Bon Ho Koo was a Distinguished Visiting Scholar at the International Institute in Winter 1995. Professor Koo is the former President of the Korea Development Institute, the principal economic think-tank for the Korean government, and is currently Professor of Economics at Hanyang University. At the University of Michigan, he conducted a seminar offered through the International Institute, in conjunction with the Business School and the Political Science Department. This article is an excerpt from Professor Koo's talk to the local Korean community, sponsored by the Korean Studies Program. By way of indication of this dramatic change, Korea will become a member of the Organisation for Economic Cooperation and Development by 1996.
Success solves old problems, but it brings new challenges as well.
But Korea faces many new challenges, such as strong external pressures to completely open all sectors of the economy, internal pressures to be more equitable, high expectations for economic welfare, and challenges from the new age of globalization. Despite Korea's economic success, most of its agriculture and many small-sized firms in the service sector are still backward and internationally uncompetitive. In these domains, accordingly, there is strong opposition to further opening of the domestic market in these sectors. The government, however, advised by technical experts and supported by most businesses, has launched rigorous programs for opening the economy, including a planned reduction of tariffs on manufactured goods to the level of the advanced economies by 1998, and a complete elimination of import restrictions in manufacturing. In the service sector, rigorous financial reforms and liberalization of interest-rate policies, foreign exchanges, and capital markets will be carried out.