“The president’s drive to create new jobs started from a humble realization that we need to do something radically new,” says Cho Won-dong, the president’s senior secretary for economic affairs, discussing Park’s strategy in his office near the Blue House.
Min, for one, is pumped. “President Park Geun-hye has decided ‘creativity’ and ‘innovation’ are the new key words,” the 39-year-old says. “If we grow the way Koreans love to grow, there is no reason we can’t be bigger than Silicon Valley.”
Dual forces lend urgency to Park’s mission: South Korea’s aging population and falling birth rate, and the economic dynamics of its neighbors.
While much of the world assumes that the South’s most vexing challenge is North Korea’s volatile new leader, Kim Jong Un, South Koreans worry more about finding good jobs and staying economically competitive with the real giant to the north — China, the No. 2 global economy. They are also looking anxiously at Japan, the country that China eclipsed, as Prime Minister Shinzo Abe drives down the yen.
Sixty years after the armistice that formally ended hostilities between the two halves of the Korean peninsula, only 15 percent of Southerners said North Korea was a priority, a February survey by Seoul’s Asan Institute for Policy Studies found. Their top concerns were reducing household debt, in which South Korea ranks eighth in the world when measured against disposable income; lowering the 8.4 percent youth jobless rate; and remaining in the middle class.
Women, who are paid 39 percent less than men for the same job, are hoping Park will narrow an income gap that was the highest among 34 Organization for Economic Cooperation and Development members.
Park says the ticket to expansion is a creative economy underpinned by entrepreneurs and venture capitalists. “Growth led by a few big firms and the government is bound to be limited,” she has told policymakers.
While Park is only now unrolling the details, investors like what they have seen.
“President Park’s goals are very good and, if achieved, will take Korea to the next stage,” says Mark Mobius, executive chairman of Templeton Emerging Markets Group. Mobius oversees more than $50 billion in emerging-markets equities, about 4 percent of them South Korean stocks.
Park has her work cut out for her. The boom that has allowed people to splurge on luxuries is ebbing. One immediate challenge is a slowdown in China, which has become the largest buyer of South Korean exports. Longer term, China, with a research and development workforce of 2.3 million — seven times that of South Korea’s — looms as a formidable competitor.