[Global Column] The Crisis of the Liberal International Economic Order and South Korea's Role

The liberal international economic order is characterized by openness and interdependence. Within the liberal order, each country seeks to open its economic gates to activate international economic exchanges. Furthermore, the activation of international economic exchanges increases the economic interdependence among countries, contributing to the maintenance of openness. In the liberal international economic order, international economic exchanges function as essential elements for the economic prosperity or survival of nations. The economic progress humanity has achieved since the 19th century is not only thanks to the technological advancements sustained after the Industrial Revolution but also the result of political efforts to restore and maintain the liberal international economic order despite various upheavals.

Currently, the view that the liberal international economic order is facing serious risks is widespread. Various factors threatening the liberal order currently exist. First, as the competitive pressures caused by an open global economy undermine the economic stability of many people, political demands for protectionist policies are increasing. The election of former President Trump in 2016 was a symbolic event where such political demands exploded. Strategic or military conflicts symbolized by the US-China hegemonic competition and the spread of nationalist sentiments are also significant factors that can undermine the liberal international economic order. Additionally, technological competition triggered by the Fourth Industrial Revolution acts as a factor increasing the temptation toward protectionism. Lastly, COVID-19 has demonstrated the risks inherent in economic interdependence, thereby legitimizing protectionist policies.

Korea can be said to be a country that has grown within the liberal international economic order. The export-led development strategy that enabled Korea's rapid economic growth could not have succeeded without the existence of the liberal order. Among the greatest beneficiaries of the liberal order formed around the United States since 1945, Korea was certainly one. Although Korea benefited from the liberal order, it was not a contributor to its formation. Korea’s developmental strategy succeeded against the backdrop of the liberal international economic order but was not based on liberal principles. Protectionist policies were an important element of Korea’s developmental strategy.

Currently, Korea’s foreign economic strategy appears to be at a critical crossroads. First, Korea can make a passive choice to strategically respond to external pressures, such as the crisis of the liberal order, from a mercantilist perspective. Alternatively, it can make more active efforts to restore and maintain the liberal order. Until now, Korea has mainly made passive choices. However, the crisis of the liberal international economic order will ultimately result in a crisis for the Korean economy. Therefore, Korea, which rapidly elevated its national status within the liberal order, needs to take on a more active international role. Korea should use the current crisis of the liberal international economic order as an opportunity to transform from a beneficiary to a maintainer of the liberal order. To perform the role of maintainer of the liberal order, Korea must clearly declare and practice liberal principles in the international community and build an international reputation as a defender of liberalism. Above all, what is necessary for this is to form a social consensus that open liberalism, not nationalist mercantilism, should be the principle of Korea’s foreign policy.

Jae-Hwan Jeong, Professor, Department of International Relations, Ulsan University