Oh Jong Nam, who just finished his term as executive director of the International Monetary Fund (IMF), says Korea is much better positioned in the global economy than when he began his tenure at the IMF. Strong exports and a dynamic tech sector have propelled South Korea into a four-way tie with India, Mexico and Russia as the world's tenth largest economy. Its new prominence has been recognized by the IMF, which recently reapportioned member-country voting rights to give Korea greater influence. Now, according to Oh, is the time for Korea to recognize its status and begin acting like a responsible global leader.


Business Roundtable

with

Oh Jong Nam
Executive Director, International Monetary Fund (IMF) 

Thursday, November 2, 2006

Since the end of the Korean War, economic policymakers in Seoul have labeled Korea a developing country. Decades ago it was an accurate description. War had shattered an already undeveloped economy. Almost half of the country's GDP came from the agricultural sector, with only a tiny fraction derived from exports. The South's economic output was smaller than the North's through the mid-1970s. As such, Korea was given typical developing-country treatment from the IMF. It received periodic infusions of economic aid from abroad, drew capital from foreign markets and sent students to the IMF's vocational training programs.

This relationship continued even as the country boomed in the 1980s, with Korea claiming special developing country exemptions in international trade agreements, and culminated in 1997 when an IMF loan saved Korea from economic calamity.

Korea has fully recovered from the 1997 crisis. Per capita GDP, which had dropped from $11,000 to $7,000 during the depths of the crisis, has rebounded to $16,000 today. Oh stated that Korea's relationship with the global economy and the IMF needs to change. Korea needs to start thinking and acting as a fully developed economy. Instead of receiving aid and technical training, it should be providing it to truly developing nations.

If Korea wants to be a major player, it has to start bearing the burdens of a major player, Oh said. If it does, the world will be better for it. If it leads, "Korea can be a bridge between advanced countries and developing countries," he added.