korean conservatives are the most neoliberal element in Korean life (President Lee pushed through the FTAs, e.g.). That sentiment almost certainly reflects pressure from the chaebol families on the hoped-for winner to back-off the ‘economic democratization’ rhetoric. So if you ever wonder why foreigners think Korea is mercantilist or where the ‘Korea discount’ comes from, here you go.
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It’s been a few months since the nasty Apple-Samsung battle led to a record lawsuit victory over Samsung in California. The Korean national response was downright vitriolic, but hopefully tempers have cooled enough that some reflections on how Korea can avoid this kind of stuff in the future are useful. I am displeased to say that Korean media turned down the following op-ed, but happy to note that The Diplomat was interested and posted this on Friday. The point of the media is not to flatter and tell us what we want to hear (see: the US media in 2002 on Iraq) but to challenges us to think beyond our prejudices. I am once again grateful to Zachary Keck, the assistant editor at the The Diplomat, for his interest in my work. So here we go:
“The bruising Apple-Samsung fight raises major intellectual property rights (IPR) issues that Korea and Asian economies generally are ill-prepared for. Unless the concerns raised by the Samsung-Apple scrap are resolved, Korea should expect regular trade friction with major partners and regular accusations of copying and cheating. As wealthy countries, including now Korea, move away from manufacturing and further into services and information, the need for innovative Korean firms will only grow. Neither Korea’s corporate structure – dominated by mega-oligopolies with strong disincentives to innovate – nor education system – overwhelmed by rote learning and plagiarism – position Korea well for the future.