South Korea may be hitting a macro-level growth “bamboo ceiling.”
Socio-Economic Capital Markets (SECM) have the real potential to create a breakout “social start-up nation” economic platform as a viable “creative economy” ecosystem for South Korea to reach greater growth in the twenty-first century.
Q1: How to boost South Korea’s post-subprime financial crisis economy?
Q2:How to create a more balanced economic ecosystem–less dependent on manufacturing and more focused on creativity and innovation while closing the gap between the haves and have-nots–to restructure one of Asia’s largest global economy that is still highly dependent on exports.
A: Socio-Economic Capital Markets (“SECM” as a Growth Model for South Korea’s “Second Miracle on the Han River”)
➢ Narrowing income disparity
➢ Economic growth through social startup SMEs
➢ Inclusion of disadvantaged/underrepresented groups
➢ Fostering creative economy –second pillar to Korea’s export dominant chaebols
What are Socio-Economic Capital Markets (SECM)?
(1) SSU-PPPs (Social Start-Up Enterprises and Co-op PPPs);
(2) SIB-PPP (Social Impact Bond PPPs);
(3) SIF-PPP (Social Investment Fund PPPs);
(4) SCMX-PPP (Socio-Capital Market Exchange PPPs); (new concept in academic literature; asiapacificglobal.com, Jasper Kim, April 23, 2014)
Why Socio-Economic Capital Markets (SECM)?
(a) The combination of traditional profit-driven business model, social project and Impact Investors
(b) Investing into social projects by creating businesses that are both profitable AND have a positive social impact
This blog will be one in a series, in which each of the four SECM social start-up factors will be analyzed in greater detail.
South Korean President Park Geun Hye’s agenda for the economy’s second miracle on the Han River is under the title of “the plan for Creative Economy-Measures to Create the Ecosystem for Creative Economy.”
But what does “creative economy” mean exactly? Now that the Korean president has had time to adjust and initiate her policies, we begin to see what the policy mantra of “creative economy” means as a matter of policy:
The post-Great Recession global economy has witnessed a shift in focus of value creation to the “innovative technology and creative idea (creative economy)” away from labor and capital, reflecting the 20th century industrial economic ecosystem–towards knowledge and information technology, reflecting a 21st century economic ecosystem and knowledge-based economy.
The “creative economy” policy hopes to leverage the country’s cutting-edge technology, culture, and art. The policy’s focus has been placed on supporting and expanding small-to-medium businesses that can lead to job creation up the value chain. South Korea also mapped out the strategy (creative economy plan) for a unique and value-added creative economy that fully leverages its comparative advantage in its ICT capabilities towards creativity-driven growth, moving beyond the catch-up growth strategy based on imitation and application. The creative economy economic policy initiative presents the vision and objectives of the so-called creative economy. Putting together and integrating the tasks of several government ministries, related tasks have been identified jointly by such respective government ministries since late March 2013. The opinions of the various ministries were accepted and reflected in the administration’s creative economy plan.
Creative Economy – Policy Summary:
◎ Presentation of 3 major goals, 6 strategies
The creative economy plan envisions three goals to create an economic ecosystem for fostering a creative economy in a new era of hope and well-being of the general public:
▲ Creation of new jobs and market through creativity and innovation
▲ Strengthening the global leadership of the nation’s creative economy with other global economies
▲ Respecting creativity and promoting creativity within society
The 6 strategies are as follows:
▲ Creating an economic ecosystem where creativity is fairly rewarded where business startups are easier (Strategy 1)
▲ Promoting venture capital firms and small-to-medium businesses playing a leading role in the creative economy and make inroads into global markets (strategy 2)
▲ Creating the growth engine for pioneering new industry and markets (strategy 3)
▲ Fostering the global creative human capital talent who have the vision and wherewithal to become a vital part of the creative economy (strategy 4)
▲ Expanding the nation’s science technology and ICT innovation capabilities, which lay the foundation for the creative economy (strategy 5)
▲ Initiating the creative economic culture that promotes the involvement of both government and people (strategy 6)
President Park Geun-hye’s first post-election policy speech this morning focused on North Korea. In effect, her North Korean policy will be one of “semi-Sunshine Policy,” or put another way, “Sunshine Policy lite.” That is, her administration will not completely shun the North, nor will it completely try to embrace the North. Rather, Park’s policy will be one of moderation, most likely with a moderate left pivot. The spirit of such policy will be economic aid and other incentives in a “something for something” quid pro quo manner, rather than “something for nothing” transactions in the form of purely ceremonial and costly summit meetings. The Park administration believes the Sunshine Policy was relatively ineffective in bringing about sustainable positive results, especially in light of the need to boost South Korea’s own economy and people in a post-subprime crisis recovery period.
2. Economic Policies and Impact:
President Park Geun-hye’s economic policies will focus on widening the country’s “social safety net” while rolling out policies related to “economic democratization.” Regarding the social safety net issue, this will include such policy platforms as increasing job security, expanding affordable housing options, boosting job security (especially for non-permanent contract employees), and debt forgiveness. Regarding economic democratization issues, this will include working “with” (rather than against) the nation’s large family-owned conglomerates–known as “chaebol”–relating to cross-share holdings and forging greater cooperation with SMEs. Thus, shareholders of such firms as Samsung, LG, SK, and Hyundai, should be relatively relieved with Park’s election, rather than Moon’s, given the more friendly (or at the very least, relatively less hostile) policy stance towards the chaebol.
At the same time, Park Geun-hye understands that the Korean economy is in essence a “one pillar” economy that is highly (some would say, overly-) dependent on exports. In total, 48% of South Korea’s GDP depends on its exports (compared to 28% and 18% for China and Japan, respectively). The proffered policy solution is the fostering of a second economic pillar in the form of a “creative economy”–basically the nation’s IT and biotech industries–that may better cater to South Korea’s innate competitive advantages in such areas. This will also help create jobs and boost productivity and production by SMEs, which account for up to 94% of South Korea’s total labor force (compared to just 6% by the largest chaebol).
3. The Female Factor:
Will Park’s gender as South Korea’s first female president play a key role? The answer is yes and no. Yes, in terms of creating a demonstration effect for half of the nation’s population. This is especially notable given that South Korea has one of the lowest female workforce participation rates among OECD member countries. In essence, although many Korean women begin to work in their 20s, a disproportionately large number of women drop out of the workforce, many due to societal pressure to get married and raise, not just bear, children, to get the family’s children into “top schools” (stemming in part from traditional Confucian/Korean values and norms). This links to many other related issues, such as the lack of day care facilities and hyper competition within the country’s educational landscape (highly dependent on attending private learning institutes outside of normal school hours).
No, in the sense that president-elect Park never made her gender–being a woman–a primary campaign issue. In part, this is due to the fact that Park could not have brought the “female factor” issue to the forefront since most of her suppot base comes from “conservative” voters, e.g., older Korean males. Thus, South Korea is entering into a “post-patriarchal” political era, in which one’s gender to assume the highest office in the land–the presidency and the Blue House–does not have to be linked to gender, similar to what was seen with former British prime minister Margaret Thatcher (who was cited as a benchmark by candidate Park) and current German Chancellor Angela Merkel.