Why It Pays to Invest Abroad
IN the half century that Americans have provided development aid to struggling nations around the world, we have witnessed many successes and several failures. We have learned from those experiences, and today's revamped assistance programs are leaner and smarter. Congress has scaled back such programs; shifted from bilateral to multilateral channels in many cases; reduced grant aid in favor of loans and guarantees; and has been more selective in approving requests. This is all to the good.
We need to reflect on what has been accomplished with those tax dollars. Americans understand the benefits of long-term dividends on wise investments.
South Korea is a case in point. I was reminded of this when it celebrated its third anniversary of full civilian democratic government in February. I do not always agree with the trade policies of Korea, and it still has a way to go in many areas. But there is no denying that our ally South Korea has made progress toward instituting an open, free, and democratic society against formidable odds.
Korea was one of the poorest countries in the world when it was liberated from Japan in 1945. Then the Korean War destroyed most of its production facilities. After sacrificing 34,000 American lives to help defeat Communist North Korea's invasion of the South, the US demonstrated its faith in Korea's future by extending postwar economic aid for two decades. From 1954 to 1971, we provided more than $3 billion.
Was it a worthwhile investment? Today Korea is our seventh largest trading partner, and America's third largest market for agricultural products. Last year we sold about $25 billion worth of goods to that former aid recipient.
Moreover, unlike our trade relationship with Japan, China, and Taiwan, America actually enjoys an annual account surplus with South Korea.
Other dividends have just begun to surface in the past three years. Since the election of President Kim Young Sam at the end of 1992, democracy and freedom have taken off in South Korea. Americans have been hoping for these results since the Korean War. They prove the wisdom and success of our human and financial investments there.
Full civilian government has replaced military-based rule. Free and regular elections offer Korean voters a choice between competing parties and candidates. President Kim instigated many election-reform and anticorruption programs that have successfully cleaned up Korean politics and government. Human rights are now respected and political dissent is tolerated.
Korea's economy is being deregulated and liberalized, permitting us more access to its trade and investment markets. Last year, we successfully negotiated agreements on liberalizing shelf-life standards for meat, and on greater market access for US automobiles, cigarettes, and telecommunications products. We still have areas of difference over secondary nontariff barriers, but talks are in progress.
Finally, Koreans are shouldering a greater share of the financial burden for their own national defense, as they should. Our alliance, bolstered by the presence of some 37,000 US troops on Korean soil, helps protect the peace for all of Asia. Last July, Presidents Clinton and Kim dedicated the Korean War Memorial here in Washington, and rededicated our two countries to a firm and lasting security alliance against all threats.
None of us debates the fact that "charity begins at home." But wise investments abroad that support our own interests and values pay direct dividends over time. South Korea today is one good example (among many) that reminds us of that reality.
