창작과 비평

Meredith Woo-Cumings
The University of Michigan / April 21, 2003

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To every stage of economic growth there is a notion that takes hold, which has a distinct geographic expression. When the countries in East Asia were "taking-off," on the wings of an unlimited supply of cheap labor that churned out low end products for the rest of the world, the favored idea for spatial organizing was "special export zones," or "special economic zones." Lodged inside these special economic zones were the Dickensian industrial mills, which hummed without stop to meet the demands of the market in faraway places, and which were governed by rules and regulations that bore little relation to those prevailing elsewhere in the country. These zones and the national economies that housed them formed prophylactic realms, to prevent the mixing of the worlds that were thought best kept apart: a domestic society that was often repressive and protectionist, and the free wheeling special zones which were often more laissez faire than might be found almost anywhere else in the liberal world economy. This type of spatial mode served Korea well in the early stages of industrial development-its best manifestation being the Masan Export Zone-and we see it replayed elsewhere in developing (and often nominally socialist) East Asia.
Today, the new rage is the idea of the "hub economy." As East Asia-or more precisely Northeast Asia-moves from manufacturing-oriented to service-oriented economies, and their capital and commodities markets become fully liberalized, the notion of "hub" has replaced "special economic zone" as the leading mode of spatial organization. From Hong Kong, Singapore, China, Taiwan, Japan and Korea, everyone wants big hub economies on their soil, and preferably in big clusters. Thus, one would end up with a cluster of financial, transport, and logistics hubs, all rolled into a huge regional complex of global business. Without exception, these hubs would serve as some kind of a "gateway" to various parts of the Asia-Pacific. "Hub" is to the transnational economy what "special economic zones" used to be for national economies.
The fact that the hub idea is a generic one-the governments of the area were probably busy lifting ideas from each other's long term visions and plans-poses a number of questions. The first obvious question is whether this model of the economic hub, which makes a great deal of sense in the context of the highly cosmopolitan cities like Hong Kong, Shanghai and Singapore, is likely to work for the areas around Seoul. Building a state-of-the art physical infrastructure for an economic hub is a problem, for instance, but it is also one that is most easily overcome. What is harder to overcome, especially in one generation, is the relative absence of financial resources (in the form of huge institutional investor presence and a world-class stock market), the relative paucity of top talent in law, accounting, and forecasting (in comparison to other hub economies) -and more intractably, the missing culture of cosmopolitanism. But none of this is new, of course. The policy makers in Korea are well aware of the Johnny-come-lately quality in the whole "hub economy" plan. But with determination, careful planning and financial resources, and a big dose of creativity, the same policy makers hope to overcome Korea's economic and cultural handicap, just as they have done in industrializing Korea in the past forty years.
If the hub economy were in principle do-able, the next logical question would be just how many financial/transport/logistics hubs can be accommodated in the Northeastern corner of the western coast of Pacific, and what comparative advantage Korea might have in this race to be Northeast Asia's economic hub. The answer to this question depends, of course, on China's growth prospect. If China's rapid economic growth stays on track, with coastal China providing the engine of growth for the vast hinterland, then perhaps there will be plenty of room for several motley gateways to China, including those in Korea. The Chinese are fond of saying that they like having many doors to their houses. Korea can be one of the many doors, along with Hong Kong and Shanghai, to the vast house comprising what is known as greater China. It is quite possible that this is what the future has in store for Korea, an eastern gate to the Chinese sphere of economic influence, and it is not a role historically unfamiliar to Korea. But we will have more to say about this later.
In this paper, I want to go back to basics and ask, what does it really mean for Korea to be a hub economy; and furthermore whether Korea should in fact strive to nurture the kind of hub economies that the Chinese in Shanghai and Hong Kong and overseas Chinese in Singapore envision their cities to become. In other words, before Korea buys the notion of the hub economy lock stock and barrel, there ought to be a real public debate because the "hub economy" implies nothing short of massive social engineering, with the intent to bring about a profound shift in economic and cultural landscape of the country. Fortunately these pages in Ch'angbi provide a useful step in that direction.
A social and economic vision like the "hub economy" is necessarily based on a nation's collective self-identity. It is a projection into the future of what a nation imagines itself to be, and what world it wants to be part of. The larger vision of the financial/transportation/logistics hub for Hong Kong, for instance, is predicated on its desire to be more "Chinese"-and this, despite Hong Kong's bona fides as a cosmopolitan city. Hong Kong is famously comfortable as commercial-to-the-marrow-of-its-bones entrepot, a legacy of a century of British rule and a half-century of political sequestration from the People's Republic of China. Hong Kong can thus "afford" to be Chinese today, and thus a perfect hub to bring the world to China. Shanghai is the reverse image of Hong Kong. Shanghai's bona fides as a Chinese city were earned through pain and repression, to keep in check and ultimately extinguish its free wheeling capitalist ways. Having put up with half century of communist smothering, it has earned its right to reclaim itself as the cosmopolitan city it had always imagined itself to be. Singapore also is a classic entrepot city which thrived on maritime trade, but since its independence from the UK it has been careful to nurture its multiethnic identity, even if it has a decided Chinese tilt. Lee Kwan Yew's vaunted "Asian values" was a crafty attempt to give order and discipline to what is essentially another Chinese variant of cosmopolitanism.
In other words, Hong Kong, Shanghai and Singapore are all essentially what used to be called "comprador" cities, hanging like jewels on the neck of China. (Kaoshung in Taiwan, as a transportation hub, may be seen as another, if lesser, comprador city to China, but given the politics one can only say it sotto voce.) These cities are securely sandwiched between China and the world and are happy to be part of greater China. Being a comprador is their blood and part of their identities, it is their telos, and they can easily build on this past to project a future for themselves.
What, on the other hand, is the Korean telos, if there is indeed such a thing? Henry James once averred that it was a complex fate to be American-something, I suppose, that can be said about any nationality-but to be Korean at this moment in history is a decidedly vexing affair. Korea is a country that is hobbled by national division, which makes it difficult to project a future for itself. It was one thing as a divided country to embark on a manufacturing-based industrialization in the context of a relatively closed domestic economy, but quite another to stake its future as a transit point for financial capital and transnational cargo. A divided country can reach out to the world, but the world is less likely to reach in to the divided country, especially if the division is fraught with tension and danger. National division need not have interfered with the mad rush to industrialize-and perhaps even goaded the country toward massive economic mobilization in the context of the Cold war-but it presents itself now as the main stumbling block in crafting a future for Korea in the 21st century.
Speaking of the social and economic prospects for Germany, Karl Marx once famously remarked that England held for Germany the mirror of its future. When Korea stared into its mirror of the future, what image does it see? I will present in the remainder of the paper three distinct but interconnected possibilities for Korea's future, as suggested by the debate on the "hub economy." I will call them the three mirrors for Korea's future, and lay out the political economy logic behind each of them.

Global Logic, International Identity

Normally the economy of the "hub" is replete with three spokes-financial, transport and logistics-and it is so with the Chinese port cities discussed earlier. In the Korean instance, however, the financial spoke is decidedly weak, to the point one wonders whether it is worth including a global financial center in the design for a Korean hub. Yet, a financial center is precisely the stuff the dreams of a global Korea are made of. It is what makes an ordinary city into a global city, and what stamps its denizens as suave, worldly, cosmopolitan, and rich. Build as many container ports and air terminals as one wishes, they still do not add up to a global city; and without at least one global city, you can't have a global country.
The new global network of financial centers is decidedly different from the old. Instead of duplicate national centers of finance with scattered offshore banking centers, the new network is a lean system, with commanding heights in New York and London. New York and London are repositories of vast financial resources and human talent, and thus irreplaceable as financial centers. Below these commanding heights there are a handful of strategic cities in which multinational financial firms can set up services, and then there are also other cities that can play "gateway" roles, monitoring capital flows or issuing bonds. One might visualize it like this. Below the command heights, there might be a string of strategic cities like Frankfurt as the capital of the euro zone; Hong Kong as the link between China and the international capital markets; Tokyo as the reservoir of the world's largest assets in bonds, savings and pensions held by Japanese citizens. Then there are less strategic cities, which nonetheless play "gateway" functions, cities like Singapore, Sydney, Toronto, and Sao Paulo. With rapid financial liberalization, big bank consolidations and mergers, and further development of its active bond market, it is conceivable that Seoul could joint this rank of the third tier, "gateway" cities. This also assumes a huge overhaul of physical, as well as legal and institutional, infrastructures. This is a massive commitment. Take Shanghai.
Shanghai cannot be a truly important financial center as yet, not so long as it lacks a fully convertible currency and a reliable legal and accounting system. But what does a city that is hell-bent to become China's financial hub at some point, hoping to feed capital into the seven provinces along the Yangtze that account for a third of the Chinese population and a half of manufacturing output, do? In the last ten years, more than $40 billion was poured into Shanghai for upgrading its infrastructure, including expressways, bridges and public transportation. And foreign investors have plunked down an additional $27.7 billion, of which $5 billion came in the past year alone. Once dubbed the "Paris of the East," Shanghai today is a stunningly beautiful city that is (at least in places) an architectural marvel. As soon as the financial system is liberalized in China in accordance with its WTO commitment, the city will have little travail in converting itself into a global city and a financial hub.
Hong Kong is the gateway to China and to Southeast Asia, and one of its myriad advantages as a financial hub stems from the fact that Malaysians, Singaporians, and Indonesians can borrow money from American and Japanese banks in Hong Kong. When this is combined with a good port, good port control, good administrative system, and the rule of law (of common law origin, which is an even greater advantage), Hong Kong ends up being a nearly perfect hub economy. As if this formidable past and present is not enough, the city has future ambitions to become the center of fund management, as well as insurance and re-insurance, and venture capital.
The key to Hong Kong's success rests in the fact that the Chinese have delivered on their policy of "one country, two systems," keeping the city by and large free of economic interference-and if there has been some modest political interference (much less than predicted before 1997), it is not always clear that this has militated against the interests of financial capital, which craves above all else stability and predictability.
In contrast, the greatest hurdle to the future of Korea as an East Asian hub, and therefore to its acquiring a cosmopolitan identity, is the absence of a stable security environment. At the most fundamental level, there can be no shining financial city on the hill, when instead of Seoul/Incheon being "the Paris of the East," it could turn into what the North Koreans have threatened--a city might can turn into a "sea of fire." There can be no international economic hub where, in place of the stability that investors crave, there is every few years a huge nuclear standoff, leading to the United States thinking the un-thinkable, a surgical military strike against the North. Not so surprisingly this year, amid the tension caused by the nuclear standoff, foreign investment in Korea plummeted by 50 percent. From the United States, whose corporate calculations are usually more short-term than others, investment was down by 71.7 percent-something that can't be fully accounted for by the unfavorable U.S. business climate. From the European Union, investment was down by 24 percent. The investment from Japan was slightly up, reflecting most likely the strength of the yen.
I think it is no t beyond the Korean reach to become one of the third tier, "gateway" hub cities, with proper urban infrastructure, liberal financial policy, and adequate institutional logistics,. But it is indubitably beyond the reach of Korea to become so, unless there is a satisfactory resolution to the tensions incessantly generated by the Korean division. Korea might eventually be unified, confederated, or exist within the framework of "one country two systems"-but whatever solution is materialized in the future, it has to be one that assures the rest of the world that Korea is a safe place in which to conduct business. Another way of putting it might be that Korea cannot finally obtain its international identity, in the absence of the profoundly Korean identity that has long eluded this divided country.

The Logic of the Chinese World Order, a Regional Identity

Far more feasible and practicable than Korea as the economic or financial hub, is the possibility of Korea as a transportation hub. Yonjong Island near Incheon is where air and sea transportation can be linked, and where, it is often said, within two hours of flight from Incheon one can access 43 cities with population of more million or more. Yonjong as the hub has the potential to offer air passage and cargo services to a target market of more than one billion people. The idea would be to bring light, high-tech cargoes to the port in Incheon and fly them out through cargo planes. And the beauty of it is that one can see where it all starts and where it might end: with the port/airport, there can be a logistics center around the Yongjong island, with all requisite infrastructure (much easier to provide than financial structures), and once logistics- and distribution-oriented firms are located there, perhaps it will eventually evolve into an amalgamation of multinational businesses, with a few branches of multinational banks to finance the thriving business there. In this sense, the Yonjong hub can be on a smaller scale what the Shanghai logistics hub already is, combining Pudong International airport with the Waigaoqiao Free Trade Zone and the Yangshan deep-water port. Likewise, the Kwangyang-Pusan belt can be the transport hub linking Kaoshiung or Northern China to Japan's seashore, or the eastern seaboard of the Pacific. With appropriate government support, it could turn into another Rotterdam or Singapore, if perhaps on a smaller scale.
All of this also assumes an integration of Korea into an economic sphere that orbits around an economic magnet that is China. That is not necessarily disadvantageous for Korea, both for a relatively short-term and also a long-term prospect for the Korean economy. In the short run it is advantageous because the China market provides some hedge against the instability of the current international trading order, as exemplified by Washington's willingness to massively violate the letter and spirit of the WTO rules. According to a recent study by the libertarian CATO Institute, only 15 out of the 435 members of the US House of Representatives and 22 out of the 100 US Senators could be counted as "free traders." Washington has also become open about using its trade policy to reward pliant countries, showing somewhat greater willingness to tolerate trade deficits with countries that support its foreign policy.
If in some ways the global trading order took a big hit in the eye with the inauguration of the Bush administration and especially in the aftermath of 9/11, the only possible recourse that offers an effective vehicle of protection is regional trade. Thus North American countries can look to the huge internal market of NAFTA and the European countries to EU. Likewise, East Asia can look to China, and given the size of that country, it really does not matter whether regional organizations in East Asia resemble the European alphabet soup (the EU, NATO, etc.) or not. Undetected by the observers of international and regional organizations who are blindsided by formal manifestations of regionalism, there may have already emerged in East Asia a very unique form of regional organization that makes sense in light of a complicated historical and geopolitical reality.
One aspect of this is the emergence of regionalism that is rapidly being knit together, and not necessarily by formal regional organizations, like APEC or ARF. I will argue that there is in place a de facto , and not de jure , regionalism that is constituted by an increasingly dense thicket of bilateral free trade agreements being negotiated today. As soon as a sufficient number of bilateral free trade zones is created, there will be, presto, a de facto regional market in East Asia. Why is this the case? For all the reasons that economic regionalism was finally possible in Europe, formal economic regionalism is not possible in East Asia. If the deliberate decision to do away with nationalism that had caused so much grief and pain in the twentieth century is at the core of the European Union, the same resolve is by and large absent in East Asia, where nationalism has not run its course. Nor is there in East Asia a resolve to counter the overwhelming power of the United States through collective action, as might have been the case in Europe. Above all, East Asia is too disparate a region, with countries at wildly varying stages of development, and with different political systems. Such remarkable diversity begets no real likelihood of unity. Looked at this way, it stands to reason that the source and shape of regionalism in East Asia has to be significantly different from those in EU or Mercosur or NAFTA.
Above all, the newly emergent and hitherto un-named regionalism in East Asia is a huge area that belongs to the traditional Chinese world order. To the east of China, it includes Korea and Taiwan, and to the South, Vietnam, northern Thailand, Singapore, and a significant portion of Malaysia where upwards of 30 percent of the population is Chinese. Indonesia and the Philippines are also integrated to this regional order world through the entrepreneurial minorities of the Chinese origin, who control a disproportionate share of the wealth of the countries of their citizenship. Japan might even be increasingly a part of this "new (old) world order," instead of orienting itself toward the U.S. and the West.
In the long run it is probably the China market that provides the stability, and a hedge, against the vicissitudes of the global market. Straight econometric forecasting for trade in East Asia, conducted by the Asian Development Bank Institute, shows that China is likely to continue amassing massive trade surplus vis-a-vis the United States in the next twenty years, which is only offset by a massive trade deficit incurred vis-a-vis the non-ASEAN countries, like Taiwan, Korea and Japan-and to a lesser extent by the ASEAN countries, like Singapore and Malaysia. In other words, China would end up robbing Peter (the United States) to pay Paul (the fringe members of the greater China). Whether such a situation can be tolerated by Washington or not can be debated, of course, but the main point is that East Asian regionalism is less a matter of formally organizing separate nation states than a matter of integrating countries on the fringes of China into the vast China market.
The Incheon sea/air port makes sense in the context of this emergent regional order. But I would also wager that the Incheon hub makes even greater sense if it is coupled with a concerted effort to integrate the North Korean economy to the global trading order. Incheon could be the hub that ties together the two Koreas. To understand this fully, we need to turn to the aspect of the transportation hub that we haven't discussed: the railways that connect the Koreas.

National Logic, Korean Identity

In the event that the Trans-Korean railways (TKR) is completed and connected with the Trans-Siberian Railroad (TSR), it would cut by half the cost of accessing the European market. And the goods produced in North Korea would be transported to Incheon, to be shipped off to their destination points. Incheon's status as strategic port would be greatly enhanced if it served not one half of Korea but all of it. With Hyundai's ongoing development of a huge industrial park in Kaesong, holding more than 100 firms, the logic of the hub at Incheon becomes even clearer, and almost an imperative.
Drawing North Korea into Korea's hub future may be a pipe dream, but there is no question that this pipe dream is an integral part of designing the political economy of the future. In the end it may not be possible to build a thriving transnational hub economy without it. A hobbled country can only produce a hub economy that is equally hobbled. The port cities in the fringes of greater China can spread their wings, certain of their knowledge of their destination points. Seoul and Incheon can only gaze upon their clipped wings, and contemplate different destination points that are endlessly negotiable depending on political and military vagaries.
What this points to is the need to think about the Korean hub in such a way that it is constructive to reconciling the two Koreas. That means thinking through the externalities that would benefit the integration of the two severed economies. In this regard, the proposal for the Northeast Asian Development Bank (NEADB) makes a great deal of sense. The aim of the NEADB would be to promote economic integration of the Northeast Asian region by coordinating a long-term regional investment program, like the Tumen River Area Development Program, which has not made great strides in part because it is starved for cash. The objections to the NEADB are the usual, garden-variety ones, with the Japanese worrying about functional duplication with the ADB and the United States worrying about the duplication with the World Bank effort. But the whole point of regional development banks is that international development institutions cannot cover the whole globe efficiently; and even Asia is way too big for the Asian Development Bank (ADB) alone to cover.
Furthermore the ADB is more engaged these days with developmental projects in South Asia, which it had been accused (rightly) of having neglected. Its focus, too, has shifted, away from financing large physical infrastructures to education, health, poverty elimination, and environment. This has left a gaping hole in the development of infrastructure in Northeast Asia, and thus there is a crying need for an organization like the NEADB to step up to the plate. The problem would be convincing the Japanese with their financial wherewithal to warm up to the idea of the NEADB, but it is not un-doable, especially if it can be linked with the potential of Japan-North Korea reparations. The normalization of Japan-South Korean relations in 1965-and with it, $500 million in developmental loans and credits-coincided with the establishment of the ADB in Manila. It would not be far-fetched to see the launching of the NEADB simultaneous with some kind of a resolution of North Korea-Japan relations, perhaps aided by the possibility of a gas pipeline from Siberia through to Japan.
When we switch our focus from the international and regional logic of the "hub economy" development, and focus squarely on the national logic of it, it also opens up different cultural possibilities for Korea. The continuing military standoff and the legacy of a long struggle against authoritarianism has produced in South Korea what is undoubtedly one of most vibrant civil societies in East Asia. Just as in Europe it was West Germany that was faced with the possibility of a nuclear war on its soil, and that fielded Europe's largest and politically most potent peace group-the Greens-it is in South Korea that democratic and peace-oriented norms have taken hold. This democratic identity of Korea has taken a long time to emerge, but today it is an identity that is widely shared, and sustained through an incredibly efficient as well as complex web of grassroots organizations and networks-and especially the world's great network, the Internet. Today instead of Molotov cocktails, Korean students may stand vigil in candle light demonstrations; and instead of fighting the riot police, they now tell the pollsters of their severe disagreement with the United States' unilateral action, especially as it affects Korea. But there is no gainsaying the fact that the Korean civil society is enormously well organized, and its activists as well as the middle class citizens are most vociferous in defending their hard earned rights as democratic citizens.
If democratic norms are what today defined Koreans, the world too gets the point. To the rest of the world, Korea has come across as a rambunctious, energetic place where people exercise the First Amendment rights of the US Constitution more freely than the Americans seem to do these days: the same irrepressible "Red Devils" that on the wings of their enthusiasm carried the Korean soccer team to heights not reached before, also do not mince their words when disagreeing with the policies of the world's hyper-power. What has occurred in the political culture in Korea is the powerful merging of nationalism with democratic norms, not just on the level of activists but the middle class citizens and professionals, as well. Elsewhere one notes the collapse of nationalistic norms, indeed they become unthinkable in places like Japan or Germany, where the legacy of war has made nationalism into a dirty word. In Korea, however, nationalism could finally become progressive and democratic. Then, of course, there is Korea's vibrant pop culture. If in the past American pop culture held sway in East Asia, today there are "Korean waves" surging throughout the region, and especially in China.
In the end, any large project that maps out a big vision of the future has to build on a truly authentic Korean identity. If Korean policy makers were to build a blue print for social engineering that were true to Korea, then it stands to reason that the most important focus for the future hub would be infrastructure development with some externalities to North Korea, thus to bring it closer to the South and to the rest of the world. It can also build a culture of cosmopolitanism that reflects its commitment to democratic norms.
In addition to attracting foreign enterprises and banks, the government could think more creatively about Korea's cultural niche, and try to bring the world into that niche-a rich democratic and civic culture, a budding popular culture. Korea could be a hub not just for making money, but deepening democratic commitments around the world, and the two are not always exclusive of each other. Korea could be a hub for transnational NGOs, international organizations, international educational institutions, and regional development banks. Korea, for instance, could be the host for NEADB, just as it could host global economic development institutes; economic development, after all, is one of the things that Koreans did very well. There could be in Korea, a development research institute much like the WIDER in Helsinki, which is part of the United Nations University system. Korea could also host a series of organizations related to human rights, civic action and environment that are also affiliated with the United Nations, as a way to raise the profile of the country.

Conclusion

The assumption in this paper is simply that any long-term social plan must be based on the nation's self-identity and sense of how it might want to imagine itself--ten, twenty, and thirty years down the road. I have argued that the ambitious plans for the Korean hub economy resolves itself to three different futures and identities for Korea. The focus on banking and finance requires that Seoul become a global city and demands that its denizens be far more cosmopolitan than they have ever dreamed of before. The focus on transportation and logistics hub highlights Korea's integration into the regional economy, which for all intents and purposes would be centered around China, and which therefore rearticulates modern Korea into something like the traditional Chinese world order. The focus on ground transport through Koreas and Siberia, however, holds up an entirely different mirror of the future. It is a future that can grow from the soil of one of the most rambunctious and exuberant democratic cultures in East Asia, and which is also married to a powerful yearning for national reunification. These reflections on three mirrors of the future are not mutually exclusive, and when and if Korea gets unified, the reflections may merge to form a coherent whole. How might that be case?
Given the twin norms of democracy and nationalism that drive people in Korea, it is not inconceivable to push for a nuclear-free Korea (a necessity if the peninsula's security is to be stabilized under Washington's close scrutiny), and eventually a neutral Korea. A neutral Korea might a very good thing to be in Northeast Asia. Neutrality is a two way street; it goes both ways, indeed every which way economically. In terms of the three mirrors idea, it makes them all possible. Just as neutral Switzerland does well with private banking, neutrality would be a real boon for a Korea that wants to be more internationalized. It is also a perfect setting for a transportation hub, and a perfect setting for international organizations (which is why the UN is also partly based in Switzerland.) Above all, a neutral Korea retrieves