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Remarks by President Park Geun-hye of the Republic of Korea at the 2013 APEC CEO Summit in the Republic of Indonesia

Source : Cheong Wa Dae

The Business of Innovation: Why Does It Matter?

Honorable Chairman Wishnu Wardhana and distinguished CEOs,

Good afternoon,

At a time when the global economy moves toward resilience and growth beyond crises, it is very meaningful for me to speak with the CEOs leading the Asia-Pacific economies on the topic of innovation.

Distinguished CEOs,

Though the world economy is somehow inching toward stability through international cooperation in the wake of the 2008 global economic crisis, the trend of low growth and high unemployment as well as growth imbalance is still persisting.

The fallout from the financial crisis is commonly fingered as the cause of such delayed economic recovery across the globe, but there are some who have a different view as well.

They point out that the pace of innovation recently has fallen behind the fast pace that continued over the past 250 years since the Industrial Revolution and that what is underlying the sluggish global economy is the stagnation of innovation.

Differently put, the root cause of the global economic recession is not the financial crisis but the innovation crisis.

It might be difficult to tell which one is right, the theory of financial crisis or the theory of innovation crisis. One thing is clear, however, and that is the fact that innovation is the one and only source for achieving sustainable growth of the world economy.

Economic stimulus packages that have been implemented by many countries since the global crisis may provide a short-lived effect like performing CPR, but they cannot cure the fundamental problems and bring back vitality.

Only innovation will be able to generate endless new growth engines and create jobs.

Distinguished CEOs,

The Republic of Korea achieved industrialization from the ruins of the Korean War in just half a century and pulled off the Miracle on the Han River.

The driving force behind that miracle was the spirit of meeting challenges without fear of failure and innovation characterized by the unceasing pursuit of change, which combined to turn hardships and crises into opportunities for progress.

The Korean economy, however, is also now saddled with structural problems such as low growth and youth unemployment stemming from the ongoing trend of low growth in the global economy and a rise in uncertainties.

For this reason, the Korean Government is on a quest for a creative economy as part of a new strategy to promote economic revitalization through innovation.

The creative economy is all about creating new markets and jobs by combining science and technology with IT and galvanizing the convergence between different industries as well as between industry and culture, building on the creative ideas of economic players.

Korean singer PSY's hit song "Gangnam Style" could provide amusement for 1.7 billion people around the world while generating new added value in such a short span of time thanks to the power of such new media as YouTube. A fusion of circus acts that were on the wane with a variety of stories and music as well as stage machinery created a completely new type of show "Cirque Du Soleil." These are exemplary cases of the creative economy.

A creative economy is distinguished from existing economic paradigms in the following two main aspects.

First, while economic growth in the past was mainly driven by the utilization of mineral resources, the creative economy finds its driving force for economic progress in the creativity of people. Unlike mineral resources, creativity neither depletes no matter how much it is used nor involves any side effects such as environmental contamination. In addition, the law of diminishing returns does not apply to it. For this reason, the creative economy has no limits in growth and could help realize sustainable growth.

Second, as creativity is universally inherent in all economic players of all countries unlike capital or mineral resources, it could serve as a major driving force to overcome the imbalance in growth. Up until now, the focus of poverty eradication efforts in developing countries and advanced nations' assistance to the vulnerable has been placed on expanding infrastructure and the social safety net. If the focus shifts in the future to helping the poor stand on their feet by developing their creativity, it would be possible to open a new horizon for inclusive growth.

Distinguished CEOs,

The potential of the creative economy and the expected outcomes know no limits. For the realization of its potential, however, there remain many barriers that have to be overcome without fail.

First is the barrier of regulation.

The existing regulatory framework is based on imposing industry-specific regulations, which ends up erecting barriers between different industries. The primary method of regulations was a positive system, which is characterized by prohibiting in principle while admitting some exceptions.

This outdated regulation system stands in the way of convergence and integration, which constitute the core of a creative economy, and prevents the birth of new technologies and industries.

Making it a rule to switch to a negative regulation system, which is characterized by permitting in principle while prohibiting exceptions, as part of efforts to overcome these obstacles, Korea is now drastically abolishing various regulations obstructing convergence and integration and the creation of new industries.

Second is the barrier of finance.

New ideas, new technologies and new industries, dubbed as the Triple New's, form the basis of a business in a creative economy, which is mainly driven by start-ups and venture firms.

However, it is difficult to evaluate the economic value of a business in a creative economy, and such a business also entails high risks. As a result, its accessibility to finance is drastically lower than the existing business models.

In particular, in developing countries where the financial industries are in a rudimentary state, start-ups and venture companies could still fail to commercialize new technologies developed with new ideas because of the lack of funds. This could serve as a significant stumbling block to a creative economy.

To address this problem, the Korean Government is carrying out various policies to facilitate a virtuous circle in the venture capital ecosystem by changing the financing method from taking out loans to receiving investments, promoting M&A and providing financing policies tailored to the development stages of businesses.

Third is the barrier of education.

The existing educational system is heavily segmented by academic discipline and has been designed to produce standardized individuals who, through standardized schooling, come to possess standardized knowledge. When it comes to developing creative, convergence-minded individuals who can break with the standards to create something new and original, this kind of system has its limitations.

For the aim of greater innovation within the system, the Korean Government has begun lowering the walls separating academic disciplines and fields so as to foster more convergence-minded individuals. It is strengthening education programs for young entrepreneurs as well. In addition, efforts are being made to put into place an employment system that selects individuals on account of various skills and passions rather than on the basis of a uniform standard of qualifications.

Last is the barrier of borders.

When an economy is closed, the creative economy cannot move forward. A creative economy can take form only when exchanges of technology, finance and human resources vis-a-vis the world economy continue to take place and when open innovation is continuously pursued.

The institutional and cultural barriers that block economic exchange between countries can become the highest obstacles to realizing a creative economy. For this reason, the Korean Government is continuing to pursue FTAs with many different countries and aspiring to a high degree of open innovation.

Distinguished CEOs,

Even at this very moment, Korea remains fully engaged in its efforts for continuous self-improvement, building infrastructure and developing science and technology. Upholding core values of openness, sharing, cooperation and communication, the Government is working to provide open access to public data and intellectual property in its possession so as to encourage their use as seeds of innovation.

A "Creative Economy Town" has also been opened online as a space for individuals to receive professional mentoring to help them turn their creative ideas into businesses.

I firmly believe that the creative economy is a groundbreaking paradigm that has the potential to bring not only Korea but also all the countries of the world toward shared growth through mutual openness and cooperation.

As Korea continues working toward this aim, we will share our experiences with the world and especially give our active support to strengthening the capacity of developing countries to work toward building their own creative economies. In this way, we will contribute to the efforts to move the global economy toward resilience and growth.

I look forward to working together, on the basis of developing-country demand for the creative economy model, to spread innovation and development know-how and to realize shared growth in the region.

With dynamism and vitality, the economies of the Asia-Pacific region have made a significant contribution to overcoming the global economic crisis. What we are being called to do in the days ahead, on the strength of our continued innovation, is to lead the global economy to recovery.

I hope this event, which has brought together CEOs representing all of the economies of the Asia Pacific region, will be a starting point on the course toward sustainable growth, and I hope the gains for innovation and the creative economy will be enormous.

Thank you very much.

Government Press Release published on October 6, 2013

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