Sangju Lee's Weblog

Bio: I graduated Hankook University of Foreign Studies in Seoul, Korea and I worked as a reporter from 2000 to 2007 for one of Korean major newspapers named Kyunghyang Daily News(www.khan.co.kr). I specialized in Economic news, socio-political issues and a little bit of literature. I moved to the U.S.A. in the summer of 2007 and joined to the CCT 2009 Spring after spending one semester at SAIS as a part-time/non-degree student. I am trying to focuse on political communication at CCT, specifically I am interested in the influence of new media/techology to representative democracy.

 

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Jun 09 2009

The improtance of educational enthusiasm in a country

            Frankly, Quatar was merely one of oil-rich countries to me. Although several facts such as Doha Asian Olympic Game in 2006 and Georgetown SFS Quatar campus have stimulated my curiosity about the nation, I have always concluded swiftly that the Quatar’s prosperity is entirely due to oil. It is true that oil has played a decisive role for Quatar to transform its fishery economy to a wealthy international economy. However not all oil producing countries have achieved that prosperity.

           According to Jane Jacobs, generating market, creating jobs, spread of city work, technological innovation, and growing city capital are key process of development. To Quatar, oil has provided market and a certain amount of jobs to this small country. However the rest of process is not automatically accompanied by discovery of oil in Quatar. As the book ‘bottom billion’ discussed, easily earned wealth from oil tends to be centralized to higher class people of the society and the extremely unequal wealth distribution is the reason of corruption, instability, and violence.  

           Among many aspects of Qutar’s success, I think Jane Jacobs would assess the educational enthusiasm of the country as a key reason of prosperity because high level education means that the country will have affluent human capital which is pivotal element for technological innovation, knowledge industry, and stronger civic engagement. I was told that the country is providing compulsory education for low or free of tuition until high school and induced world class schools and institutions. With the blessed natural resources, the human capital supports the sequential, sustainable advance of Quatar.

            However I cannot easily find the geopolitical importance of the small state. It is bordered by Saudi Arabia and there is Iran across the Persian Sea. Although the two neighbors are important in world politics, is it attractive enough to catch all the international business/financial/scholarly people?

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Jun 09 2009

Economic development itself can not make a real development

Through several sessions of the course, it became clearer to me that development matter should be considered not only in an economic perspective, but also in a social structural perspective; a society’s history, culture and institutions. In the same sense, western countries’ economic success model cannot be directly transplanted to a developing country which has different structure unless there are concurrent strategies for institutional change at the same time. This viewpoint also explains why western economic success or Asian four dragon’s path has not been reiterated in many developing countries.

Some might argue that economic development can be still achieved without institutional changes such as growth of civic society and political maturity, providing the example of Dubai, one of seven Arab Emirates states. The city-state Dubai emerged as the center of luxurious tourism, world class financial service, and significant real-estate market of middle-east Asia during the late 1990s and early 2000s. Although most part of the country is covered with sand, the state’s highly centralized government had changed the desert into a vibrant business place. The country has the world’s first 7 star hotel and the world highest tower (this building is under construction). Investors have brought huge amount of money to the tax-free country and the money stimulated further growth, in turn. “Although Dubai’s economy was built on the back of the oil industry, revenues from oil and natural gas currently account for less than 6% of the emirates’ revenues” as the year of 2005[i] However, it is hard to say that they have substantial social capitals. The country is still maintaining power centralized monarchy and there is little civic involvement.

South Korean politicians were once eulogized the splendid development of Dubai and even insisted that we had to learn the model. However, Dubai asked bail-out money from IMF recently since investors rushed out the city right after the global economic crisis. The prosperity of Dubai turned to be built on bubbles, which was not a real development.

I was raised in a country where economic growth had absolute priority in all development aspects. Social welfare, labor’s right, political diversity, wealth distribution, and environment were ignored for a long time. That is why we have still unstable society although we achieved a significant economic growth. We were not allowed to raise considerable civic society in the past. We were taught that economic growth is the most important thing for everyone and we had to endure and even sacrifice our generation, if necessary, for the nation’s future. However, I do not think the fruits have not been evenly distributed. Economic growth and social capital have to be grown at the same time, affecting and complementing each other.

Related to the issue, I remember one impressive moment when I visited Vietnam three years ago. I was there to report the emerging economy of Vietnam and its government-driven development policy called ‘Do-E-Mo-E’. In Vietnam, there are corruption problems in public sector and the decision making process is not transparent. Hence it is very important to make a good relationship with bureaucrats when you run a business, which is not surprising at all in developing countries. At that time, I visited one of Korean construction companies who had won a big project after several years’ formal and “informal efforts”. But the company representative said the project was in danger of becoming null since indigenous civic society was strongly against the project because of environmental issue. (There was a big national park on the spot where the construction project was about to be started.) I was so impressed because the fact that Vietnamese people were concerning not only economic development but also environment protection at the same time. Despite of corrupted government, I could see hopes for the future of Vietnam.


[i] Wikipedia, http://en.wikipedia.org/wiki/Dubai#Economy

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Jun 03 2009

How influential can global institutions be?

I would like to present my thought through examining the neo-liberalism as one of main ideas of global economy and current economic crises. Neo-liberalism, which has played dominating role in the world economy since Uruguay Round, is broadly characterized by free trade, free market, and deregulation. The principles of neo-liberalism have stimulated FTAs, financial globalization, and labor movement.

Globalization and neo liberalism had changed the social structure of a country enormously. For example, South Korea accepted neo-liberalism policies during Asian economic crisis. In the end of 1997, the country was in short of foreign exchange reserves while foreign investors ran out of Korea swiftly as overall Asian economy was shaking. The Kim, Dae-jung government (1998.2-2003.2) had no choice but to open financial market completely to receive as much as possible foreign investment. At the same time, barriers having limited M&A were removed to attract foreign investors. These changes of formal institutions have also brought the changes of informal institutions.

 First of all, the concept of job has transformed. With the economic crisis, many workers were evicted to the street from their (once believed) life-time work place under the name of cost efficiency, and their family had to suffer from the sudden income lost together. At the same time, jobs converted rapidly into irregular and short-term positions. As a result, the concept of life-time job vanished and workers show less royalty to their current companies. It is dramatic change, since my parents’ generation believed that companies are like the second family. Nowadays nobody feels that one shares a common destiny with company like older generation did.

 More importantly, economic polarization transformed social structure from bell like society where majority belongs to middle class, to pyramid like structure where top 10% owns 90% of the wealth (An advanced 20/80 society). Money became the number one concern even to college students since the economic crisis. They read business/economy books without giving attention to social science books. Professors call the phenomena as “the death of social science”.

 To conclude, global institutions like neo-liberalism are highly adaptive to a country whose economy/politics is interlinked to the world economy/politics because accepting global standards is one of pre-requisites to receive foreign investment, which is pivotal for development. Also the change of formal institutions affects informal institutions simultaneously.

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Jun 01 2009

Same Aim, but Different Approaches

            I think there are two kinds of development strategies depending on who is the main body of leading development; one is government-led, the other is private/market-led development. The government-led type reduces initial cost through restraining excessive competitions and overlapping investment. Also, it is more likely to have strategic concentration on several key industries. South Korea and Singapore cases are the examples. On the other hand, many developed countries achieved economic growth based on private/market led development. This type of development strategy encourages competitions among players in the market and upholds deregulatory policies. This development strategy promotes market efficiency, strengthens the surviving companies’ competitiveness, and there are less corruption problems.

           I believe free market system is superior than government controlled economy to accomplish a sustainable development in the long term. Because economic entities formed though organic growth are more flexible in risky situations. Unfortunately, not all countries can choose this way, though, if there were not substantial infrastructure; banks, markets, entrepreneurs and social stability. That’s why every country needs different combination of policies to achieve growth. There is no one absolute solution for development.

           Whatever strategies a country chose, however, fairness should be guaranteed in every process and to do so there should be a clean politics. When I looked back the Korean economic history, the conglomerates (Che-bols) have received enormous special benefits from the government as “star companies”. For instance, political leaders gave pressure to banks to lend as much as possible loans to those companies, and the companies bribed to politicians in turn. It was possible because we had government-led economy. A company could be closed at once by the bureaucrat’s decision. It was inevitable that political and economic power group have had adhesive relationship. New players could not survive in the competition and the market diversity was damaged.

           Then, how to obtain fair competition? I believe that the role of civil society is important. There should be their continuous watch on policies/politics, vigorous participation in the process of policy making, and critic decision on elections. At the same time, the higher degree of democracy for free expression and vibrant discussion is needed for a country to achieve growth based on fair competition. (My country did not have democracy until 1987, and there are still vestiges of dictatorship and military government).

          All in all, if I were a strategist in a developing country, I would try to make solid democratic social system at first, and introduce competition based economic policies ultimately although I might choose a mixed box of free market system and regulatory market system in the beginning.

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May 28 2009

A closed society in the open world

I would like to raise international attention to the possible upheaval of Korean peninsula in the near future.

It is well known that Korean peninsula suffered from Korean War, the proxy war of Cold War, in 1950s and the land divided into two parts; North Korea and South Korea as the result. Although ‘Cold War’ ended in 1989 and the experiment of world communism party turned to be failed after all, North Korea is still maintaining communism as its ruling ideology. However, since Kim Il-sung, the long term communist leader of North Korea, passed away in 1994, North Korean society has been confronting various problems. While development has been long stagnated, the country gradually lost strong connection with old alliances such as Soviet Union and China. There are chronic food deficiency, lack of electricity, abject poverty, widespread famine and disease. North Korean government also gave up the central food distribution system several years ago and people suddenly forced to find a way to feed themselves in the devastated land.

Experts say North Korean society will face upheaval in the near future. There are several scenarios; a sudden collapse, coup-d’état, gradual open, and so forth. Whatever it would be, it will cost huge amount of money to rebuild the North Korea. It would sound like far away land story to developed countries. However, North Korea has very important meaning to the USA in a geopolitical sense. The country bordered by China and Russia, and when North Korea collapse all of a sudden, it is very likely to be absorbed into China to give greater power to the fast emerging country.

There are six-party talks (South and North Korea, Japan, USA, China, and Russia) to deal with the peace matter in Korean Peninsula, and their role is pivotal for the admirable change of North Korea. At the same time, general global citizens need to pay constant attention to the North Korean problem, not just when the country shows its military potential like recent one. I believe that North Korea will continue nuclear development unless they find other cards to negotiate with the powerful partners in the six-party talk as well as in international society.

Building substantial trust is important to lead soft landing of impending change of North Korea. The country is approaching to the cliff. If they became nothing to lose, we cannot predict what will happen. Then how to create substantial mutual understanding to prevent the extreme action of North Korea? Unfortunately it is extremely hard to find a way to persuade North Korean people to accept the change and to come out to international society since the country is tightly closed.

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May 26 2009

What prevent real globalization…

Globalization is an inevitable change and the concept itself is ideal; letting resources move from where there are surpluses to where there are deficiencies. However, there are only a few participants who benefit from globalization because the boon has not fairly distributed YET. The poor become poorer and the rich and their early alliances become richer. I think the biggest problem of the globalization is that the power is highly centralized to the top and the way to imitate the success is closed. Although western world grew quickly by using various protectionism policies, they had kicked away the ladder to climb up the same trail for other players.

Today’s international trade agreement requires fair rules and standardized systems to every participant. It sounds reasonable. Unfortunately, however, trade agreement cannot be made fairly enough in the world of power imbalance. For example, when the U.S-Korea FTA negotiation was proceeding, Korea had to admit resuming U.S. beef importation although the worry of mad cow disease had not dissolved. I often eat beef in the U.S.A. However the beef that Korea accepts from the U.S.A. is different from what normal U.S. domestic people eat. It is told that mad cow disease was mostly found in over 30 month cows. To minimize the risk, USDA allows that less 20 month cows to be sold in domestic market. However Korean government admitted the importation of older than 20 month cows as well to conclude FTA treaty. We certainly understand that there cannot be only benefits from FTA and there must be gives and takes. However beef importation provoked Korean people since it is directly related to life matter. There are few countries in the globe which import older than 20 month cows from other countries. Then why did my country make such a tough decision? Because Korea is economically and politically dependent on U.S.A and we do not have enough power to neglect the demand of the U.S.A. It is just a simple example of the power imbalance in negotiations.

In the networked world, there are some nodes that connect different parts of the community such as international organizations, NGOs, and academic schools/institutions. However, I cannot find no nodes link the world evenly. Because it seems to me that everything is related to the power matter; who owns the power and the nodes are subordinated to the established hierarchy. More specifically, international organizations can easily be affected by who pay for management. NGOs’ activities are remained just in several certain areas such as environment, anti-war/terrorism, and poverty reduction. They hardly affect to the real political decisions. Academic schools and institutions are also becoming political organizations these days.

There is another big obstacle in making perfect globalization. Although technology reduced physical distances among nations/cultures, people’s perspective of a nation has not much changed. The identity of a people defined more distinctively in the globalized world and they follow interests of their own. It is hard to make a collective action despite of the splendid speed of communication.

I am not a pessimist, though. I would like to find answers that I have not thought over to make it a better place through this course.

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May 21 2009

Reflection Paper-2

           First of all, I would like to mention a little bit about the Stiglitz’s book. Although most westerners think that South Korea is one of the countries where successfully overcame the Asian financial crisis of 1990s, domestic people do not entirely feel that way. Rather, we think we are still struggling for the price of wrong decisions made at that time. Most of all, we opened our financial market too early. We were not ready at all to compete in the global market but we were forced to open the market by international organizations such as IMF and WTO. Right after the openness, as Stiglitz described as well, many domestic companies had to be exposed to the hunt of speculative hot money. Some bigger companies were sold to foreign investors and even to hedge funds.

Those investors did not care long term growth of a company. Their only concern is to retrieve money as soon as possible with maximum interest. The tactics they used to maximize return were reducing cost by cutting human capital, selling valuable equities separately, and paying dividend to shareholders instead of reinvesting money for R&D. They worked only for shareholders not for the domestic workers/economy. Speculative money might not so formidable in bigger economies, but it has enormous power in smaller economies. Although Korean GDP has grown steadily, the number of jobs did not increase in Korea. Neither the quality of most people’s life improved except top 10%. The GDP growth was entirely due to the several big exporting companies such as Samsung, which took advantage of low-valued currency. Through the experience, I learned that numbers do not representing the reality of people’s life in a country.

           Let me move to network issue now. I think that a person cannot exist without networks. In other words, a social individual is formed by the networks which he/she is engaged in. I get ideas directly from people around me. Although the internet, newspaper, and books are common sources of achieving ideas, my communities still affect immensely the choice of information. Consciously or unconsciously, we are absorbing what other people around us read, think, see and eat. Since the IT revolution, the Internet enhanced the networks significantly. The communities a person associated with have been diversified and the speed of information exchange has remarkably quickened.

            As far as the development strategies concerned in the globalization, I think we need deeper understanding about other countries/cultures to build up a true corporation. Fortunately we have the Internet now that has much improved the accessibility to various kind of information. However, it still has limitation that there is no efficient way to exchange opinions between English users and non-English speakers yet. Furthermore, traditional media are closing many of their foreign bureaus because of current economic difficulties. I am worrying there would be fewer voices available to promote mutual understanding in the short term. However, I believe the ICT proliferation can promote the global communication in the end.

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