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Sunday, May 11, 2003

THE ASIAN BOOKSHELF

EFFECTIVE DIASPORA

Koreans make good moves


THE KOREAN DIASPORA IN THE WORLD ECONOMY, edited by C. Fred Bergsten and Inbom Choi. Washington D.C.: Institute for International Economics, Special Report 15, January 2003, 180 pp., $25 (paper)

In recent years, increasing attention has been given to the social and economic role of diasporas -- communities of foreign nationals -- in their new homes. Economists have tended to focus on Chinese and Indians who have left their native lands and gone on to make substantial contributions to both their new home and that of their ancestors.

There has been little study of the Korean diaspora -- at least until now. This slim volume, the product of an October conference in Seoul hosted by the Overseas Koreans Foundation and the Institute for International Economies, is a fascinating introduction to the history and continuing contributions of the Korean communities spread around the world.

Some 5.7 million Koreans, about 10 percent of the current population of the Korean Peninsula, live elsewhere in the world; that figure grew about 17 percent over the past decade.

While Koreans are scattered across 151 countries, the overwhelming majority -- 5.3. million, or 93 percent -- live in the United States, China, Japan, the Commonwealth of Independent States, and Canada. The U.S. alone has more than 2 million Koreans, about 38 percent of the total. China has 1.9 million ethnic Koreans; Japan, about 640,000 (more than one-third live in the Osaka area); the CIS, 521,000; and Canada, 140,000.

The current hot spot for Koreans is New Zealand, where the population jumped from 3,000 to 18,000 from 1992-2001.

The presence of a Korean community has a powerful economic effect. Inbom Choi, chief economist at the Korean Federation of Industries, notes a positive correlation between Koreans' presence and trade. He estimates that "a 100 percent increase in the number of overseas Koreans would appear to increase Korea's exports by 16 percent and its imports by 14 percent." Koreans in the U.S. have increased trade between the two countries by 15 to 20 percent.

More impressive still, Koreans in the U.S. save at a rate that's double the national average, are almost twice as likely to have college educations and are 70 percent more likely to form their own businesses. Average income for second-generation Koreans is 70 percent above the U.S. average.

Census data in the U.S. shows that, in 1997, Korean-Americans owned 135,571 businesses, generating $45.9 billion in revenue, employing 336,649 workers earning wages of about $5.8 billion (and these figures are likely to have been underestimated).

According to Marcus Noland, a student of the North Korean economy, if the number of Koreans participating in the U.S. economy doubled, U.S. per capita income would increase by 0.1 to 0.2 percentage point.

There is one anomaly, though. Usually a diaspora sends money home in the form of capital transfers and investment. That generally has not been the case with Koreans for reasons involving the number of foreign workers in South Korea and the overseas family support provided by main wage earners in South Korea.

The book features chapters on the presence and impact of the Korean diaspora in the U.S., China and Japan, and a chapter on Chinese business networks and their lessons for Koreans. A concluding chapter discusses the global outlook and its implications for business opportunities. The main chapters include comments from a paper discussed at the October conference.

The chapter on Japan's Korean community is disappointing. It focuses on the legal dimensions and status of Koreans in the country. It is an important discussion, but much of the analysis is clouded by the lack of reliable statistics. Moreover, it pretty much sidesteps the issue of discrimination.

While the chapter's author, Toshiyuki Tamura, dean of the faculty for international politics and economics at Nishogakusha University, is quite sympathetic to the plight of Koreans in Japan, he appears to gloss over the hard questions and issues. For example, he compares Korean and Chinese participation in the Japanese economy without noting that Korean unemployment is more than twice the national average. (The figures are in an accompanying chart, however.) Furthermore, it is incredible that a chapter on the Korean role in the Japanese economy doesn't even mention pachinko.

The chapter on the Korean community in China is better, as it highlights important shifts in the regional economy. Korea and China are moving closer together and their unfolding relationship will have important implications for all of Northeast Asia.

Bilateral trade has grown nearly 20 percent a year and has reached $31.5 billion in 2001. As of July 2002, there were 6,600 Korean investment projects in China worth about $6 billion. (Chinese statistics put the total at twice that amount.) Human ties -- students, visitors, expatriates -- are increasing at the same rate. Curiously, Korean-Chinese were once seen as the best way for Korean investors to do business in China, but they now feel that such chauvinism may not be the best strategy.

This new relationship also has important implications for North Korea. Strictly speaking, North Korea is outside the scope of this study, but since the Korean diaspora will play a critical role in that country's economic rehabilitation, some discussion is warranted.

Noland offers some thoughts on its future. He concludes that Pyongyang has embraced reform, but the process will be wrenching and difficult: "The train has left the station, but it is unclear whether the engineer knows where the train is headed and whether he can keep it on the track. Overseas Koreans thinking about investing in North Korea therefore ought to be ready for some real turbulence along the way. This train may ultimately derail."

Brad Glosserman is director of research at Pacific Forum CSIS, a Honolulu-based policy research institute.


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