South Korea and Taiwan are entering a critical phase in their historical quest to join the ranks of advanced, developed countries. Their similar paths of socio-politico-economic development since the end of World War II have transformed these two nations from impoverished agrarian to advanced industrial economies, and from authoritarian states to democracies.
While their successful modernization has become a model for other Asian countries, their very success has now led to common, looming challenges.
They are faced with the difficult tasks of restructuring their economy to sustain economic growth, strengthening the social welfare system and improving democratic governance. They are also confronted with the long-term challenges of an increasingly aging and shrinking population, as well as growing ethnic and cultural diversity.
Unless the two countries can constructively tackle these problems head-on, the social consensus that supported their rapid development is likely to break down amid an increasingly disillusioned and discontented public.
In response to these structural changes, South Korean President Park Geun-hye and president-elect Tsai Ing-wen (蔡英文) have come up with very similar policy agenda for the comprehensive reform of their countries.
As a result, their shared policy perspectives have created a timely opportunity to engage in wide-ranging cooperation to overcome the common structural problems that threaten the two countries’ development. In fact, their shared values and interests, as well as history of impressive achievement under adverse circumstances, make them natural partners in this endeavor.
The most daunting challenge the two leaders have to tackle is the revitalization of their economies. Their top priority is how to sustain growth that is being constrained by their maturing economies.
With the era of rapid growth having come to an end, their economies are suffering from stagnant GDP and wage growth, which in turn are contributing to growing youth unemployment and economic inequality. While the industrial sector has been the primary engine of growth during an earlier phase of development, it can no longer provide sufficient employment to keep the economy growing.
To create an ever-increasing number of highly skilled, well-paying jobs, they must not only diversify their economic structure by creating a more competitive service sector, but also develop new growth engines through innovation and creativity, and expand their trade relations and inbound investment.
In response to widespread public dissatisfaction with the worsening economic conditions, the two leaders have come up with comprehensive plans — Park’s Creative Economy and Tsai’s New Model for Economic Development — to revive growth and employment.
The two plans converge on the importance of knowledge and innovation in developing new industries and technologies into commercially viable products and services to drive the next-generation economy.
Creating new growth engines is where the two countries can create the greatest synergy by effectively combining their strengths through strategic cooperation.
Both countries have a highly skilled and educated workforce and a well-developed science and technology infrastructure. By combining their resources and expertise to co-invest and co-develop “green” technology, biotechnology, the Internet of Things, smart machines including robots, and other emerging technologies through various government and private industry partnerships, they can create new, highly profitable industries while minimizing the cost, time and risks involved in starting new business ventures.
They can also create linkages between their high-tech start-ups to jointly develop and commercialize creative ideas in the information and communications technology-related industries.
Moreover, they can foster entrepreneurship and talent among their young people by bringing them together to develop creative content, such as TV dramas and entertainment programs, movies, popular music, Webtoons and computer games, as well as beauty and fashion products for overseas markets.
The economic impact of the global spread of Korean popular culture known as Hallyu has led the South Korean government to support the culture industry as a new growth engine.
Through opening and sharing, connecting and co-developing new value-added businesses, Taiwan and South Korea can create a transnational “Silicon Valley” in East Asia.
Given the emphasis of the two plans on the role of small and medium-sized enterprises (SMEs) in powering economic growth, the two governments can also encourage their SMEs to cooperate to increase their competitiveness in the global market.
South Korea can learn from the success of globally competitive, export-oriented Taiwan SMEs that have significantly contributed to its rapid economic growth.
Another area where the two countries with extensive experience and knowledge of foreign markets can create synergy is co-investing in and co-developing new markets for their innovative products in emerging economies.
Another major challenge they face is, as their societies continue to evolve and mature, their governments are increasingly subject to public pressure to find solutions to pressing problems that are often divisive and complex in nature. They are faced with growing public demand for improved governance, expansion of the social welfare system, and creating a more just and equitable society.
In formulating policies to deal with these issues, policy experts, academics and civil society representatives from the two countries can share their perspectives and ideas on how to carry out political reform to make the government more representative, accountable, transparent and participatory; provide for elderly care, childcare and women’s employment; and tackle the problems of educational reform, rising public debt and housing prices, pension reform and growing economic inequality.
They can also share views on how to address the long-term problems of a rapidly aging and shrinking population and managing the emergence of a multicultural society. The exchange of ideas and perspectives, as well as policy experience, would benefit the two countries by deepening their understanding of the issues and their policy options.
For too long, South Korea and Taiwan have ignored each other and seen each other only as economic rivals engaged in a zero-sum game. It is high time for these two countries, which are facing similar challenges, to combine their strengths using a win-win strategy to forge a brighter economic future and achieve their long-sought goal of becoming advanced, developed countries.
Steven Kim is a visiting scholar at National Chengchi University’s Graduate Institute of East Asian Studies.
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