REMARKS AS PREPARED FOR DELIVERY SANDY K. BARUAH ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT - WHITE HOUSE KOREAN-AMERICAN DAY - WASHINGTON, DC

FRIDAY, December 7, 2007

AS PREPARED FOR DELIVERY

Introduction by Vishal Amin, White House Associate Director of Speechwriting and Director of the Office of Asian Pacific-American Affairs

Thank you, Vishal, for that kind introduction. It’s a pleasure to be with you today and to represent President Bush and Commerce Secretary Carlos Gutierrez to address discuss economic development in the 21st century.

In our 21st century world, we cannot consider the issue of economic development without celebrating the great contribution that Korean Americans make to the robust American economy and society as well as acknowledging Korea as one of the world’s great success stories. At the end of the Korean War, Korea was one of the world’s poorest countries. In just 54 years since the end of that war, Korea:

• Is a vibrant democracy;

• Boasts the world’s 11th largest economy with a GDP of $1.2 trillion, and a GDP growth rate of 4.2% a year;

• Has substantial consuming power, with 49 million people and a GDP per person of $24,000;

• Is a great potential market for U.S. exporters; and

• Is a member of the Organisation for Economic Cooperation and Development – the OECD, a group of 30 countries committed to democracy and the market economy.

As Special Assistant Kim and Assistant U.S. Trade Representative Cutler made clear, President Bush appreciates the great contribution that Korean Americans make to our Nation, and the President and his team are committed to strengthening the already strong economic ties between the United States and Korea.

As we contemplate how strategies for strengthening this relationship, a little context can be helpful. I would like to help frame our discussions here at Korean-American Day at the White House by, first, providing a brief snapshot of the national economic environment, and then outline the realities of our 21st century economy as I see them from my chair at the Commerce Department.

OUR ECONOMY IS STRONG AND GETTING STRONGER

Looking at the national economic context, we have good reason to be optimistic. Thanks to the hard work and innovation of American workers and businesses, our national economy is strong. Just this morning, the Department of Labor reported that 94,000 jobs were created in November, marking the 51st consecutive month of job growth, making this the longest, most robust record of job growth in our nation’s history – ever.

The national unemployment level remains at a low 4.7% – a figure most economists consider to be below the full employment rate.

The economy has created about 2 million jobs over the past year. For those of you keeping score at home, that’s over 8 million new American jobs since August 2003, more jobs than all the other major industrialized countries – combined.

The American economy grew at 4.9% last quarter, providing for nearly 6 straight years of uninterrupted economic growth, showing that we have a very resilient, diversified, and flexible economy.

EXPORT GROWTH

One of the key reasons for America’s economic strength is the growth in U.S. exports – a reflection of our nation’s ability to succeed in the 21st century worldwide marketplace.

The global marketplace is paying off for the American consumer. According to research by the respected Financial Services Forum, the average American family income is $10,000 a year higher because of our participation in the global marketplace.

Today our export performance is booming. U.S. exports have increased by 11% over 2006, and for the first time in memory, the rate of growth of our exports is greater than our growth in imports. This has led to a narrowing of our trade deficit by nearly 8% or $30 billion compared to the same period in 2006.

This is important, because the jobs associated with exports have higher wages than other jobs, which helps drive our national prosperity.

That’s why it is important to open worldwide markets to U.S. goods and services. A key tool to accomplish this is Free Trade Agreements – FTAs, such as the U.S.-Korea FTA that Wendi Cutler addressed.

The evidence is clear. Free Trade Agreements work. Our trade deficit with FTA countries is substantially less than our trade deficit with the rest of the world. Since NAFTA was implemented, the exports between the U.S., Canada, and Mexico all increased, and the economies of all three countries grew significantly; the U.S. by 48%, Canada by 49%, and Mexico by 40%.

So, thanks – at least in part – to our strong export performance, it is clear that the American economy is resilient and strong. This is good news not just for the nation, but for your economic regions as well, because a strong, growing national economy allows economic regions and individuals to tap into this expanding economic pie and share in our national prosperity. It takes both smart national policies and forward-thinking regional action in order for economic growth to occur.

THE 5 NEW REALITIES OF 21ST CENTURY ECONOMIC DEVELOPMENT

So, with a strong national economic foundation and the realization that our economy is interconnected with the rest of the world, what is the environment that we will encounter as work to continue to strengthen our economy in the 21st century?

I believe that there are 5 realities of the 21st century we must understand and respond to.

Having just mentioned America’s strong export performance, let’s begin with New Reality #1 of the 21st century economy: While perhaps the most obvious, it’s also the most important; and it’s the that we are truly in a Global Economy, or as New York Times columnist Tom Friedman says – the world is…flat. In the new flat global marketplace, competition is not just from the firm down the road; our competition comes from any person in any corner of the globe with a good education, a good idea, and a good Internet connection.

Our economy today is interconnected:

• The number one selling car in America is a Toyota – and all those Camrys sold in the United States are built right here in the United States.

• The same is true with the Sonata sedan and the Santa Fe SUV by Hyundai – Korea’s largest automobile manufacturer – which are produced at the new $1.4 billion Hyundai plant in Alabama.

Determining what is “American” and what is “foreign” becomes more difficult every day – but it is the American consumer that wins in the global marketplace. The global marketplace is paying off for the American consumer by providing us greater product choice, improved access to new technologies – regardless where on the planet they come from – lower prices, and vast opportunities for American businesses and workers to sell our products and services to those outside America.

And, with 95% of potential customers for American products living outside the United States, understanding this reality becomes more important every passing day.

New Reality #2: Competition in the 21st century global marketplace is intense, and the pace of change will continue to accelerate. It took 55 years for the automobile to spread to one-quarter of the U.S. population. It took only 7 years for the Internet to reach that same milestone. Imagine how quickly we will adopt the next big thing.

The nature of innovation itself is changing: innovation is becoming multidisciplinary as different technologies converge, creating new fields. Fields that didn’t even exist just a few decades ago. People smarter than me debate where bioinformatics or nanotechnology will take us, but all agree that they will become major drivers of the world economy.

This new reality where cycle times for products and ideas continue to shrink will require all institutions – public, private, educational, and non-profit – to continually adapt and change. Those that don’t are at risk. Those that do have the opportunity for reward.

New Reality #3: Yes, the world becomes a bit more complicated every day. In order to respond to this increased complexity, we must realize that we have reached a point where the components of competitiveness can no longer be pursued separately. Just as technologies are converging to create new fields of innovation, so are the components of competitiveness merging to shape economic growth in the 21st century. This reality holds two important lessons for the local and regional level:

First, the idea of workforce development, community development, economic development, and educational programs occurring in separate silos can no longer be tolerated. The interconnected challenges of these components of competitiveness must be tackled in concert.

Second, in our new 21st century global economy, we must acknowledge what we all learned on the school playgrounds of our youth, that we are stronger when we stand together than when we stand alone.

Standing together means that we need to look beyond traditional political jurisdictions – the city boundary, the county line, even the division between States – and work together. Because the competitiveness of America’s companies is in large part tied to the competitiveness of the economic regions in which they do business.

New Reality #4: Public-Private partnerships become more critical every day. While governments at all levels, universities and other non-profit institutions are important players, let’s not forget that the private sector is the most important element of any successful economic development strategy. Unless the private sector is ready, willing and able to invest in a community, economic growth simply will not occur, regardless of how much government spends. The private sector should not just have a seat at the table, but should actively be engaged as full partners in strategies for economic growth.

The private sector should be helping to shape – within the parameters of public accountability, of course – the development strategies that will lead to more higher-skill, higher-wage jobs.

New Reality #5: At the end of the day, it is the ability to innovate that is the only possible sustainable competitive advantage in the 21st century. It’s not location. It’s not even the cost of doing business. Factors such as these will continually shift in a dynamic worldwide economy. But if a nation can maintain its edge in innovation, it will grow and prosper.

America is clearly the world’s leader in innovation. The spirit of discovery is one of our national strengths. From Edison's light bulb to Jarvik’s artificial heart to the iPod to the frozen pizza, we have brought more technological breakthroughs to the marketplace than any other nation – and this has made not just America, but the world, safer, healthier, more productive and more prosperous.

Companies – by necessity – must continually innovate to stay one step ahead of their global competitors, especially as the pace of change in our global marketplace continues to accelerate. If they don’t, they will cease to exist. There are no pit stops in this race. And the challenge will not go away by ignoring the reality or by closing off America to the rest of the world.

Meanwhile, government, university, and nonprofit leaders at all levels have the same responsibility to adapt their approach to fit the changing times. Government – by design – moves slowly, and that can be a problem in our fast-moving economy. Unless government can offer flexible and innovative programs and tools to economic regions – such as the U.S.-Korea Free Trade Agreement – we risk putting these areas that we are responsible for at a competitive disadvantage in the global marketplace. Innovation is just as important in the public and nonprofit sectors as it is in the private sector.

So, these are some of the “new realities” we collectively face in the 21st century – filled with opportunity and challenge:

• We are in a global economy.

• The pace of change will continue to accelerate.

• The components of competitiveness can no longer be pursued separately – and we must work collaboratively.

• Partnership with the private sector is critical.

• And innovation is the only sustainable competitive advantage.

CLOSING

Perhaps the most relevant of these new realities is #1: that we are living in a flat, global economy that offers opportunities to buy, sell, and partner with all parts of our globe. It is important that at all of us, in government, in business, in academia, and as individuals work to adapt to this new reality, and to position ourselves to engage in and take advantage of the global marketplace. Free trade agreements will help us adapt to this new reality, and hopefully we will soon add the U.S.-Korea Free FTA to our arsenal of tools that will helpu us master the 21st century global marketplace.

As Korean Americans, you are in an ideal position to advance this global economic development environment. By definition, you already have a global view, and you can help build global partnerships to the benefit of the American people, Korean people, and the worldwide economy.

The 50-year-old U.S.-Korea partnership is a great example of what success looks like in the global economy. This partnership already boasts $78 billion in annual bilateral trade, and that will be bolstered through the U.S.-Korean FTA. Through this partnership, the U.S. and Korea are working together to make our nations more secure and deliver a better life to our citizens.

The ties that bind our nations are enriched by 2 million persons of Korean origin that call America home. These citizens contribute tremendously to America's vitality. Korean Americans are leaders in business, medicine, science, engineering, academics, technology, and other fields.

It is clear that the U.S.-Korea relationship is a key priority for President Bush. But the responsibility to make the relationship work – and work better – is all of ours. It’s not just the American and Korean governments. It’s the private sector. It’s the non-profit institutions. It’s our educational institutions. While I pledge that the Department of Commerce will do our part, we are all responsible for this important relationship.

On behalf of Commerce Secretary Carlos Gutierrez it has been my distinct pleasure to be here this morning. I applaud you on your commitment to building a voice for the Korean American community, and thank you for your efforts to enhance the important relationship between the two great nations of the United States and Korea.

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