EXPORT POLICY DIRECTIONS FOR POST-FINANCIAL CRISIS ERA

Abstract

Since November 1997 when the financial crisis erupted in Korea, the government has recognized and emphasized the importance of export enhancement as one of the most basic solution to the current economic turmoil. However, in 1998 exports recorded a 2.2% decline due mainly to the decreased world demand caused by the economic turmoil in Asia. The analysis of this disappointing export performance reveals various limitations of Korea"s export structure especially in terms of its concentrated product mix and overall low competitiveness. The export-led economic development strategy adopted by Korea since the 1960s was implemented on the basis of close government-business relationship. Powerful and interventionist government led the economy to grow at accelerated pace through various industrial policy measures. Businesses, in tum, failed to acquire the needed competitiveness. As a result, despite the remarkable growth of Korean export over the years, it has also become uncompetitive in the world market. In formulating trade policy, the government must break away from the past practices and adopt a drastically different position. Beginning with the elimination all regulatory barriers that are preventing Korea"s competitive products to be exported abroad, the policy priority should be given to create an environment under which domestic industries can develop into world-class manufacturers. The businesses, on the other hand, must make an effort to identify changing world market environment and work to enhance their genuine competitiveness