The 3rd Korea Foundation Global Seminar was held on February 9-12 at the Sheraton Grande Walkerhill Hotel in Seoul, under the theme of “Reforming Global Economic Governance: Concerted Efforts for Cooperation.” A total of 54 economic/development specialists from 19 countries participated in the four-day forum to discuss key global issues, including the efforts to correct trade imbalances and to promote green growth and effective global governance systems.

Gypsy Cultural Influences

The KF seminar was jointly hosted by the Institute of Economic Research of Korea University, with support from the Korea Development Institute (KDI). It was divided into four panels, each assigned to debate a main subject: “Designing a New Regulatory Framework for Global Balance,” “Global Governance for Green Growth,” “Seoul Development Consensus: Assisting Developing Countries to Attain Sustainable Growth,” and “Beyond the Global Financial Crisis: The Role of the G20.”

Apart from the panels, four working groups were formed to propose practical solutions and recommend policy alternatives for various problems of the world economy that have resulted from the 2008 global financial crisis. Also, a roundtable discussion, presided over by Professor Lee Hong-shik of Korea University, was participated by Dr. Colin Bradford, senior fellow at the Brookings Institution, Professor Feng Xingyuan of the Chinese Academy of Social Sciences, Professor Pedro Dallari, deputy director of the Institute of International Relations at the University of Sao Paulo, and Professor Fernando Fernandez at IE Business School in Madrid.

Euro Zone Crisis and Global Instability

Regarding how long the European financial crisis would continue to cast dark clouds over the global economy, Dr. Bradford remarked: “It depends on how soon the creditors and debtors will stop their chicken game. While the United States and China are making more demands in return for aid, for fear of moral hazard, debtor nations are rejecting such demands for the reason of domestic political unrest. If the brinkmanship continues, the Euro zone crisis could jeopardize the global economy more seriously than the 2008 Lehman Brothers bankruptcy.”

Professor Feng offered an explanation about China’s proposal for the European Union to first grant “market economy” status to China in order to receive Chinese aid. He further noted that the EU has d the principle of market economy status for anti-dumping regulation against former socialist countries and unfairly treated communist-bloc countries, thereby casting a negative outlook on China’s support for Europe.

As for the suggestion that Greece and Italy should be excluded from eurozone to expedite its recovery, Professor Fernandez noted: “As a founding member of the European Economic Community (EEC), Italy also played a role in founding the EU. To overcome the eurozone crisis in a short period of time, they may get support from China and the IMF, but for the eurozone to recover fundamentally, every euro member should hand over more sovereignty to the EU.”

Efficient Global Governance

In regard to the so-called BRIC (Brazil, Russia, India and China) countries that are experiencing relatively favorable economic conditions, Professor Dallari pointed out: “Now, the era has gone when a single country’s financial policy could resolve crisis. So, the newly emerging economies like Brazil, Korea, and Turkey should no longer be excluded from the global economic governance system led by the United States and Europe.”

As for the U.S. economic indicators showing signs of recovery, Dr. Bradford predicted that the situation would gradually improve this year if there are no external risk factors, such as European crisis. He expected the U.S. GDP growth rate to reach 3-4 percent this year, unless external variables aggravate the situation.
Commenting on the possibility of the Chinese economy realizing a soft landing, Professor Feng stated: “It depends on the real estate market. China has already experienced a bubble and its government is currently controlling the property market. Fortunately, the government policy has been effective and I believe the policy for bubble management will also succeed. The only remaining challenge is how to keep the private sector from contracting during the process of removing bubbles from the market.”

Lee Sang-deok and An Byeong-jun
Staff Reporters, The Maeil Business Newspaper