New Growth Paradigm of APEC Economies

When APEC was established in 1989 to champion free and open trade and investment, its primary goal, as stipulated in the mission statement, was “to support sustainable economic growth and prosperity in the Asia-Pacific region.”

Just 20 years after its founding, the premier Asia-Pacific economic forum has charted a new growth paradigm, adding an “inclusive growth” model to the previous “sustainable growth” goal.

In a statement issued November 15 in Singapore, leaders of 21 economies throughout the Asia-Pacific endorsed the goals of the G20 Framework for Strong, Sustainable and Balanced Growth and declared their intent to “ensure a durable recovery that will create jobs and benefit our people.”

This significant change reflects the different landscape of the world economy, in particular in the wake of the receding global economic crisis.

The recent crisis has underlined that continual economic growth is not a given, and that, despite APEC's efforts, not all segments of society have benefited equally from the upturns and some have suffered more in the downturns.

More clarity as to how inclusive growth will be achieved will come when APEC Leaders and Finance, Trade, and Foreign Affairs Ministers consider the issue; and Japan, as host of APEC in 2010, will lead the development of a comprehensive work program. However, it is not based on a redistributive approach. Rather, it is anchored in a strategy of sustainable development that enables all parts of society to participate in, contribute to and share the benefits of growth.

SMEs in Driver's Seat for Inclusive Growth

In any circumstance, a key part of an “inclusive growth” strategy is improving the performance and sustainability of APEC SMEs.

Being small and with limited resources, SMEs face many challenges even in normal times. They tend to be hit harder by recession and lag behind large corporations during expansionary phases as they lack economies of scale and bargaining power.

Nevertheless, SMEs are - and will continue to be - a key source of growth for APEC economies, sitting in the driver's seat of “inclusive growth” for the global & regional economies.

They should, therefore, be encouraged to participate vigorously in growth strategies as well as be providers of job opportunities.

Market Access & Internationalization

Given the realities of the current environment, market access and liberalization has significant implications and is of paramount importance for realizing the dream of “inclusive growth” of APEC SMEs.

In this context, the APEC SME leadership has designated the Small and Medium Enterprise Working Group (SMEWG) theme for 2009 as “Helping SMEs Access Global Markets and Overcome Trade Barriers.”

Consistent with the concept of “inclusive growth”, the four-year Strategic Plan (2009-2012) of the APEC Working Group underlines market access and internationalization as one of six priorities and actions.

The APEC SME Innovation Center, located in Seoul, Korea, is making efforts to innovate the environment that will generate the greatest opportunities to access the resources they merit and require while facilitating firms enter and exit the market to freely.

Inspiration From Korea’s SME Global Outreach

In the 1960s, Korea adopted a so-called outwardlooking, policy in a departure from a domestic-market oriented economy. The outward-looking strategy that focused on global markets proved to be the key element in transforming an absolutely poverty-stricken country into the dynamic economic powerhouse that is Korea at present.

Today’s global Korean conglomerates like Samsung, Hyundai, LG and others were originally like small and medium enterprises at the time the outward-looking policy was initiated.

Now, Korea is striving to implement a second outwardlooking strategy designed to foster SMEs as hidden global champions.

To accomplish this, our focus is on enhancement of market accessibility, adaptability and availability for small and medium enterprises.

To achieve success in this endeavor, Korea is well aware of the importance of international cooperation, collaboration and coordination.

In the international economic game, there should be neither winners nor losers -- there should be only cochampions.

Highlights of Korea’s APEC Regional Market Alliance

The character of Korea’s SME global market initiatives is the combination of traditional outward-looking policies; a win-win spirit & principles commensurate with the global village era; and networking with technology, especially the fusion of knowledge IT, and culture.

• SME Business Matching

This program is aimed at turning practical cooperation into actual business transactions, creating new business opportunities with the enhancement of market availability.

We have employed this model with next-door neighbor Japan, supplementing it with complementary programs such as government-private sector joint policy dialogue, matchmaking consultation sessions, industrial technology fairs and SME CEO forums.

Of particular note, we published the “Success Story Book,” which has proven effective in building a climate of reliability and facilitating communication.

• SME e-Business Cooperation

This initiative is designed to establish a round-the-clock e-business platform via the mutual linkage of SME information and knowledge networks in the region.

Specifically, we have linked GobizKorea and China’s ecommerce platform. This marriage of e-market portals is expected to create various new opportunities, expanding borderless trade through online overseas marketing.

• SME Innovation Consulting

This program aims to generate common benefits for Korean enterprises that have advanced into other APEC markets and their local cooperating enterprises.

This model is associated with our basic concept of market adaptation.

For example, in the era of glocalization (a compound word formed from globalization and localization), it is necessary to better understand the culture, traditions, environment, etc. of the market in which our businesses are operating. Korean enterprises operating in a specific foreign market should be regarded as not only Korean but also a contributing member of the host economy.

Korean-led SME consulting programs are at present conducted in the Philippines, Indonesia, China, Vietnam and other markets. We plan to publish progress reports and a success story book on the results and achievements of the innovation consulting program in the near future.

• Korean Suggestions for a Regional SME Alliance in pursuit of inclusive growth

I would like to reiterate SMBA Administrator Hong Suk- Woo's three suggestions presented in the SME ministerial Meeting on Oct. 15 in Singapore as follows:

Realign the issue of market accessibility to incorporate the concepts of market availability and market adaptability

• Establish an APEC-wide e-marketplace, and
• Create an APEC SME cooperation system focused on the area of green energy.

To enhance market accessibility, APEC should accelerate its drive for free and open trade, developing and implementing measures to eliminate trade barriers.

To promote market availability, I think, it is necessary to pursue new opportunities uncovered in the wake of the economic crisis. The tools for this effort would encompass an e-marketplace alliance, business matching efforts, etc.

Market adaptability is critical to facilitating communication, overcoming such barriers as culture, language, traditions and environment, and ultimately realizing ubiquitous “5 any” communication -- anytime, anywhere, any device, any network, any service -- within the global village. We should innovate, we should initiate and we should be united.

An APEC-wide e-marketplace would create a new silkroad for member economies, broadening opportunities for businesses, investors and consumers alike. But to make this happen, related regulations and systems in each economy have to be addressed in detail.

Establishing an APEC SME cooperation system in the green energy field is a pre-requisite to a brighter, more sustainable future. It is our generation’s duty to the next generation.

Climate change and sustainable growth are flaming issues around the world today. Our proposal is designed to catch three birds with one stone. -- mitigate climate change, create new business opportunities and enhance the quality of life of all peoples in the APEC region.