Posted by: Ihlwan Moon on February 25, 2008
Lee Myung Bak, a business icon of South Korea’s growth-at-all-costs era in the 1970s and ’80s, took office as the country’s new president on Feb. 25, vowing to lift the economy into the world’s top seven from the current No. 13 in a decade. It’s good to hear his promises to dismantle the bureaucracy slowing business processes, slash corporate tax rates, and introduce steps to attract foreign investment.
But Lee’s approach to please already-established business groups won’t be enough to overcome Korea’s next round of challenges. To really achieve the kind of flexible and innovative economy Korea needs, Lee will have to lead a wholesale shift in business practices, abandoning the country’s somewhat xenophobic cultural mindset and adopting a far greater willingness to tolerate job losses and other short-term pains.
Lee’s prominent career as a chief executive of the construction arm of the giant Hyundai conglomerate gave him skills to get results quickly. He has won “the Bulldozer” nickname, thanks to his go-getting style of pushing through big projects on time. His proposal to make the life of big business groups easy will probably lead to some quick results.
What Korea now needs, however, is a change in the way young students are educated and managers are carrying out business duties. Korean kids may do well when it comes to international standardized tests but few think its university system produces enough of the kind of problem-solving and risk-taking graduates. Younger Korean managers are rarely empowered to challenge the established wisdom of senior management at the chaebol.
Overhauling the Korean economic model is a crucial choice the Koreans have to make in years ahead. Embracing a different perspective or new ideas won’t be achieved by railroading through policy agenda. Changing all this will require a sustained and sometimes economically painful transition.