South Korea Joins the 20-50 Club: Taiwan Taken Down a Notch

South Korea Joins the 20-50 Club: Taiwan Taken Down a Notch
China Times editorial (Taipei, Taiwan, ROC)
A Translation
June 5, 2012

Summary: After World War II, a dozen or so economies, including the Taiwan Region of the Republic of China, experienced over 20 years of rapid growth. On average they experienced a 7% annual GDP growth rate. But recently South Korea has left everyone else behind. This month it will join the "20-50 Club." It will become one of the seven countries in the world with a population exceeding 50 million, and a per capita income exceeding $20,000 USD. This news was hard for both the ruling and opposition parties on Taiwan to swallow.

Full Text below:

After World War II, a dozen or so economies, including the Taiwan Region of the Republic of China, experienced over 20 years of rapid growth. On average they experienced a 7% annual GDP growth rate. But recently South Korea has left everyone else behind. This month it will join the "20-50 Club." It will become one of the seven countries in the world with a population exceeding 50 million, and a per capita income exceeding $20,000 USD.

Currently only six countries are members of the 20-50 Club. These  six major developed countries became members before Korea. They include Japan (1987), the United States (1988) France and Italy (1990), Germany (1991), and Great Britain (1996). 

This news was hard for both the ruling and opposition parties on Taiwan to swallow. Taiwan and South Korea have long competed in every field, from academics to athletics. The 20-50 Club however, is an objective standard, one established by the major powers. Given the numbers, the gap between Taiwan and South Korea is hardly surprising. In 2004 South Korea's per capita income was $15,037 USD, ahead of Taiwan's at $15,012 USD. The gap in per capita income is increasing. Taiwan exceeded $20,000 USD in 2011. But South Korea led by $3,000 USD. In recent years South Korea's international competitiveness has steadily risen. The lifeblood of Taiwan's electronics industry has been diverted to South Korea, to Samsung and other large enterprises. Taiwan has been under the gun. It has lost market share to South Korea even on the Chinese Mainland. In 2005, South Korea commanded an 11.64% share of the Mainland market, exceeding Taiwan's 11.31% share. It has continued to lead Taiwan since.

Many commentators have suggested that South Korea's achievements are a result of its internal solidarity. They say it channels the entire nation's resources into economic development. But the fact is South Korea is free and open. The government and Big Business join to suppress domestic trade unions and farmers. Allowing U.S. beef imports created quite a stir in South Korea. When South Korea signed an FTA with the United States, opposition party legislators occupied the legislature. Only ruling party force enabled the legislature to vote. In other words, once the Korean government set its goals, it did not hesitate to pay any political price to achieve its goal, This is something we have been unable to accomplish on Taiwan.

Secondly, Taiwan must reallze that South Korea has always been a larger economy than Taiwan. It has twice the population. It has vastly greater land area. Taiwan may set higher goals. It may compare itself to South Korea. Just like South Korea often compares itself to Japan, out of national pride. But such comparisons are unrealistic.

What Taiwan really needs to emulate, is the South Korean government's determination to open itself to the outside world. South Korea has signed more free trade agreements than any other country in the world. It has signed FTAs with the Association of Southeast Asian Nations (ASEAN), India, the European Union, and the United States. Currently 36.22% of South Korea's exports are duty-free. If it signs FTAs with Mainland China, including Hong Kong, with Japan and other countries, then 72.73% of South Korea's exports will be duty free. This will create ideal conditions for Korean products in the international markets.

South Korea's FTA strategy was devised by foreign service personnel and trade-oriented think tanks established by the government. They formulated its economic and trade strategy. Major companies also have research units. Together they have cultivated the talent necessary to open up global markets and negotiate FTAs. These talented individuals are experts in foreign languages and laws, international industry, finance, politics, and diplomacy. Hundreds of them have post-doctoral research experience. But the South Korean government's real achievements lie in its exploration of the future of industry. According to Nobel Prize winning economist Michael Spence, South Korea was like Taiwan. It too experienced a period of rapid growth. It too transitioned into a middle income economy. South Korean ruling and opposition parties also worried that their economy would lose momentum. High quality, labor-intensive manufacturing moved to lower cost countries. But the South Korean government vigorously promoted structural transformation. This may have been a response to the Asian financial crisis of 1997. South Korea hit rock bottom. This was a signal that reform could no longer be avoided. Public sector investment shifted from the labor-intensive export sector to education and applied research. The government actively recruited overseas Korean talent, and persuaded them to return. It canceled many of its plans to support industry. It transferred the resources to the private sector.

As Quanta Chairman Barry Lam observed, South Korea channeled its resources into the integration of technology. It actively developed information technology. First-class talent joined the Samsung Group. When Samsung announced its intention to develop and manufacture semiconductor memory chips, western countries thought it was being foolish. But a decade later, Samsung has created the world's first 256 GB memory chip. This was an important milestone for the semiconductor industry, The doubters are now silent.

If one really wants to understand the difference between South Korea and Taiwan, one must avoid the myth of "large consortia vs SMEs." The real difference lies elsewhere. The real question, whether for industrial policy or for FTA strategy, is whether the government took the lead and offered a vision. Did the ruling and opposition parties persist in infighting? Did they change the direction in which the country developed?

韓國邁進20—50俱樂部 台灣矮一截
2012-06-05
中國時報
【本報訊】

在二次世界大戰後，有十幾個國家（包括台灣在內）持續廿幾年高速成長，平均超過ＧＤＰ七％以上，但目前在這場賽跑中領先的韓國已經把大家拋在後面，即將於這個月進入「二○｜五○俱樂部」，成為全球第七個平均國民所得超過兩萬美元、總人口超過五千萬的國家。

目前全球僅有六國是「二○｜五○俱樂部」的成員，比韓國更早加入的國家，只有日本（一九八七年）、美國（一九八八年）、法國和義大利（一九九○年）、德國（一九九一年）與英國（一九九六年）六個主要發達國家。

這個新聞讓台灣朝野很不好過。過去台灣與南韓兩國處處競爭，從學術水準到體育競賽無一不在做對比。但「二○｜五○俱樂部」畢竟是個客觀標準，也是個強國的標準。從數據看，台韓差距並不是突如其來的，自從二○○四年韓國的平均國民所得（一五○三七美元）超過台灣（一五○一二美元）後，雙方平均國民所得的差距愈來愈大，台灣雖然在二○一一年超過兩萬美金，但是南韓卻又超前領先台灣三千元美金。尤其近幾年，韓國國際競爭力節節提升，台灣電子業的命脈被韓國三星等大企業掌握，更讓台灣備感威脅。即使連在中國大陸市場占有率方面，韓國亦於二○○五年以十一．六四％的占有率超越台灣的十一．三一％，並且持續領先台灣至今。

不少論者認為韓國的成就，是因為內部團結一致，用整體國家的力量在發展經濟。但事實上韓國的自由開放，卻是經由政府與大企業聯合，壓制國內工會與農民所導致的結果。美牛開放在韓國曾掀起軒然大波，與美國洽簽ＦＴＡ之際，更面臨反對黨議員佔據議事堂，執政黨是不惜動用強制表決才讓其生效。換句話說，韓國政府一旦認定了方向，就不惜付出任何政治代價，只求達到目標，這不是台灣所可以比擬的。

其次，台灣也必須認清，韓國本來就是一個比台灣更大的經濟體，不只人口是兩倍，土地面積也大得多，台灣可以設定更高的目標，自比南韓，但是就像南韓要自比日本一樣，有時出自民族情緒，並不實際。

台灣真正需要學習的，是韓國政府對外自由開放的決心。韓國是全世界簽署自由貿易協定最多的國家，目前已與東南亞國協、印度、歐盟、美國等國簽署ＦＴＡ，總計韓國已經有三六．二二％的出口產品享受免關稅與通關便利。倘若韓國再與中國大陸（含香港）、日本等國完成ＦＴＡ協商，則比例高達七二．七三％，此舉勢必將為韓國產品在國際市場上創造良好的競爭條件。

韓國的ＦＴＡ戰略，是由政府成立外交與貿易智囊，研究國家總體的經貿戰略，各大企業也設研究單位，一起進行全球市場開拓與ＦＴＡ簽署談判人才的培養，這些人才領域遍及外語與法律、國際企業、國際金融、政治與外交，屬博士後研究人才有數百人。但韓國政府真正的作為，還是在於開拓未來的產業方向。據諾貝爾獎經濟學家史賓塞的研究，就像台灣一樣，韓國經過一段快速成長階段後，邁入中階所得轉型期，韓國朝野也曾憂心經濟會失去成長動能，優質、勞力密集的製造業移往成本較低國家。但不尋常的是，韓國政府大力進行結構性轉型，也許是因一九九七年亞洲金融危機，韓國幾乎跌到谷底，讓它知道改革無可避免，將公部門投資焦點從勞力密集的出口部門轉移至教育、應用研究，積極吸引海外人才回流，並取消許多早期對產業的計畫與支持，移轉給民間部門去負責。

誠如廣達董事長林百里的觀察：韓國在國家整體力量主導下，正進行科技整合計畫，積極發展資訊科技產業，一流人才全部進入三星集團。早先當三星宣布打算發展與製造半導體記憶晶片時，西方國家認為這是愚蠢之舉。但是在宣布的十年後，三星製造出世界第一個二五六ＧＢ記憶體，那是半導體產業的重要里程碑，外界的質疑頓時鴉雀無聲。

如果要真正檢討韓國與台灣的不同，千萬要避免所謂「大財團v.s.中小企業」的迷思，真正的差別還是在於，不論是產業政策方向，亦或是ＦＴＡ戰略，政府有沒有帶頭提出願景，再加上朝野的循環惡鬥，有沒有扭曲了國家發展的大方向。