The Philippine interest in the G20 summit in Seoul: a guide

The eyes and ears of the world are now on Korea for the G20 summit on Nov. 11-12 in Seoul.  What is the Philippine interest in this event?  At first glance, there is not much to indicate that the Philippines is represented, much less invited.  The president of neighboring Indonesia regularly sits at the summit.  Korea as the host country exercised its privilege of inviting Singapore, as well as Vietnam which is this year’s head of the ASEAN.   With these three ASEAN countries sitting in G20, could it be safely said that Philippine interests are well represented?  The presence of at least three ASEAN leaders both have advantages and risks,  due to the diverse characteristics of small,  free market leader Singapore,  socialist Vietnam, and big Indonesia.

Like many debt ridden, ODA dependent, developing countries, the Philippine interest in the G20 summit is to learn from Korea’s development success and failures.  Korea succeeded in its agrarian reform, massive investments in education, infrastructure, technology, and global business presence, among others.  How did Korea do it?  On the other hand, Korea is facing a low birth rate, threatening population growth — the reverse is true in the Philippines.  Most young Korean graduates want to apply in big multinational Korean companies.  There is a shortage of workers willing to work for less wages, and 3D (dirty, dangerous, difficult)  jobs – now filled by young workers from the Philippines, Vietnam, Indonesia, Bangladesh and other countries,  through an employment permit system of fixed term contracts, between 3 to 5 years.

Like the Philippines, Korea also has transparency and governance issues – the arrest of a CEO of a leading business conglomerate for maintaining a “slush fund” for bribery dominates the latest headlines.   Korea also faces equity issues:  asset and income distribution, gender, and diversity, among others.

A G2 summit of 34+ leaders?

Skeptics say that the interests of the biggest countries tend to dominate the agenda.  Thus, the event is really a G2 summit between the US and China.   There are more than 34 leaders involved, and there are no rules in the discussions.  Everything depends on the host country.

The record of past G20 summits indicate mixed results in representing issues concerning developing countries – especially the debt burden, poverty, agrarian reform, unequal terms of trade and other equity issues.  The Philippines has big population of overseas workers who send back remittances to support their families, and the economy in general.  It is important to track whether or not these issues will be on the agenda in the G20 Seoul summit, as well as any follow up, measures and results.

The Pittsburgh summit in 2009 acknowledged the global power shift and established the G-20 as the “premier forum for international economic cooperation … in an interconnected global economy to build and balance the global economy, reform the financial system, and improve the lives of the poor.”
There are some paradoxes about the G-20 summit in Korea.  It has always been a coordination meeting for the rich countries known as G7. Later, this club evolved into a G8, then a G9, then a G11.  The G-20 summits first began after the beginning of a crisis stemming from the capitalist system in the West, mainly the U.S. and Europe. The first meeting was held in 1999 in Berlin, between finance ministers, central bank governors and the IMF.

This year, however, the venue is Korea, in East Asia. Emerging countries such as China, Brazil, India and Russia may have significantly different priorities.  There are new emerging tensions in Northeast Asia.  Day by day, there are new hidden fireworks which could scuttle negotiations on sensitive issues regarding the balance of trade, currency, financial and banking regulations, and global warming.   There is indeed a hidden danger of global anarchy and loss of credibility for G20 if nothing substantial is achieved and the G2 giants (US and China) dominate the agenda.

Korea is strategically, and uniquely located between three economic giants: China, Japan and Russia.  Most important, strong political and military ties with the United States will require Korea to balance these strong geopolitical interests, face threats as well as opportunities to craft new global strategies.

Korea’s leaders are now burdened with heavier demands —  not only to listen, act as a bridge,  or as a mediator, but also be pro-active in anticipating drastic changes of attitude in the negotiations among the G20 leaders. Korea is also expected to bridge the gap between the developed – especially what used to be the G-7/G-8 countries, the emerging economies, countries still developing, and those left behind who are still recipients of massive doses of assistance and bail-outs for many decades.

The event will also highlight contradictions and gaps not only among the blocs of rich countries in the U.S. and Europe and among the emerging markets in East Asia and South America, but also with poor countries that need a voice at the discussions.

The usual crowd of both foreign and local protestors will also test the capacity, maturity and tolerance of the police in keeping order and security, while respecting the freedom of expression and assembly, as well as other democratic rights.

The Philippine interest:  learning from Korea

As a developing country, the Philippines could learn much from the “Korean development model”. Korea’s leadership of the G-20 is a chance to show that an organized culture of nationalism or love of country, commitment to continuous innovation, investments in social and physical infrastructures, human capital investments through education and training, and focused leadership, among others, are essential to overcome crises and constraints to economic development.

Korea achieved this advanced country status by mobilizing nationalism among its citizens, decisive agrarian reform, protecting key industries, creation of strong state owned enterprises, support for family owned conglomerates (chaebols), with the minimum of external interference on the path chosen by Korean leaders.

Agrarian reform in 1950 led to the distribution of 70 to 80 percent of agricultural land to small farmers at a small cost.  Land redistribution transformed the poor farmers who composed the majority of the population into small landowners, with greater incentive to raise farm productivity.  With more income, the rural population provided the basis for the development of a strong domestic economy able to purchase the products and support the emerging industrial companies.

More important, a massive investment in basic and higher education started in 1950, and provided the emerging industries with managers, scientists, engineers and other skilled workers.  Through careful and well coordinated planning, the state controlled education, training and the labor market, carefully matching the demands of emerging industries with new skilled workers, as well as other professionals, engineers and scientists.

The recognition of unions as part of industrial democracy came in the 1990s.  Steady wage increases and better working conditions as a result of tumultuous labor-management relations further boosted the purchasing power of the workers, and the middle classes.

Some experts point out that Korea developed by using a mixture of protectionist and competitive policies. Korea regulated foreign currency exchange and investment to protect key national industries and chaebols (family owned business conglomerates) in steel, electronics, cars, shipbuilding, chemicals, among others.  A number of state owned enterprises in oil, gas, transport, banking, agriculture supported industrialization.  Korea also began without strong laws on intellectual property rights.

Very few are aware of Korea’s development experience after the devastation of World War II and the Korean War, as well as the recovery from the Asian financial crisis in 1997-98. It is important for Korea to transform the development dialogue and overcome the lobby of professional beggars entrenched in international organizations who claim to speak on behalf of poor people from all over the world.  Korea could show that the way to development also requires hard work, strong institutions of transparent and democratic governance, as well as consensus.

The event is a rare teaching opportunity for other countries to learn how Korea mobilized patriotism or love of country to recover from war, low incomes and lack of jobs to achieve advanced industrialized status.

Korea’s experience should teach developing countries how to graduate from being a recipient of international assistance to being a donor. Many development policy makers are not familiar with Korea’s experience: how the state provided leadership to organize industries and markets, overcome market failures, build infrastructure, advance in science and technology, implement a decisive postwar agrarian reform, and other key features of Korea’s development.

It is also important to learn how Korea is trying to solve its current problems:  among others, maintaining peace, and even sending aid to a belligerent neighbor suspected of sinking one of its navy ships several months ago; the low birth rate which could indicate a lack of confidence among people who are expected to replenish the Korean population; and the negative consequences of too much connectiveness, such as computer game and internet addiction.  Korea is a member of the OECD, the exclusive “rich club” of countries.  Korea has a high GDP, and a leader in engineering, technology, innovation, and overall business competitiveness.  Yet, Korea has the lowest per capita income among the OECD.

With the onset of the G20 summit, greater stakes, higher decibels and a heavier tone of expectations now emanate from global leaders and stakeholders both invited and uninvited to the event.  Korea’s leaders, as well as ordinary citizens are now burdened with the act of balancing divergent global interests, as the eyes and ears of the world prepare to converge in Seoul.

All countries have a common stake in green technology, stable financial markets, and fair globalization – sufficient incentives for leaders of countries inside and outside the G-20 to be bound together by a Seoul statement in November 2010. –Maragtas S.V. Amante, Professor, Hanyang University, Korea

Maragtas S.V. Amante is a professor at the College of Economics and Business Administration,  Hanyang University Ansan. He was with the U.P. School of Labor and Industrial Relations in Diliman, Quezon City.  Email:  amantech@ymail.com