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  • Archive for January, 2013

    South Korea’s “lost generation” of youth? – 6 socio-economic challenges

    January 29th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    *(Q&A below is taken from a recent interview with a local South Korean broadcaster as of the date of this upload)
     
    1) Last year there were over 300,000 Korean college graduates, but only 18,500 jobs for them, what sort of impact is this having on the younger generation?
     
    It’s a case study where supply vastly trumps demand. So it’s a big hit economically for the younger generation trying to secure employment after graduation. This is especially impactful since typically it’s the first job after graduation that can often define a person’s career trajectory. What this statistic does not show is the “invisible” overlapping demand for the same types of jobs with the same bandwidth of companies and organizations. In Korea, there’s a singular mindset that being “successful” in terms of securing a job means working for one of the large conglomerates (Hyundai, Samsung, LG) or to become a government official (공무원). Since many young people still live with their parents until marriage or other event, this means that they are not as “economically squeezed” as compared to those seeking jobs in the US and Europe where independence is considered a relatively greater virtue.
     
    2) Due to the difficulty of securing entry-level jobs, many young South Koreans are giving up their dreams, taking low-paying temporary jobs and postponing marriage, how is this going to reshape the economy?
     
    South Korea’s youth employment challenges have led to a “lost generation” – which accounts for a sizable portion of the nation’s economy. Take the statistic that South Korea’s youth unemployment (those seeking jobs between the ages of 15-29) has more or less hovered around the 7% mark, nearly twice the number for the general population. What’s also interesting is the unique Korean cultural aspect to this equation, that many of the most qualified talent in Korea are not actively engaged in the labor markets since they are in “near constant test preparation” as a default, career in and of itself. This comes in the form of taking several years from employment to study and sit for either a company-specific or government entrance exam. As an example, the former Korean bar exam was notorious for its excessively low passage rate of 3-5%. Even successful bar exam passers had to sit for the bar three years on average. Japan has a similar “lost generation” phenomenon. In short, for contemporary South Korea, its youth will earn less, in a more volatile and changing job market, which will dramatically change South Korea’s socio-economic landscape in the near future.
     
    3) Many are unable to save up for their own house, let alone saving for retirement, how can the Korea, government continue to support an aging population which will no longer be able to support itself?
     
    Our Group has seen clear evidence that South Korea is one of the world’s fastest aging societies. Soon the demographic structure will be top heavy with senior citizens who are seeking public funds rather than contributing to them. As a result, the country will be hard pressed to figure out how to pay for such public benefits with a shrinking workforce, low fertility rates, and a super aging society. Ultimately, if no other solution is found, South Korea will simply have to go into debt (through the issuance of Korean government bonds in the open markets). But such funding scheme will only delay, not resolve, its fiscal woes.
     
    4) Students who study overseas are finding success in starting-up their own businesses abroad, is this a sustainable direction for the younger generation to follow?
     
    This would in essence mean a net outflow of South Korea’s best and brightest offshore. Many countries, including India and China, have benefitted from so-called “boomerang” talent–those who left the country to live and/or for education, but then return for one reason or another. The challenge in South Korea is that its culture is not a “risk taking” culture, rather, it’s defensively postured for secure “permanent” jobs with the largest corporations or the public sector. But having a critical threshold amount of boomerang talent could change this pivot towards a more offensively postured one that is more geared to making modern day South Korea a start up nation similar to the US and Israel (to name just a few).
     
    5) Considering South Korea’s e-commerce is the sixth largest in the world, why is the market so difficult for domestic start-ups to penetrate?
     
    The main, but not only, factor is the lack of true venture capital (VC) firms onshore in South Korea today. VCs exist in name, but in substance, the true “high risk, high reward” risk-taking, long-run spirit is still lacking. Also, a notable portion of start-up capital is sponsored (subsidized) through the government. As the former Harvard president and US Treasury Secretary, Larry Summers, once quipped, “The government makes a terrible venture capitalist.” This is because most start-up funding is based on the mindset that the invested company must go public (IPO) as soon as possible, so that the investor can be profitable in the short run. Maybe South Korea has a different interpretation of how to create a start-up nation, but our Group’s view is that the VC/angel investor must be patient and adhere to the “99 strike-outs for 1 home run” investment mindset.
     
    6) Are the economic difficulties for the younger generation, which was once the backbone of the Korean economy, likely to continue or is there hope ahead?
     
    Nobody knows for sure. But in a slow growth era, where governments are highly indebted, it looks like economic difficulties for the younger generation will continue. The one silver lining is that South Korea is highly tech-savvy, at least in terms of the products and physical landscape of Seoul. Further, its mindset, the nation’s operating system, has a chance to convert from the “Chosun Corea” mindset to the globally competitive “Global Korea” mindset, as more and more of the nation’s youth live, study, and work overseas and bring such perspectives back to their native ecosystem.
     
     

    UN Resolution Against North Korea’s Missile Launch – 6 Factors

    January 22nd, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

     
    1) China has supported the move to expand sanctions on North Korea following the rocket launch, and yet debris of the latest missile showed that many of its parts had actually come from China. Does this present a conflict for China’s position in the UN Security Council, and should there be ramifications for its involvement?
     
    More than a conflict, this issue represents China’s diplomatic dilemma. Specifically, to straddle the line between maintaining its loyalty to the DPRK–which acts as a strategic buffer zone to US military forces based in South Korea–and its more self-interested need to appear as a more neutral and responsible member of the international community, especially given the PRC’s rising economic and military recent influence.
     
    There won’t be any actions taken against the PRC for the discovered Chinese parts in North Korea’s intercontinental missile for several reasons. Namely, the parts, which include wires, sensors, and a battery voltage converter are not in violation of international agreements (specifically, the Missile Technology Control Regime), and several other parts were also allegedly imported from several European countries.
     
    2) Will China’s move against NK cause any serious diplomatic tensions, and what might have motivated their decision to back the sanctions?

    North Korea will probably understand that, given China’s rising power and position in the UN, that the PRC’s decision to “condemn” the DPRK’s recent missile and satellite launch represents the least worst strategic alternative for both the PRC and DPRK. This is because the current draft resolution merely “condemns” the North’s actions and calls for tightening of already existing sanctions, but does not call for new immediate sanctions.
     
    3) Will these expanded sanctions be enough to contain the threat o another rocket launch, or might it further aggravate the issue?
     
    The short answer is “no.” North Korea is what I refer to as a “super-sanctioned state”–one of the most sanctioned states in the world–yet it still continues to do what it does.
     
    4) How might the sanctions affect South Korean relations with Beijing, especially in the face of a new presidential office?

    The new UN resolution will probably have little effect in terms of Sino-South Korean diplomatic relations since the major states have so far generally agreed to its embedded suggested language.
     
    5) Do you think China’s support implicates a change in global dynamics as China moves to closer ties with the US?

    It does not, in my view. But the next generation of future PRC leaders may take the view–as has been speculated by several China experts–that the costs of loyalty and support of North Korea may outweigh the PRC’s self-interest of furthering its global hegemony, which in part, may be hindered if Beijing’s leadership continues to support a regime, North Korea, that is largely viewed by the international community as a dangerous outlier.
     
    6) How do you think the US views China’s changed attitude to NK which it once considered its close ally?

    As stated above, China has not changed its diplomatic stance regarding the current proposed UN resolution against North Korea. So it demonstrates that things will be more of the same at least in the short run under the leadership of Xi Xinping.
     
     

    re: North Korea and cyberattacks – 4 Factors

    January 17th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    The Q&A below is taken from a radio interview with a local South Korean broadcaster (interview date: Jan. 17 ’13).

     
    1) How come North Korea is frequently accused of targeting South Korea’s cybersphere? What have been some of the major online attacks
    so far and what?

     
     For North Korea, engaging in cyberattacks represents a greater strategic advantage compared to traditional military or paramilitary attacks using armed military personnel, bombs, and aircraft.
     
     Today, South Korea’s JoongAng Daily (JAD) newspaper concluded that the hacking of its servers was in fact linked to North Korea. This was the fifth time an alleged North Korean cyberattacks were detected, following distributed denial-of-service (DDoS) attacks on websites of government agencies and financial institutions in July 2009 and March 2011; the hacking of Nonghyup’s banking network in April 2011; and additional hacking of email accounts belonging to students at Korea University in November that year. There were also alleged cyberattacks from the DPRK targeting South Korea’s Incheon International Airport that could have potentially caused confusion with the airport’s heavy air traffic as well as a relatively recent cyberattack on the GPS systems many Seoulites depend upon to navigate Seoul’s busy and often complicated street ways. More concerning, cyberattacks were also aimed at the Blue House and National Assembly. One estimate by the Hyundai Research Institute puts the loss value for FY 2009 alone at $33.7-50.5 million.
     
    2) How big of a threat is it to be attacked by North Korean hackers, assuming that their internet technology is far behind that of South Korea’s? Describe North Korea’s internet culture.
     
    No one really knows for sure, but as far as we can tell, there’s not much internet technology to speak of in North Korea, apart from a couple of universities, which are most likely closely monitored by the North Korean government. North Korea, much like South Korea, actively recruits top students to become part of the governments’s military cybercommand units. So it seems, in a sense, that all those hours of video gaming could actually pay off, since some overlapping skill sets exist.
     
    3) Cyberattacks are perceived by some to be less harmful than conventional military attacks. So should the public be fearful?
     
    Yes, since cyberattacks can often inflict just as much damage as attacks using “kinetic” weapons such as missiles, bombs, and bullets. For instance, a cyberattack could be aimed at an electric grid, which could then cut off the power source for hospitals in a city or country, wreaking havoc on the system.
     
    4) How does the global community or the international law under the UN Charter, specifically, properly address such cases of cyberattacks and cyberwar?
     
    As of now, little legal infrastructure exists to reflect the burgeoning capabilities of cyberattacks and cyberwar.
     
    Article 51 of the UN Charter, originally drafted right around the end of WWII, states that a state has the right to collective self-defense if “an armed attack occurs.” But this language was written when PCs and the internet did not exist. So the question becomes: Does a cyberattack inflicting military and/or non-military personnel constitute an “armed attack” under Article 51 of the UN Charter? If yes, then a state can in theory preemptively attack another state for purposes of collective self-defense, as was the case in the Middle East in the past when one state pre-emptively attacked another state
    s nuclear weapons production facilities, claiming self-defense.
     
    Expect more cyberattacks in the Korean peninsula for 2013–leading to greater potential economic and non-economic losses – it is the future of warfare in the 21st century, for better or worse.