Financial Sector Reform to Boost Economic Growth
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Korea Times
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2006-11-29 00:00
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Financial Sector Reform to Boost Economic Growth
By Yoon Ja-young
Staff Reporter
Korea could boost its economic growth by up to 1.5 percentage points from the current 4 percent to 4.5 percent through financial sector reforms, according to Anne Krueger, former first deputy managing director of the International Monetary Fund (IMF).
``Trade was the engine of growth in the past. Now it’s the efficiency of finance sector,’’ said the economist, who also served as the vice president for economics and research at the World Bank, in a lecture titled ``The Changing World Economy and Its Implications for Korea’’ hosted by the Institute for Global Economics Wednesday. She said efficient financing helps make flexible adjustments to sudden changes in global economy.
``The financial crisis in the 1990s came out in part due to earlier successes,’’ she said, pointing out that although regulating a financial system works well in the early stages of development, a poorly organized financial sector is doomed to lead to a financial crisis.
She said Korea has made many new innovations in its finance sector but has depended too much on bank capital rather than capital from new financial sources.
She emphasized the importance of education in enhancing competitiveness. ``The quality of education, particularly university education, can improve greatly in this country,’’ she said.
Krueger said financial reform is even more crucial for Korea as it is rapidly aging. ``In many of the industrialized countries, the labor force is expected to decline.’’ She said opening the doors for immigration is only postponing the problem, as the fertility rate among immigrant households falls to domestic levels after about 1.5 generations.
She said that faced with this demographic challenge, the economy should raise productivity as labor gets scarcer. Krueger said the ratio of the agricultural labor force to the total population of Korea is still about four times larger than the OECD average.
Krueger has taught economics at a number of prestigious schools including Stanford University, the University of Minnesota and Duke University, and has published extensively on policy reform in developing countries and the role of multilateral institutions in the international economy.
chizpizza@koreatimes.co.kr
11-29-2006 18:39
By Yoon Ja-young
Staff Reporter
Korea could boost its economic growth by up to 1.5 percentage points from the current 4 percent to 4.5 percent through financial sector reforms, according to Anne Krueger, former first deputy managing director of the International Monetary Fund (IMF).
``Trade was the engine of growth in the past. Now it’s the efficiency of finance sector,’’ said the economist, who also served as the vice president for economics and research at the World Bank, in a lecture titled ``The Changing World Economy and Its Implications for Korea’’ hosted by the Institute for Global Economics Wednesday. She said efficient financing helps make flexible adjustments to sudden changes in global economy.
``The financial crisis in the 1990s came out in part due to earlier successes,’’ she said, pointing out that although regulating a financial system works well in the early stages of development, a poorly organized financial sector is doomed to lead to a financial crisis.
She said Korea has made many new innovations in its finance sector but has depended too much on bank capital rather than capital from new financial sources.
She emphasized the importance of education in enhancing competitiveness. ``The quality of education, particularly university education, can improve greatly in this country,’’ she said.
Krueger said financial reform is even more crucial for Korea as it is rapidly aging. ``In many of the industrialized countries, the labor force is expected to decline.’’ She said opening the doors for immigration is only postponing the problem, as the fertility rate among immigrant households falls to domestic levels after about 1.5 generations.
She said that faced with this demographic challenge, the economy should raise productivity as labor gets scarcer. Krueger said the ratio of the agricultural labor force to the total population of Korea is still about four times larger than the OECD average.
Krueger has taught economics at a number of prestigious schools including Stanford University, the University of Minnesota and Duke University, and has published extensively on policy reform in developing countries and the role of multilateral institutions in the international economy.
chizpizza@koreatimes.co.kr
11-29-2006 18:39
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