(April 22, 2015) The investment and trade ties between Latin America and the Caribbean and the Republic of Korea have grown stronger in recent years, according to a new publication by ECLAC released today in Santiago, Chile.
According to the study, the Republic of Korea has become a significant source of foreign direct investment (FDI) for the region, even surpassing China between 2000 and 2011. Between 2003 and 2012, the FDI flows originating in that Asian country grew from $4 billion to $27 billion dollars, concentrated mainly in Brazil and Mexico and especially in the manufacturing industry.
At the same time, South Korea’s participation in the region’s exports rose from 1.1% in 2000 to 1.3% in 2013, while its weight in terms of imports went from 1.8% to 3.1%. In addition, the country has free-trade agreements with three nations in the region (Chile, Peru and Colombia).
The document Economic relations between Latin America and the Caribbean and the Republic of Korea: Advances and opportunities, was released by the regional United Nations commission to coincide with the official visit of South Korean President Geung-hye Park to Colombia, Peru, Chile and Brazil.
According to ECLAC’s document, the Republic of Korea went from being one of the world’s poorest countries in the early 1960s to being, by 2014, a high-income economy, an industrial, exporting and scientific power, and a society with high levels of social cohesion and educational achievement. Today it has a market of 50 million inhabitants and per capita income that tops $28,000 dollars.
Its successful experience spanning six decades offers numerous lessons for Latin America and the Caribbean and for developing nations in general, according to the report.
The study indicates that the main lesson to be gleaned from the Korean experience is that, regardless of the global economic context’s ups and downs, achieving development depends on the quality and coherence of a country’s public policies.
“The case of the Republic of Korea demonstrates that active, coordinated and consistent public policies, in line with each country’s resources and characteristics, are an effective instrument for achieving a development process that is dynamic, sustainable and equitable,” the report states.
It adds that the promotion of green growth and the emphasis on the creative economy are examples to be followed for Latin American and Caribbean nations. Korea’s green growth strategy has put it at the global vanguard in terms of progress towards more sustainable patterns of production and consumption, while the policies that foster the creative economy have enabled the country to capitalize on its strengths in education, science and innovation.
According to the document, the great challenge that the region faces in its trade relationship with the Republic of Korea (and Asia in general) continues to be the diversification of exports, which is to say, adding value and knowledge to the regional exports that are based on natural resources, while also fomenting the development of clusters that bolster the links between natural resource sectors (agriculture, agro-industry, mining, energy, forestry and fishing), manufacturing and services—applying engineering, expertise and new technologies.
In 2007, Korea became a Member State of ECLAC and since then it has carried out a broad cooperation program with this organization, centered on topics such as the diagnosis of and proposals to improve the quality of reciprocal trade, Korean FDI in the region, public-private alliances for export development, the logistical and infrastructure connection, innovation in small and medium-sized enterprises (SMEs), and planning of development and public administration.