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  Revival of US Economy is Opportunity and Challenge for Korea
  Poster : admin     Date : 16-01-11 18:54     Hit : 539    
Revival of US Economy is Opportunity and Challenge for Korea
 
-KITA’s Washington Center says Korea needs strategical responses such as investment expansion in the U.S. and joint research on high-tech-
 
Since the U.S. economy shows signs of revival, some argue that Korea needs to work on the strategical responses, including investment expansion as well as joint research on high-tech, in order to be prepared for “the second era of Pax Americana.” In addition, since the U.S. is expected to become the largest natural gas producer and exporter due to the shale gas revolution, it is also pointed out that Korea needs to strategically take advantage of the U.S. with a view to diversifying energy import sources as well as ensuring energy security.
 
The Washington Center of the Korea International Trade Association (Chairman, Kim In-ho) has recently released a report titled “The U.S. Economy’s Revival, Opportunity and Challenges.” According to the report, the U.S. economy has shown steady signs of recovery such as 2 percent of annual economic growth, the constant decrease of unemployment rate (June 2013, 7.6% June 2015, 6.3%), the increase of manufacturing productivity and capacity utilization ratio driven by private investments as well as consumer spending growth. Accordingly, the major countries’ investments in the U.S. have been brisk and the Foreign Direct Investment (FDI) in the country was 236 billion dollars, which was 35 percent and 57 percent higher compared to the previous year and 2009, respectively.
 
It is understood that the U.S. government’s extensive policy supports for a pick-up in manufacturing, energy independence and the expansion of exports and investment after the 2008 financial crisis as well as the cost reduction due to the expansion and commercialization of shale gas development are playing roles as driving force. Moreover, the U.S. government’s export expansion and its aggressive actions to attract investment via the National Export Initiative (NEI) along with the manufacturing promotion policy are creating synergy effect.
 
The report suggests that Korea needs to expand its trade, including its exports to the U.S. focusing on the items that are set to benefit from the Korea-U.S. FTA, along with the cooperation in the service and property right areas for the short-term. For the long-term perspective, it is required to work on diversified strategies, including energy, chemicals, ICT, medical, aerospace and government procurement, in order to take advantage of the huge domestic market, highly qualified human resources and advanced manufacturing technology.
 
In particular, the report analyzes that it will be promising to make inroads into chemicals, ICT, medical and bio, aerospace and security sectors by utilizing the pan-government’s advanced manufacturing promotion policies as well as the energy and chemicals related industries driven by the shale gas revolution.
 
The major competitor Japan emerged as the largest investor in the U.S. in 2013 and 2014 and the country has invested the world’s second largest accumulative amount. Moreover, the Committee on Foreign Investment in the United States (CFIUS) examined 54 investments of China (Korea’s 4 investments) between 2011 and 2013. China is rapidly rising as the largest investor in the high-tech industry by extensively merging the American companies and investing in them. It is urgent for Korea to work more aggressively on the entry strategies into the U.S. such as expanding its investment in the promising areas since Korea is in the 12th in terms of the investment amount in the U.S. over the last five years.
 
In addition, the report points out that as the Panama Canal expansion is scheduled to be completed by the end of this year, Korean companies who have global competitiveness need to actively participate in the large-scale infrastructure construction, including the expansion of the east ports in Mobil, Jacksonville, Savannah, Norfolk and New York as well as high-speed rail and LNG export facilities.
Meanwhile, the international organizations, such as the World Bank and the IMF, JP Morgan Chase and McKinsey & Company forecast that the U.S. will continue to display the robust growth rate over 3 percent in 2015.
 
Sung Young-hwa, head of Washington Center, said “It is required for Korea to come up with differentiated entry strategies depending on each state’s policies, geographical condition, comparative advantage industries as well as key industries, labor environment and consumer market.” He also stressed “For instance, Maryland has competitiveness in bio and medical and IT areas while Virginia is strong at aerospace, Massachusetts is strong at aerospace, the defense industry and IT. Massachusetts and Wisconsin focus on medical and IT and Florida is strong at food processing and agricultural machinery production.”