New President Park outlines Geun-hye-nomics

Posted on : 2013-02-26 15:25 KST Modified on : 2019-10-19 20:29 KST
In her inauguration, Park Geun-hye describes two-pronged approach of creative economy and economic democracy

By Ahn Seon-hee, staff reporter

Park Geun-hye presented a two-pronged approach of a “creative economy” and “economic democracy” as an answer to South Korea’s economic problems in her Feb. 25 inauguration address.

The creative economy approach was presented as a response to low growth, while economic democracy was given as a solution to growing income polarization. Taken together, they represented Park’s vision for “economic revival,” which she said would usher in an age of “national happiness” through a “Second Miracle on the Han River.”

The first component, a creative economy, involved increasing value added by combining technology and information technology with various other sectors to provide a new growth engine for the national economy.

According to Park, this would entail “convergence between technology and industry, and between culture and industry, with creativity blossoming where there once stood boundaries between industries.”

She also said it would involve “creating new markets and new jobs as a base for convergence,” adding that she planned to “lift South Korean technology to world-class levels” to achieve this.

She went on to emphasize the role of the newly created Ministry of Future Creation and Science as a driver for the creative economy.

Park also said economic democracy would have to be achieved for the creative economy to flourish. This came after she was recently blasted by critics after ‘economic democracy’ - one of her main election-time slogans - was conspicuously absent from a list of governance goals published on Feb. 21, leading some to question whether she was backpedaling on the issue. Observers read the renewed attention in her inaugural address as an attempt to quiet the controversy.

Park’s conception of economic democracy was defined as a “fair market.”

“It means allowing large corporations and SMEs to prosper together through policies to foster small business so that anyone can rise if they work hard enough,” she said.

She also said it would involve “rooting out the various unfair practices that frustrate small merchants and small businesses, and correcting the mistakes of the past.”

Park said her ultimate hope from this was to create a future with a “a mutually reinforcing cycle of national advancement and the happiness of our people.” Analysts read the reference to a “mutually reinforcing cycle” as an oblique dig at the growth-first policy approaches favored by other leaders. Park also made reference to balanced growth in her list of governance tasks, saying she planned to shift the focus in the “growth model” from exports, manufacturing, and big business to domestic demand, services, and SMEs.

The list also outlined plans to move from prioritizing growth over value to achieving a cycle between them, and to make a high employment rate, rather than a high growth rate, the growth policy objective.

In this, Park’s approach marks a radical departure from the so-called “MB-nomics” of her predecessor, Lee Myung-bak. Market and business-friendly policies were front and center in his inaugural address five years ago, with the then-newly arrived President advocating “small government and big markets,” tax cuts, privatization, deregulation, and open markets. “Saving the economy is priority one,” he said at the time.

But with a tiny handful of big exporters and earners dominating the rewards of economic growth, criticisms and alternate approaches became a major theme in the last presidential election. As a candidate, Park succeeded in reaching a broader range of supporters by putting economy democratization on her agenda.

In some ways, this change in course reflects growing criticisms of the neoliberalist economic approach around the world in the wake of the 2008 global financial crisis. Indeed, Park said in her address that capitalism has been “facing new challenges since the global financial crisis and has lost its way” and suggested new models for growth. In her words, these included “collecting people’s strength for the public good,” “lives of cooperation and sharing,” and a “society full of responsibility and consideration.”

This suggests that where the Lee administration’s conservatism leaned toward the neoliberal market-centered approach of Britain’s Margaret Thatcher government, Park believes a solution can be found in something akin to the “compassionate conservatism” that the country’s Conservative Party adopted in the pre-Thatcher era.

The change is a significant one in light of the polarization and concentration of wealth at the top of the pyramid that South Korea is currently experiencing. But Park’s approach also shows the limits of conservative economic policy. In particular, by restricting her definition of economic democracy to a “fair market order,” she limited the scope of government intervention to address polarization, and she was reluctant to present the kind of labor and welfare policies that need to accompany it.

Other issues also raise serious questions about the substance of the “creative economy” approach she is advocating as a new growth engine. Not least of these is the vagueness of the concept, which suggests a far-reaching, long-term task that would be almost impossible to achieve in her five-year term. Questions are also being raised already about the person she wants to appoint to the most important role in this process, Minister of Future Creation and Science nominee Kim Jeong-hoon.

 

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