[G20 summit agenda] Rebalancing global growth

The following is the seventh in a series of articles analyzing the major problems that the G20 leaders should tackle to stabilize the global financial markets and rebalance the world economy. Ed.

By Tu Packard

For the first time in modern history, the emerging market countries especially China, India and Brazil-supplanted the United States in leading the world economy out of the deepest recession since 1929. Also for the first time, the governments of these rapidly growing economies took seats at the Group of 20 global policymaking table, marking a major transition in the global economic order. This long-anticipated development was accelerated by the 2007-2008 financial crisis that originated in the U.S. subprime mortgage market and in the excessive risk-taking by financial firms whose demise would have brought down the international financial system. 
The global spread and depth of the financial shock plunged the world economy into its first highly synchronized recession since the Great Depression. The shock froze global private sector credit and chilled private sector demand, especially in the developed economies. Trade plummeted and unemployment rose rapidly. The United States and United Kingdom two countries at the epicenter of the financial storm were hit hard, but export-dependent Germany and Japan suffered even more from spillover effects. 
Only decisive and concerted action by leaders of the world’s largest economies this degree of global policy coordination also was without precedent saved the world economy from sliding into an even deeper and more protracted recession. Governments and central banks around the world spent over $11 trillion to support the financial system and about $6 trillion in fiscal stimulus measures to shore up the global economy. Without these extraordinary policy measures, private demand would have collapsed. The resulting social and economic costs would have been even greater (see Charts 1 and 2). 

Emerging market countries 

[G20 summit agenda] Bank compensation reform to help global stability

The following is the 10th in a series of articles analyzing the major problems that the G20 leaders should tackle to stabilize the global financial markets and rebalance the world economy.


Prior to the global financial crisis, the short-term compensation practice by major financial institutions resulted in excessive risk-taking behavior and contributed to the crisis. Some financial institutions were criticized for paying out bonuses while they were accepti

[G20 summit agenda ] The stakes for Asia in global financial stability

The following is the 11th in a series of articles analyzing the major problems that the G20 leaders should tackle to stabilize the global financial markets and rebalance the world economy. 

Two years after the onset of the global financial crisis and the ensuing global downturn, the recovery that is now taking hold is marked by a divergence in the performance across advanced and developing economies, and also across regions. As the IMF’s latest World Economic Outlook notes, while advanced economies as a group are expected to grow by 2.3 percent this year, emerging and developing economies should see output expand by 6.3 percent. 

Asia is now at the forefront of the recovery, with the developing economies of the region expected to expand by 8.7 percent. Indeed, and for the first time, Asia’s contribution to a global recovery has outstripped that of other regions. Moreover, the region’s recovery has been underpinned by strong domestic demand and not just a rebound in exports. The strong relative growth prospects for Asia have also attracted large capital inflows to the region, buoyed by the expectation of higher earnings growth than in advanced economies and the prospect of currency appreciation.

KAIST Business School aims to be Asia’s best

With a touch of multinational variety, the KAIST Business School aims to become the top business school in Asia within a few years, said Ravi Kumar, dean of the school.

Kumar, from India, was invited by KAIST president Seo Nam-pyo to lead the business school last year when he was spending his sabbatical leave in Korea while working in the University of Southern California, School of Business. He thus became the first foreigner to become dean of a Korean business school.

“I took interest in Korea as the people’s culture and behavior was very unique and the society was changing at an unprecedented speed,” he told The Korea Herald.

“All the social and economic changes were so visible here.”

Ravi Kumar, dean of KAIST Business School

Renault Samsung’s sales, production rise to record

Renault Samsung Motors Co. announced Monday that the company’s first half sales and production figures came in at record high levels.

Renault Samsung, the Korean arm of France’s Renault S.A., holds the third- largest share of the domestic market. 

According to the company, its domestic sales for the first six months of the year came in at 85,142 units while exports came in at 50,160 units, pushing up its overall sales figure for the first half of the year to 135,302 units, the highest since the company was launched in September 2000.

'U.S. may freeze N. Korean assets in foreign banks'

The United States Wednesday did not preclude the possibility of freezing North Korean assets in foreign banks to effectively cut off resources for the North's development and proliferation of weapons of mass destruction, 

"I'm not going to predict any particular step that we're contemplating, but these are steps that are available to us under existing U.S. international law," State Department spokesman Philip Crowley was quoted by the wire as saying in Washington.

He was responding to the question if Washington was considering freezing North Korean assets at foreign banks just like it froze more than US$25 million in North Korean accounts in Banco Delta Asia in Macau in 2005,

NKorean killed for spreading Gospel: report

A news report said Monday that a North Korean was killed for spreading Gospel.

The Associated Press said Son Jong-nam was reportedly tortured to death for spreading the Gospel with 20 bibles and 10 cassette tapes in the reclusive state in 2009, 11 years after living in the neighboring area of China in 1998.

The wire said it obtained the information from his younger brother Son Jung-hun, who lives in South Korea.

P.M. office staff accused of abusing investigative power

Members of the prime minister’s office face a criminal investigation for allegedly conducting illegal surveillance on a civilian.

The prime minister’s office said Monday it has referred four of its staff members for a prosecution probe as they were found to have violated rules on government officials’ duties.

Lee In-kyu, a senior official in charge of inspecting ethics-code violation by public officials, and three lower-level officials allegedly led an illegal probe of a businessman surnamed Kim who posted on his blog a video image of slander against President Lee Myung-bak and his policies. Kim at that time ran a subcontractor of a major bank.

A Democratic Party lawmaker and MBC-TV claimed late last month that Lee In-kyu’s people searched Kim’s office and pressured the bank to stop doing business with Kim. The case was then transferred to the police who interrogated Kim on charges of embezzlement and libel against the president. 

Prime Minster Chung Un-chan addresses the last meeting of a panel on implementing a revised Sejong City plan Monday. Kim Myung-sub/The Korea Herald

LG faces critical test with Optimus series

LG Electronics on Monday announced the launch of its flagship Android smartphone Optimus One with Google via 120 carriers worldwide in the third quarter. 

LG's first global smartphone will be a make-or-break test for its mobile division president, Ahn Seung-kwon, who is struggling to rejuvenate the ailing smartphone business. 

 

Ahn Seung-kwon

Ahn gained fame for leading the development of LG’s hit feature phone Chocolate in 2006, as then head of LG’s mobile research center. Propelled by the huge success of the Chocolate, he grabbed the top position at LG’s mobile division in 2007, and since nurtured LG’s mobile business as a major cash cow. 

However, his successful career has been tarnished by his failure to predict and prepare for the fast growth of the smartphone market.

LG’s handset division is expected to swing to a loss in the second quarter, hit by its weak smartphone line-up. 

The company is determined to revive its smartphone fortunes with the rollout of the Optimus One, which runs Google’s Android 2.2 operating system, LG did not disclose other details, but said the new model will be competitively-priced. The phone will be available via 120 carriers while Samsung Electronics’ smartphone Galaxy S is currently sold via 100 operators.

Samsung, LG, Hyundai team up for flexible display: report

Samsung, LG, and Hyundai Motor Group will team up to develop flexible display material, the Maeil Business Newspaper reported, citing officials from the Ministry of Knowledge Economy and related industries. 

The global flexible display market is expected to reach 17 trillion won ($14 billion) by 2018, according to the Korean-language report.