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Address by the President of the Republic of Korea1

Author(s):
International Monetary Fund. Secretary's Department
Published Date:
November 1985
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Author(s)
Chun Doo Hwan

It is a great pleasure today to witness the opening of the joint Annual Meetings of the World Bank and the International Monetary Fund here in Seoul. On behalf of the Korean people, and in the name of the Government of the Republic of Korea, I extend to all of you who have come from near and afar, and especially from afar, to visit our country a sincere welcome.

First of all, I wish to praise the historic achievements of the two institutions in re-establishing anew an economic order out of chaos that prevailed after World War II. We should all appreciate the work of economic reconstruction to which the Bank and the Fund made an indispensable contribution. In particular, I have the greatest respect for the individual countries that cooperated closely with the two institutions to overcome the difficult challenges of the postwar era.

The Korean people feel that there is a special significance to your fortieth joint meetings of the Bank and the Fund, because it has been during these forty years that Korea has managed to raise itself from one of the world’s most underprivileged and disadvantaged countries to one of the world’s most promising and developing. These were difficult steps, but we are grateful that the efforts proved to be worthwhile.

Now it is my wish, indeed my duty, to express Korea’s deep gratitude to your two institutions for the assistance, support, and encouragement that my nation received in the course of its development. And I want to avail myself of this solemn occasion to pledge Korea’s firm commitment to fulfill its responsibilities as a member of your organizations.

We all live today in a global community of interdependent nations. Increased interaction and specialization have made international cooperation a matter of first priority, and imperative. No nation can manage its economy successfully without taking into account its economic relations with other countries. Today, a nation by itself can achieve neither security nor prosperity, unless its policies are geared to the common well-being of all nations.

Even when making what are conceived to be domestic policy decisions, a country requires the kind of leadership with broad international vision and a great deal of courage. It is often easier to simply wish away or ignore developments outside its borders; but this will not do. More than at any time in the past, a renewed spirit of international cooperation, backed by the will to bring economic policies into a global harmony, is necessary.

Building a lasting prosperity has always been the goal of mankind. Now, if this goal is to be successfully attained, I believe that any joint efforts we make must be firmly based on our willing acceptance of the imperative for international cooperation. In the face of this imperative, what we see today, unfortunately, are rising demands for protectionist impediments to free trade in the interest of what is perceived to be short-term national interests.

Protectionism by any name will reduce world trade, bring about an economic downturn, and threaten all countries with economic stagnation. A vicious circle of stagnation and instability will grip the world economy and tension will mount in all aspects of international relations. Protectionism is the first step in a sequence of deterioration in which all nations will suffer.

As I observe the current deterioration of the world economy and the protectionist tendencies of today, I am struck by the ominous and foreboding parallel between this situation today and that of the early 1930s.

As you all know, each leading industrial nation at that time tried to outdo the other in taking and retaliating with protectionist actions, bringing about a 25 percent reduction in world trade and at least a 30 percent drop in the GNP of these same countries in the four years after 1929. As debtor countries lost opportunities to earn the foreign exchange necessary to repay their debt, world financial markets broke down. There is little doubt that the protectionist policies of industrial powers were a major cause of the Great Depression, with all its disastrous social and political consequences.

If protectionism continues to grow unabated, it could develop into economic warfare in which every nation pursues its own so-called interest at the expense of all others. No one can be sure that this sort of situation cannot lead to military conflict. We must be careful. For we know that in nearly all of the past wars, big or small, a conflict of economic interests was an important factor. In order to prevent such a process of decay, I wish to ask all nations to join forces in transforming the danger of economic warfare into cooperation through fair competition.

The alternative to cooperation through fair competition is, of course, self-centered protectionism, but to go down that path is to invite economic and political disaster for the human race.

I am convinced that the Bank and the Fund, fortunately, are capable of exercising strong leadership to make international cooperation a reality. I have faith in these organizations.

In recent years, the conflicting budgetary and monetary policies of individual countries have caused instability in world financial markets. Widely fluctuating exchange rates have hindered the smooth transfer of private capital, worked against a sustained economic recovery, and aggravated debt problems worldwide.

The critical debt problems of many developing countries stem largely from rising protectionist barriers. As long as these barriers continue to increase, there is little hope that developing countries will be able to find a fundamental and lasting solution to their debt problems, even with the fullest cooperation with the Bank and the Fund.

The difficulties of many nations in servicing their debts are not simply a problem just for those countries concerned, but a problem for all of us. Naturally, debtor nations must do a better job in managing their debts to solve this problem. More important, however, all countries should work together to improve the world trade environment and restore the momentum of global economic growth.

In order to re-establish a sound world economy, all nations must give up their obsession with narrowly perceived self-interest. In its place, we must have a renewed sense of world economic order, with prosperity for all as its basic objective. In this regard, the responsibilities of developed countries are very great. Their power to influence the world economy gives these countries an obligation to maintain the international monetary system, coordinate their economic policies, and defend the free trade system.

I also wish to point out that the interests of the developing countries should be taken into full account and their positions be sufficiently reflected in the formulation of international economic policy and programs because these countries’ roles and importance are growing in the world economy.

The newly industrialized countries play a vital and dynamic role in the world economy. Most certainly they should not be penalized for their good performance by the more advanced countries.

It must be clearly recognized that developing countries can complement the world economy by serving as a growing market. Their growth imparts dynamism to the world economy as a whole. I believe that giving encouragement and support to these developing countries is in the enlightened self-interest of all, including the advanced countries.

If the developed countries insist on protecting their own vested interests, totally ignoring the plight of the developing nations, and if the developing countries, on the other hand, show an attitude of equal inflexibility regarding the interests of developed countries, then the divisive and clashing inconsistency will bring us all the deprivation no one wants. The hallmarks of the renewed economic order should be trust instead of suspicion, sharing of burdens and responsibilities instead of shirking them, and, above all, efforts to keep the market open.

The Bank, the Fund, and the GATT can and should provide leadership in creating a productive and harmonious international economic order. This can be accomplished if member countries will advance new ideas for broader international cooperation and coordination of national economic policies, always in close consultation with each other.

The Korean people and their Government attach a very great importance to the current Annual Meetings of the Bank and the Fund in Seoul, because we have known the oppressiveness of poverty and because we are also keenly aware of the fact that our own prosperity is directly linked to the world’s economic growth. Since Korea joined the Bank and the Fund thirty years ago, we have faithfully supported the policies and programs of these organizations, discharged our responsibilities as a member country, and were rewarded with success in overcoming poverty in our land. We began with the seemingly insurmountable difficulties arising from national division and the utter devastation of the Korean War. But the Korean people kept their spirit. They believed in a better life for themselves and in their ability to achieve it.

Beginning with our First Five-Year Plan for Development in 1962, Korea has pursued consistently an outward-looking development strategy, with the assistance of the two institutions: the results have exceeded any skeptic’s expectations. After the inauguration of my Administration in 1980, Korea placed great emphasis on controlling inflation by reducing budgetary deficits and restricting the growth in money supply.

Important as it was, price stability was also a necessary condition for increasing our reliance on the market mechanism and maximizing efficiency. The Government’s style of economic management also changed to one of greater openness, and it was in this fashion that efforts in structural adjustment were successfully made.

The Korean Government has taken many concrete steps over the five years to liberalize our trade and investment policies. Thanks to these liberal reforms, our economy has achieved growth as well as price stability. These certainly enriched this nation’s potential for future growth.

I am confident that Korea has the ability to continuously foster its growth potential, and I am sure that it will continue in the future to make an increasingly significant contribution to the economic progress of the international community through an open market policy and improved industrial efficiency.

Korea has accumulated some considerable experience and know-how in the course of our development through trial and error, and this we want to share with other developing countries. Let me clearly state my country’s desire to strengthen our mutually beneficial and mutually supportive and mutually reinforcing ties of cooperation with all nations of the world.

As you know, the division of the country and the resultant armed confrontation across the demarcation line has been an ever-present source of difficulty for Korea. Unfortunately, this condition persists today. In order to ease the tension resulting from this condition, my Government has been promoting the idea of exchange and interaction through peaceful dialogue between the South and the North, transcending the conflicting political ideologies.

I am pleased, as I am sure you are, too, about the recent progress in the Red Cross talks and the economic talks. With perseverance on our part, we shall continue our effort so that the sports talks as well as the summit talk between the two Koreas can become a reality. I believe that herein lies our way to make a contribution to regional and global peace. May I ask you for your support and encouragement in these endeavors of the Korean Government and the Korean people.

As you know, Korea will host the Asian Games next year in 1986, and the Summer Olympics in 1988. All preparations for these international events are proceeding on schedule. Korea hopes that all nations of the world will participate in the Olympic Games in 1988. We sincerely hope that these prestigious events will serve to reaffirm the sense of international solidarity of all peoples of the world and demonstrate our confidence in ourselves as members of the human race.

Distinguished delegates, ladies and gentlemen, in our very small world consisting of interdependent nations, we must talk with each other effectively, we must pool our resources to build anew an international economic order based on harmony. With world prosperity as our common objective, we will walk with you toward that goal.

I have every expectation that your Seoul meetings will be a great success in promoting international harmony, cooperation, and international economic justice. These meetings will be remembered for their success for that reason. May I wish that each and every one of you may find your visit to Korea to have been a personally rewarding, enjoyable, and memorable experience.

Delivered at the Opening Joint Session, October 8, 1985.

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