NAM-HUN SUNG / RAPHO FOR TIME

SMILE: Fans at the Pusan film festival, a showcase for Korea's rising stars, snap photos of their idols on the red carpet

Breaking Through
	South Korea used manufacturing muscle to build a modern economy. Now it has started to focus on using its head
	By Anthony Spaeth and Donald Macintyre

Posted Monday, November 7, 2005; 20:00 HKT
The opening ceremony of the World Stem Cell Hub was held last month at Seoul National University Hospital, in an aging lecture hall equipped with worn, wooden desks and iron reading lamps. While the setting was antiquated, the occasion was 21st century all the way. South Korea's stem-cell "bank" will offer cloned embryonic-stem-cell lines to researchers around the world hoping to devise revolutionary treatments for ailments such as diabetes and Parkinson's disease. The guests squeezed into the hall included South Korea's President Roh Moo Hyun and leading lights in the field of cloning and stem-cell research, such as Ian Wilmut, the British embryologist who cloned Dolly the sheep. The heady ambitions of this scientific enterprise were trumpeted on banners around the hall: "Hope of the World. Dream of Korea."

The stem-cell bank made global headlines and that's a very Korean dream these days: to be recognized internationally as a country on the cutting edge, not a mere copycat manufacturer of VCRs and microwave ovens. As the port of Pusan, the nation's second-largest city, prepares to host the annual Asia-Pacific Economic Cooperation (APEC) summit this month, South Korea finds itself at a watershed moment between its past and future. The country's export-intensive postwar economic model, borrowed from Japan, delivered the robust economic growth that is one of the principal goals of APEC; by the time of the organization's landmark 1994 conference in Bogor, Indonesia, South Korea was on the brink of being recognized as a developed nation, defined as having per-capita income of $10,000. Today, the country is home to world-class technology companies (Samsung Electronics, LG Electronics), automakers (Kia Motors, Hyundai Motor), steelmakers (POSCO) and shipbuilders (Hyundai Heavy Industries). South Korea has become a land of bullet trains and microchip-controlled refrigerators for making kimchi.

But reliance on manufacturing and exports has also left Korea vulnerable to foreign competitors following the same blueprint—particularly China. The Asian financial crisis of 1997 brutally revealed the flaws in the South Korean economy—the sclerotic and secretive management practices of the family-dominated chaebol (business conglomerates); corruption and cronyism; and the fact that much of what the country produces is based on technologies invented in the U.S. or, even more ignominious, in Japan, its former colonial overlord. South Korea's economy grew by 4.6% last year and it's expected to slow to 4% this year, compared with 9% or higher in China.

The 1997 crisis helped convince many South Koreans that it isn't enough to be a "developed" follower of other countries' ways. They are determined instead to create an advanced economy powered by their own inventions and talents. This business plan jibes perfectly with APEC's philosophy of breaking down barriers and opening up to the world, and that's a remarkable about-face for what has traditionally been a deeply insular nation, distrustful and resentful of the outside world. Koreans are now jetting everywhere, learning a host of foreign languages, investing everywhere from China and India to Turkey and the Philippines. Before 1989, the average citizen was only allowed a passport for government-approved business and family visits, and investing abroad was akin to treason. But innovation, openness and an eagerness to compete on the global stage—particularly in hot, fast-evolving fields such as I.T., biotech and entertainment—are now national mantras.

Switching to an unfamiliar economic game plan entails risks—but "reckless" and "hasty" are adjectives Koreans use with pride to describe themselves. "Korea has not only the brains but the basic attitude," says Dr. Hwang Woo Suk, who conceived the World Stem Cell Hub last April and brought it to fruition in just six months. Patients suffering from spinal-cord injuries and Parkinson's find nothing hasty in that: last week, when the center started accepting applications for cell donations from people who might benefit from the research, its server nearly crashed from the overload. Listen to Hwang and there is no mistaking the sense of urgency fuelling this economic transformation: "We have to find another kind of national growth engine."

Continued...

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