Understanding “cultural differences” between India and South Korea can help enhance economic ties between the two countries, Un-Chan Chung, former Prime Minister of the Republic of Korea, said.

Chung, a noted economist, is also the Chairman of the Korea Institute of Shared Growth.

“India is very important for the Korean economy. But, there are cultural differences. We have to try and narrow the gap. Then the economic relationship will improve,” he said on the sidelines of the 12{+t}{+h} Annual Conference of the Asia Pacific Economic Association, organised by IMI, Kolkata here on Thursday.

Batting for a “shared growth” model (or inclusive growth) for benefiting the small and medium enterprises (SMEs), Chung said the model could be replicated across “emerging economies” in Asia. This growth model however does not mean taking away from big corporates and giving to SMEs. Rather it means making the distribution process fair and pay the SMEs “what they really deserve”.

According to him, the trickle down effect — where big conglomerates earn fat profits and this then flow down to the small and medium enterprises — has not been successful, at least in Korea.

Over there, the model has led to “economic polarisation” with larger conglomerates taking undue advantage of their size and market power to buy out the SMEs. Financial crisis and a slowdown in exports and loss of manufacturing to China has only heightened the polarisation.

“The solution is shared growth…about making SMEs competitive. Shared growth is the way forward for various emerging economies,” he said.

Published on July 14, 2016