importance. firstly, efforts for financial structural reform should be stepped up more than ever. it is true that korean financial markets have developed greatly in terms of quality and quantity thanks to its drive for structural adjustment since the 1997 financial crisis. more recently, however, some new factors making for instability in financial markets have emerged. they include the worsening of management status in some credit card companies and investment trust companies, the rise in the overdue ratio on household loans, and the increase in number of individuals on the bank ’ s credit blacklist. worse still, they act as a hindrance to economic growth, causing the shrinkage of consumer and business confidence. therefore, it is important to resolve the problems posed by these destabilizing factors at an early stage through more intensive financial reform so that the korean economy can enjoy continued growth. secondly, the problem of high costs, which is deeply rooted in all areas of korean society, should be solved. the major high costs i would identify are the high housing cost caused by the steep rise in property prices, the high education cost caused by the fevered atmosphere of private tutoring institutes, and the high transportation cost caused by urban traffic congestion. these high costs consequently lead to high wages. though the causes of these high social costs are varied and complicated, we can say the main factor lies in the development imbalance between the regions. for this reason, it is important to promote balanced development between the regions to solve the problems of these high costs. and in particular, it is highly necessary to devise countermeasures for easing the concentration of the population on seoul and notably the kangnam area. lastly, but not least, the problem of low social efficiency should be tackled. typical examples of this low efficiency are immature labor - management relations, the influence of vested interest groups, the unproductive political structure, and the anti - globalization sentiment. these phenomena mainly arise from the underdevelopment of the structure of popular consciousness. therefore, korea should overcome them by reinforcing social leadership and steady efforts for the reform of consciousness. that is, korea should shift in labor - management relations from a mind - set oriented toward conflict and confrontation to one focused on understanding and cooperation. and it should shift from a wearisome and unproductive political process to one that is constructive and productive, and from closed mental attitudes to outward - oriented ways of thinking. the importance of north - south economic cooperation on korean peninsula so far, i have outlined

three paths to enhance the korean economy ’ s competitiveness. however, they are all medium - or long - term tasks that will need a long time to bring to fruition. so then, what can provide a short - term breakthrough for strengthening competitiveness? the answer is to promote north - south economic cooperation on the korean peninsula. north - south economic cooperation could open up a new path toward absorbing the impact on the korean economy of its high wage costs, the dynamic rise of the chinese economy, and the revolution of openness. north korea offers very low production costs, particularly low - cost labor, and there is also the possibility of direct inland transport between the north and the south. it should also be relatively unproblematic for south korea companies to locate operations there because of the shared language and historical traditions. in addition, people in the two halves of korean peninsula have the sense of belonging to one and the same nation. on the basis of these advantageous conditions, the combination of south korean capital and technology and north korean work force can lead to stronger competitiveness in the high - end information technology sector as well as, of course, the more labor intensive sectors. needless to say, the setting - up of brisk economic cooperation between the north and the south is also very important in terms of preparations for reunification. at the present time, north korea is in great need of basic necessities because of the backwardness of its industrial facilities. if reunification were to take place without adequate preparations under these circumstances, huge number of north korean people would flow into the south looking for work. this could turn into a national disaster. for the timely prevention of such a situation, we need to narrow the economic gap between the two koreas by stepping up investment in north korea. in this respect, a great deal depends on whether or not the industrial complex at kaesong, the southernmost city of north korea, proves a success. with the ground - breaking ceremony on june 30, the construction of the first stage of the kaesong industrial complex is underway with a ticket of some 180 million dollars ( 200 billion won ). kaesong is a very important staging post on the road between seoul and pyongyang, and it is located only some 60 km north of seoul. and it is understood that within the factory complex, the minimum wage will be only 57 dollars and 50 cents per month. the rate of tax will be very low. there are also guarantees that firms will have