|Korea Institute for International Economic Policy President Lee Jae-young speaks during a recent interview with The Korea Times at the newspaper's head office in Seoul. / Korea Times photo by Choi Won-suk|
KIEP head proposes international platform for technological ties
By Park Jae-hyuk
Korea, which is one of the world's most export-reliant economies, has tried to minimize the damage from trade wars against this backdrop, by diversifying its export markets with the New Southern Policy targeting Southeast Asian nations and the New Northern Policy seeking economic opportunities from the Eurasian countries.
According to Korea Institute for International Economic Policy (KIEP) President Lee Jae-young, however, this approach cannot generate a fully satisfactory outcome, if the two policies are pursued separately.
The head of the state-run think tank specializing in global economic issues emphasized that Korea should connect the two foreign policies with each other, if it wants the best results.
"A new technological cooperation order should be established, by connecting the New Southern Policy with the New Northern Policy," Lee said during a recent interview with The Korea Times at the newspaper's head office in Seoul.
He cited the post-Soviet states' needs of a bigger market and the Association of Southeast Asian Nations (ASEAN) member countries' needs of advanced technologies.
"As for the Northern part, there is Russia and Belarus, both of which are good at basic science research," he said. "As for the Southern part, there is Vietnam and Indonesia, both of which have huge markets with large populations."
He expected both sides would be able to look for a win-win situation, if the "New Northern countries" transfer their technological skills to the "New Southern countries," in return for their entry to the rapid-growing Southeast Asian market.
In this regard, the economic expert suggested Korea serve as a bridge between the two regions.
"Korea should take the initiative in organizing a platform for technological ties between the two regions," he said. "Then it should help Russia and Belarus commercialize their technologies, so that they can export those to Southeast Asia."
Lee also mentioned the necessity of joint research among think tanks from each country.
"If think tanks from Russia, Belarus, Vietnam, Indonesia and Korea conduct a joint study to find out which technologies are in demand, a virtuous cycle can be created," he said, adding it will be a way for Korea to distinguish itself from China and Japan in the ASEAN market.
Korea, which has recently begun expanding its presence in the Southeast Asian market, has been in a fierce rivalry with its two neighbors, both of which have already settled there with their stronger financial powers.
"Although foreign direct investments from Japan and China to the ASEAN nations in 2018 were 3.2 times and 1.5 times that from Korea, respectively, the ASEAN nations have been concerned about dependence on Japanese and Chinese capital," he said.
"If Korea focuses only on selling its products in the Southeast Asian market, the ASEAN nations may regard Korea as another country that exploits the market. Korea should therefore consider the technological cooperation platform."
The KIEP president said his idea received positive reviews from both the New Northern and the New Southern countries, when he proposed his idea during the fifth Eastern Economic Forum in Vladivostok in September.
Lee, who obtained a doctorate in economics at Moscow State University, is one of Korea's most renowned experts in the Eurasian region.
He urged Seoul to put what he proposed on the table, when it has a chance to talk with Moscow.
"If Russian President Vladimir Putin visits Korea in 2020, the administration should discuss this matter," he said.
Given that Korea and Russia will mark the 30th anniversary of their diplomatic ties next year, President Moon Jae-in is highly expected to have a summit with his Russian counterpart.
Lasting trade wars
The reason the think tank leader suggested Korea connect its two foreign policies is because market diversification is necessary for the country's survival, amid growing expectations that the global trade wars will continue for a while.
Lee predicted that both the Korea-Japan and the U.S.-China trade feuds will be prolonged, despite several efforts, such as Prime Minister Lee Nak-yon's meeting with Japanese Prime Minister Shinzo Abe and the small trade deal between the world's two largest economies.
"The tension between Korea and Japan could be eased on the occasion of the Tokyo Olympics at the earliest, if both sides come up with forward-looking policies by then," he said, voicing that he was skeptical about the possibility of the two achieving a breakthrough in the short run.
Given that Korea may soon seize properties of Japanese firms involved in forced wartime labor and a couple of years are needed for the World Trade Organization to make a decision on the Korea-Japan trade dispute, the KIEP president said maintaining the status quo is the best option for both countries at this moment.
As for the U.S.-China trade war, he came up with a more negative outlook, saying this will last longer, because the two countries differ in their strategic goals.
"U.S. President Donald Trump wants a quicker settlement, because he is facing a Presidential election in 2020," he said. "China, on the other hand, is thinking of engaging in a protracted war."
Defining the U.S.-China trade feud as the battle for technological hegemony, not the tariff war, he said it is probable that the conflict will continue, regardless of whether or not Trump is reelected.