Is South Korea Going Neoliberal?

♠ Posted by Emmanuel in , at 4/03/2007 05:57:00 AM
To be sure, I was somewhat surprised that the Korea-US Free Trade Agreement (abbreviated to the somewhat gnarly KorUSFTA) was negotiated successfully at the last possible moment. For, another US FTA deal with Malaysia did not pull through over the same time frame. Nevertheless, gaining legislative approval in the US for KorUSFTA is far from a done deal. A particular article in the Korean press got my attention as it suggested that room for mercantilist policies that have enabled Korea's economic rise has been further limited by this trade deal. Books recounting how East Asian countries like South Korea were able to engender economic growth during the postwar period as described by authors such as Alice Amsden and Robert Wade remain classic heterodox (read: "non-neoliberal") takes on development. Here are some excerpts from the article, though I strongly suggest that you read the rest and see what you think:

It is a well-known fact that Korea has slowly moved away from its decades-old mercantilistic protectionist trade policy, its support of producers over consumers, its subsidization of farmers and strong intervention in banking management following the currency crisis in 1997.

Under the IMF bailout program, Korea was forced to Westernize or Anglo-saxonize [great verb, BTW] its economy, to open banking and capital markets as well as reform the four major sectors namely chaebol [large business conglomerates], banking and public sectors, and labor practices. The IMF restructuring program has upgraded the Korean economy but many parts of the economy still remain inefficient, outdated and protected…

The Anglo-saxonization of the Korean economy symbolizes that Korea, like the United States, is now adopting a more open trading system, free trade and market capitalism.

This means a lesser role of the government in the economy, further polarization of the haves and the have-nots and more synchronization of the stock markets between Wall Street and Yoido in Seoul.

Seoul's major daily JoongAng Ilbo described the deal as the third opening of the country. First was the Chosun Dynasty, predecessor of the Republic of Korea, which was forced to open the country in 1871. The second opening, according to the article, occurred with the late Park Chung-hee's industrialization drive from 1962. Now the accord is regarded as the third opening of the country. Some economists picked the 1997 IMF bailout program as one of catalysts for further opening up the economy despite it being imposed from outside.

Korea can tap the $1.7 trillion American import market and become the second Asian nation after Singapore to sign an FTA with the United States. Excluding the multilateral NAFTA, the KorUS FTA is regarded as the largest deal among 212 FTAs signed worldwide.