* This is my article in BusinessWorld last Wednesday, June 6.
The summit meeting between US President Donald Trump and
North Korea leader Kim Jong-Un (KJU) this coming June 12, 2018 in Singapore is
marked with several paradoxes.
For one, the US is the biggest economy in the world with
a GDP size of $19.39 trillion in 2017 while the North Korean economy is very
small with an estimated GDP size of only $16 billion in 2016, or just 0.08% of
the US economic size.
North Korea’s economy is small because it has focused its
resources on its military and nuclear capabilities. As a result, most of its 25
million people are starving and are deprived of several basic services,
including but not limited to reliable and dependable electricity service.
Last month, a historic summit meeting was held between
KJU and South Korean President Moon-Jae In with both parties discussing the
formal ending of the Korean War and to finally establish peace and prosperity
between the two countries in the peninsula.
An important event aiding this Trump-KJU summit is the
renewed vigor of the US economy by which it can reassert its role as main
“anchor” of global trade, investments, and economic dynamism. Let us review
some numbers as to why this may be possible.
The last time the US economy posted a GDP growth of at
least 3% was in 2005 or 13 years ago — it grew 3.3% that year. The eight years
of “hope and change” under President Obama did not produce a single year of 3%
growth or higher.
During that period, 2009-2016, even anemic economies of
fellow rich countries managed to grow above 3%: Japan experienced 4.2% growth
in 2010, UK grew 3.1% in 2014 while Germany experienced growth of 3.9% and 3.7%
in 2010 and 2011, respectively.
China as second global economic “anchor” continues to
grow fast but no longer in double digit figures, owing to the declining pace of
its expansion.
South Korea maintains a growth rate of at least 3% and it
remains the 11th biggest economy in the world. Japan remains the 3rd biggest
economy and India is roaring high and is now the world’s 6th biggest economy.
The Philippines has achieved fast growth since the last administration and the
momentum is expected to be sustained until this year and the next (see table).
The growth momentum of the US economy is very evident
since last year: 1.5% in 2016 or the last year of “hope and change,” 2.3% in
2017 and IMF projection of 2.9% this year. Actual Q1 2018 growth was 2.8% and
when the May 2018 unemployment rate further went down to only 3.8%, an 18
year-low, prompting banks and research institutes to revise their growth
projections for 2018 Q2 to Q4 of 3.5% to 4.7%.
With the world’s no. 1 economy rolling on high growth
path and immediate neighbors being the 2nd, 3rd and 11th biggest economies in
the world, the opportunities for North Korea to quickly transition from a
hermit-like, autarkic economy to regional and global economic integration is
high.
It will not be surprising then if Apple, Samsung, Google,
Microsoft, McDonalds, Toyota, Shangri-la, other big global brands will put up
offices and factories in North Korea months after the Trump-KJU meeting.
Is a North-South Korea reunification as one country like
the East-West Germany reunification, desirable? It will be better if they
remain as two separate countries linked by heavy commerce and investments, like
Malaysia-Singapore and EU countries.
Bigger countries and economies tend to be more
bureaucratic than smaller ones. Compare for instance China-Hong Kong,
Indonesia-Singapore, India-Bhutan, Russia-Finland, and so on.
Peace and prosperity, more commerce and trade, more
investments and tourism, more sports and cultural exchanges, more energy and
electricity, and not more tanks and missiles. This is the kind of economic
development in the region that many people and businesses around the world hope
to see.
---------------
See also:
BWorld 217, Dutertenomics, TRAIN and high inflation, June 02, 2018
BWorld 218, Tobacco taxation, smuggling and plain packaging, June 07, 2018
