One of the great concerns facing Korea may be its secular manufacturing decline since the 1997 financial crisis. There are many causes for this trend. I have discussed as to how Korea can shore up its productive capacity on numerous occasions.
Technology trade deficit, global wage arbitrage, skewed industrial structure, struggling SMEs, industrial/technology/higher education policies are the examples of the structural problems.
Ironically, easy credit policy since the 1997 financial crisis has been exacerbating the decline of Korea’s manufacturing.
One has to take a hard look at what made Korea’s economic miracle possible and how it has seemingly bounced back from the 1997 financial crisis.
What made Korea’s rapid economic growth possible (e.g., massive government interventions and chaebol-centered industrial development) is now hurting her.
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