The Honorable Jin Nyum
Deputy Prime Minister and Minister of Finance and Economy

at the International Conference on Financing for Development

Monterrey, Mexico
18-22 March 2002

Mr. Chairman and Distinguished Delegates:

It is my great honor and pleasure to participate in this meeting. Let me start by thanking the Government of Mexico for hosting this conference and also to the Preparatory Committee for the Monterrey Consensus.

I hope this consensus will build a coalition for effective financing of development throughout the world. And, I believe that it will not be long before we can meet the key challenge facing the world today, namely overcoming poverty.

As my President, Kim Dae-Jung, noted in his speech at the Nobel Peace Prize Forum last year, "Poverty is the single most important factor behind rising tensions around the world. We, therefore, must strive to alleviate poverty and give hope for the betterment of human beings."

This morning I would like to make several remarks as to how we can help finance development and alleviate poverty based on Korea's experience over the past forty years.

Korea's experience

Mr. Chairman,

Korea transformed itself from one of the world's poorest countries forty years ago, into one on the threshold of becoming an advanced country.

Looking back on our early development, three things stand out: First, a nation-wide consensus and a strong and effective political leadership, which helped to harness the energy of the Korean people to the goals of economic development.

Second, as a country with limited resources and a small domestic market, Korea had to pursue open, outward-looking strategies. As the strategies were aiming at free trade and inducement of foreign capital, the government established a new institutional framework and adopted good governance.

Third, Korea of course made its own effort to increase domestic savings in both the public and private sectors. It not only revamped tax administration but also provided incentives including higher interest rates on deposits. Then, we made much efforts to combine the mobilized domestic resources and foreign capital to be invested into the nation's strategic industries.

One of our key development strategies to this day is the industrialization policy through trade. Although this strategy is by far the best for a developing country, it also cones with some side effects, such as an urban-rural income gap. Korea encountered this problem in the 1970s. The government addressed this problem by launching the "Saemaeul Movement", also known as the "New Village Movement".

Thanks to these policy measures, Korea achieved high growth of over 8% for over three decades. The World Bank assessed Korea as one of the best examples for developing countries since it achieved both high growth and equitable income distribution.

Since the financial crisis of 1997, however, Korea has had to deal with many new challenges. While undertaking massive restructuring, we were also faced with a surging need for more comprehensive social safety net for the most vulnerable people in our society.

Now, the Korean economy is moving fast toward a knowledgebased economy. The government is responding to this new trend by, expanding digital opportunities. Furthermore, we intensified our efforts to address the problems of the so-called Digital Divide by providing IT training and education to the general public, including housewives and residents of remote areas.

Policy remarks

Mr. Chairman,

With the Korean experience in mind, let me discuss now how the international community can help finance development and overcome poverty worldwide.

First, we need to strengthen international cooperation to expand the flow of capital from developed to developing countries. Subject to each country's own efforts to help one self with good governance and sound policies, we need to provide substantial aid to meet basic human needs such as foods, health care, and basic education.

Second, to meet financing needs for further industrialization, we need to facilitate the flow of private capital, including loans and foreign direct investment. In parallel, recipient countries should make their own efforts to attract foreign investment and improve business climate in general.

Third, industrialized countries need to offer wider opportunities for trade by developing countries, because increased market access is essential for their sustained development.

Fourth, industrialized countries also need to share their development experience, be it success or failure story, with other countries.

In this connection, Korean government has initiated the Knowledge Partnership Project jointly run by the World Bank and Korea. More recently, as proposed by President Kim at the ASEAN+3 Summit last year, we launched the IT CapacityBuilding Project for developing countries. To this end, my government has already committed funds of 5 million dollars to create IT training centers and expand IT networks in developing countries.

Before concluding, I would like to stress one point in particular: For effective development aid, it is the recipient country's efforts that matter. No country can possibly hope to develop unless it is willing to set its own developmental goals and prepared to use resources in a cost-effective and efficient way. Likewise, global community should endeavor to expand their support for these developing countries.

Only then, can we make full use of the spirit of global partnership. And, only then, will the promises of the Monterrey Consensus be realized in the near future.

Thank you.

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