computers, telecommunications, steel, chemicals and machinery, which are midway on the technological development ladder. as an example, about two years ago when i went to china, you could hardly see a locally produced mobile phone. handsets imported from korea were a big hit on the streets at that time. today, however, china has already emerged as the world ’ s largest producer and exporter of mobile phones. korea ’ s policy options in dealing with the hollowing - out the hollowing - out of korean manufacturing is taking place so fast and across such a wide spectrum that our firms and government have little time to spare. it has become a critical challenge to the korean economy. will the hollowing - out of manufacturing derail the korean economy, or can we take advantage of it like the u. s. and japan by turning it into an opportunity for a further quantum leap? the answer will depend upon how the korean people react. to embrace this challenge and exploit it as an opportunity to press forward the development of the korean economy, the korean people and its government should commit themselves to four major endeavors. firstly, we must set out to constantly strengthen economic cooperation between south and north on the korean peninsula. this will give us some short - term relief by softening the blow represented by the hollowing - out of manufacturing. south korean firms should relocate their labor - intensive industrial facilities not just in the kaesung industrial complex, which is now being constructed, but throughout the whole of north korea. this will breathe new life into korean enterprises whose competitiveness is now on the wane, and smes in particular. within the kaesung industrial complex, wage levels will be fifty - seven and a half dollars a month, which is lower than those in china. land prices too are very reasonable, and the highest level of corporate tax rate will be only 14 %. so there is a very good case for korean firms to take full advantage of these points by relocating production to north korea rather than to china or vietnam. brisk economic cooperation between north and south is also very important in terms of preparing for national reunification. now many of north korea ’ s industrial facilities are in a decrepit state. if they were to be exposed to the blast of open competition, there would be no option other than to scrap them entirely. research institutes tell us that if reunification were to take place abruptly under these circumstances, with the coming down of the walls dividing the peninsula, several million north koreans might be forced

of society ’ s high costs and low efficiency can and will be solved through educational renewal, the reconfiguration of politics, cooperation between labor and management, and restraint from collective egotism. along with this, globalization will be encouraged through moderation of the mood of anti - globalization and animosity to openness that still lingers on in some areas of korean society. i am convinced that once korea has traversed the hollowing - out of manufacturing, it will move on to become a much more mature advanced society. let us suppose that it is indeed able to maintain stable growth at the 5 % level annually, by turning the present changes in its environment into opportunities for enlarging its growth potential. then, about ten years later, the country could look to the ‘ new miracle of the han river ’, achieving per capita income of 30, 000 dollars and joining the ranks of the ten largest economies worldwide. mr. president, distinguished members of the asia society, ladies and gentlemen, drawing my remarks to a close, i should like to give my deep thanks to all of you here today for your keen interest in the korean economy. it is my great hope that as true friends of korea you will not hesitate to give your suggestions and advice about the best way forward for the korean economy. thank you for listening so attentively.