Global Talent: Skilled Labor as Social Capital in Korea

by Gi-Wook Shin, Joon Nak Choi

Overview

Global Talent seeks to examine the utility of skilled foreigners beyond their human capital value by focusing on their social capital potential, especially their role as transnational bridges between host and home countries. Gi-Wook Shin and Joon Nak Choi build on an emerging stream of research that conceptualizes global labor mobility as a positive-sum game in which countries and businesses benefit from building ties across geographic space, rather than the zero-sum game implied by the "global war for talent" and "brain drain" metaphors.

The book empirically demonstrates its thesis by examination of the case of Korea: a state archetypical of those that have been embracing economic globalization while facing a demographic crisis—and one where the dominant narrative on the recruitment of skilled foreigners is largely negative. It reveals the unique benefits that foreign students and professionals can provide to Korea, by enhancing Korean firms' competitiveness in the global marketplace and by generating new jobs for Korean citizens rather than taking them away. As this research and its key findings are relevant to other advanced societies that seek to utilize skilled foreigners for economic development, the arguments made in this book offer insights that extend well beyond the Korean experience.

Product Details

ISBN-13:	9780804794381
Publisher:	Stanford University Press
Publication date:	03/18/2015
Series:	Studies of the Walter H. Shorenstein Asia-Pacific Research Center
Sold by:	Barnes & Noble
Format:	eBook
Pages:	216
File size:	5 MB

About the Author

Gi-Wook Shin is Professor of Sociology and Director of the Walter H. Shorenstein Asia-Pacific Research Center at Stanford University. Joon Nak Choi is an Assistant Professor in the Department of Management at The Hong Kong University of Science and Technology.

Read an Excerpt

Global Talent

Skilled Labor as Social Capital in Korea

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By Gi-Wook Shin, Joon Nak Choi

STANFORD UNIVERSITY PRESS

Copyright © 2015 Board of Trustees of the Leland Stanford Junior University
All rights reserved.
ISBN: 978-0-8047-9438-1

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CHAPTER 1

Toward a New Model of Engaging Skilled Foreigners

The story of Korea's economic miracle is now well known throughout the world. Over the past 50 years, the Republic of Korea (henceforth Korea) has gone from one of the least developed countries to one of the most developed. Today, Korea ranks among the 31 high-income members of the Organisation for Economic Co-operation and Development (OECD) and is classified as an advanced economy by ratings firms, including the FTSE (Financial Times and London Stock Exchange), Standard and Poor's, and Dow Jones. As the only member of this prestigious club that has gone from a recipient to a provider of official development aid (ODA), Korea has become a model for many other developing countries that seek to replicate its success. Korea's economic rise has been accompanied by social development as well; according to the 2010 Human Development Index (HDI), a broad measure of social development, Korea scores virtually identical to Japan and above France, Great Britain, and Italy. Today, Korea has gained a "place in the sun" as an advanced nation with firms like Samsung Electronics and Hyundai Motors, which have become global leaders.

Yet economic development has come with new challenges. As a wealthy, high-income developed country, Korea is increasingly experiencing the same competitive challenges from newly industrializing countries as other advanced nations. In recent years, many countries have followed Korea's formula for development: exporting industrial goods and using the proceeds to invest in more advanced technology, gradually moving up the technology ladder to produce increasingly profitable goods. Through this process, industrializing countries like China have become increasingly sophisticated competitors in the same export industries that Korea has recently dominated, including automobiles, consumer electronics, and shipbuilding. Cutthroat competition in such industries harms Korea more than it does other developed countries that rely less upon manufacturing and more on lucrative service sector industries such as finance and business services. Having reached the limits of export-oriented industrialization, Korea is now attempting to find new engines of economic growth. Toward this end, the previous Lee Myung-bak administration promoted a "knowledge-based economy" while the current Park Geun-hye government is pursuing a "creative economy," emphasizing the development of advanced services and complementing Korea's historical strengths in electronics hardware with software expertise.

Such efforts have been hampered by Korea's shortage of top-tier "global talent." Korea has an extensive system of higher education—indeed, nearly 70 percent of Koreans between 25 and 34 years of age hold the equivalent of a bachelor's degree, the highest in the OECD. Yet, the country faces a shortage of global talent—individuals with key technical or professional skills conferring valuable advantages for firms competing in global markets. For instance, one recent ranking of cities worldwide conducted by the consultancy A.T. Kearney and the Chicago Council on Global Affairs highlighted Seoul's shortage of global talent. This study ranked Seoul as the ninth most important city in the world, with high marks in terms of business activity (7th) and research and development (5th) but much lower marks regarding the quality of its human capital (35th). Similarly, the French business school INSEAD recently ranked Korea 28 out of 103 countries in the 2013 Global Talent Competitiveness Index, a disappointing performance considering its economic strength and vitality. Such evidence suggests that Korea produces an abundant supply of college graduates yet faces shortages of global talent in key sectors, including business services and software engineering.

One potential solution for Korea is to follow countries like the United States and Canada in recruiting talented foreigners who possess the prized skills mentioned above. A large literature on economic growth has long considered skilled foreigners instrumental for enhancing a country's economic competitiveness. As Kirkegaard (2007: 1–2) argues, "The long-term economic growth of an advanced country ... is with certainty highly correlated with the skill level of its residents.... The skill level in turn depends heavily on both the education and immigration policies of the country. The combined outcome of these policies is a ready supply of high-skilled workers, which is critical for globally competing businesses." For this reason, the United States, Canada, and other such countries not only train their own citizens at institutions of higher education but also recruit foreigners possessing desired expertise in fields as diverse as medicine, finance, and software engineering. Foreigners possessing specialized technical expertise or training have played a critical role in endowing such countries with substantial competitive advantages. One needs to look no further than Silicon Valley, which could not have obtained and maintained its status as the center of the global technology industry without an influx of talented Indian and Chinese engineers.

Two global trends are making the recruitment of skilled foreigners all the more important. Economic globalization has facilitated the flow of goods, services, and capital across national boundaries and has increased the demand for top professionals who are qualified to handle such tasks. Demographic changes will further increase the competition for global talent, given a looming shortage of skilled labor in advanced countries. Approximately 20 percent of humanity lives in countries where the number of children being born is lower than that of deaths among the elderly. This transition will affect the workforce sooner than outright population decreases; the number of economically active individuals will begin declining long before the overall population does. Thus, between economic shifts increasing the demand for skilled labor and demographic shifts limiting the supply of such labor, workers with the right skills are becoming increasingly valuable, and the "global war for talent" will only intensify.

In this global war for talent, countries such as Korea that base national identity on shared ethnicity face inherent disadvantages when recruiting skilled foreigners. The countries that have most successfully recruited and leveraged skilled foreigners, such as the United States, Canada, Australia, and New Zealand, have all been "settler societies" characterized by a willingness to accept, assimilate, and naturalize new citizens regardless of their ethnic origins following the legal principle of jus soli (right of soil). Settler societies are attractive to skilled foreigners because their citizens embrace shared narratives of long-term immigration and assimilation, making it possible for new immigrants to become full members of these societies. For instance, the "American Dream" of enjoying a better life as a legitimate member of American society has long drawn skilled individuals of diverse ethnicity to the United States. Such narratives of diversity, tolerance, and accommodation strongly contrast with narratives of national identity prevailing in many other countries. Countries like Korea, Japan, and Germany have all been "nonimmigrant societies" characterized by ethnic identities based upon the belief that its members share a bloodline reaching back several centuries or millennia. For instance, most Koreans hold the idea that all ethnic Koreans are linked through a shared ancestry, and Korean citizenship is awarded based on the principle of jus sanguinis (right of blood). Such an ethnic conception of nationhood and citizenship repels skilled foreigners because outsiders lacking this shared bloodline are not considered fully Korean, regardless how long they stay in the country or how well they assimilate into Korean society and culture (see Shin 2006). Individuals without Korean blood might conceivably obtain Korean citizenship but face discouragingly obstinate barriers. Koreans also remain reluctant to welcome foreigners into their remarkably closed social networks, despite recent efforts by their government to accommodate migrant laborers and foreign brides through multiculturalist policies. For such reasons, a study by the Samsung Economic Research Institute suggests that Korean firms and society would be neither willing nor able to attract top foreign talent.

Across the world, however, such conditions represent the norm rather than the exception. While few countries are nearly as ethnically homogeneous as Korea (see Shin 2006), many if not most countries award citizenship based on jus sanguinis rather than jus soli. As the Center for Immigration Studies notes, only 30 of the world's 194 countries grant automatic birthright citizenship based on jus soli. Data from the World Value Survey further suggest that Korea is representative of a large subset of such nonsettler countries. Koreans distrust foreigners more than people in any other high-income OECD country for which data are available. According to Figure 1.1, Korea differs from three groups of advanced countries. As expected, the settler societies (the United States, Canada, and Australia) are relatively trusting of foreigners. The Scandinavian countries also live up to their reputation for tolerance, as well as two countries (France and Great Britain) that draw large numbers of immigrants from former colonies. However, Korea broadly resembles a fourth group: countries such as Italy and Germany featuring substantial amounts of ethnic nationalism. Other developed societies in Asia should also fall into this category; in addition to Korea, Taiwan (not shown) and Japan (no data available) would presumably fit this pattern.

This fourth group of more ethnically homogeneous countries—including Korea—has even more to gain from skilled foreigners than other developed countries but faces the greatest hurdles in recruiting such individuals. Most of these countries are projected to face significant population declines over the next few decades and would benefit the most from an influx of skilled foreigners. For instance, Korea's recorded birthrate has dropped to 0.89, which has been the lowest in the world for two consecutive years. Indeed, by 2050, Korea is projected as having the highest proportion of people over 65 of any country in the world. The coming dearth of young workers, along with a fast-aging population, will make skilled foreigners particularly valuable to countries such as Korea. Yet, these very countries have the greatest distrust of foreigners—in other words, xenophobia—and thus face special challenges when recruiting skilled foreigners.

In this book, we examine how countries like Korea might recruit and leverage skilled foreigners to overcome looming economic and demographic challenges. While most studies on skilled foreign labor have focused on settler societies, we address this issue from the perspective of nonsettler societies using the Korean case, which resembles a large group of Asian and European countries that have all had difficulty in accommodating immigrants and have consequently been debating the merits and costs of multiculturalism. To the extent that Korea represents those countries, the central arguments and implications developed in this study should apply toward these other countries.

Skilled Foreigners in the Global Economy: Calling for a New Model

In this book we argue that nonimmigrant countries should follow an emerging approach toward leveraging skilled foreigners to improve their economic competitiveness. Skilled foreigners bring human capital—specialized skills that are acquired through education, training, and work experience. Skilled foreigners also bring social capital—social ties that spread information and innovations and facilitate trust. Existing work on skilled foreigners and current debates on "brain drain" have predominantly focused on the former, overlooking the importance of the latter. For this reason, we call for greater attention to an emerging "new model" of foreigner recruitment. The new model acknowledges the human capital benefits highlighted by the old model but simultaneously focuses on skilled foreigners' ability to bridge their home and host societies. These "transnational bridges" enable the spread of market information, the diffusion of innovations, and greater cultural understanding between these societies. Such benefits not only accrue to the host societies where the foreigners now work and live but also the home societies where the foreigners originated. Thus, the new model highlights bidirectional "brain circulation" rather than a zero-sum brain drain. Saxenian (2006: 5) epitomizes the new model of foreigner recruitment, saying that "the scarce competitive resource is the ability to locate foreign partners quickly and to manage complex relationships and teamwork across cultural and linguistic barriers." Such social capital benefits may even exceed the substantial human capital benefits highlighted by the old model, especially in nonimmigrant societies as shown in this study.

Rationales for Recruiting Skilled Foreigners: The Old Model

The "old model" highlights the human capital benefits of recruiting skilled foreigners. Researchers and policymakers alike have long viewed human capital as an important ingredient for national economic development. Human capital, defined as "productive wealth embodied in labour, skills, and knowledge" according to the OECD's "Glossary of Statistical Terms" (2012c), enables productive economic activities much like physical capital investments. Gary Becker explains:

To most people, capital means a bank account, a hundred shares of IBM stock, assembly lines, or steel plants in the Chicago area. These are all forms of capital in the sense that they are assets that yield income and other useful outputs over long periods of time. But such tangible forms of capital are not the only type of capital. Schooling, a computer training course, expenditures on medical care, and lectures on the virtues of punctuality and honesty are also capital. That is because they raise earnings, improve health, or add to a person's good habits over much of his lifetime. Therefore, economists regard expenditures on education, training, medical care, and so on as investments in human capital. They are called human capital because people cannot be separated from their knowledge, skills, health, or values in the way they can be separated from their financial and physical assets.

Although human capital can be increased through investments in formal education, informal training, or simply by workers learning on the job, countries still face a shortage of certain types of skilled labor. A given country's citizens often prefer one skilled occupation over another, even if it creates surpluses in one occupation and shortages in another. For instance, the United States has long had a serious shortage of skilled engineers while training a large surplus of qualified lawyers. Korea has increasingly experienced similar problems, despite historically being known for its deep and talented pool of engineers. According to the OECD's PISA 2006 database, only 8 percent of 15-year-olds in Korea are planning for a career in engineering or computing compared to the OECD average of 11 percent.

(Continues...)

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Excerpted from Global Talent by Gi-Wook Shin, Joon Nak Choi. Copyright © 2015 Board of Trustees of the Leland Stanford Junior University. Excerpted by permission of STANFORD UNIVERSITY PRESS.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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Table of Contents

Contents and Abstracts1Towards a New Model of Engaging Skilled Foreigners chapter abstract

Korea has pursued new opportunities for continued growth, but has been hampered its lack of global talent— individuals with key skills conferring valuable advantages in global markets. Countries like the United States have generated such advantages by recruiting skilled foreigners. Korea has had difficulty recruiting such foreigners because its strong ethnic nationalism makes it comparatively unfriendly for foreigners. Yet, Korea can leverage skilled foreigners by inviting skilled foreigners for a short-term sojourn. Since they will have difficulty assimilating, such foreigners are not expected to stay and contribute their human capital over the long-term. However, if they return home, they can become transnational bridges linking Korea with their home societies and create mutually beneficial opportunities for information exchange, cooperation and trade. Overall, Korea and similar countries in Europe and Asia can benefit from participating in global brain circulation, even if their ethnic nationalism hampers them from assimilating skilled foreigners.

2Foreign Students in Korea chapter abstract

In recent years, Korean universities have attracted an increasing number of foreign students, mainly within the Asian region. Some students expressed mainly instrumental reasons to study in Korea such as the lower cost, the availability of scholarships, and Korea's geographical proximity and social similarity to their home countries. In contrast, other students expressed mainly social identity reasons to study in Korea, mainly the opportunity to learn about Korea's development experience and to experience firsthand a culture they had learned to appreciate while consuming Korean cultural products abroad. Such individuals also expressed a desire to bridge Korea and their home countries for mutual benefit, a tremendous opportunity for all involved. Understanding this, several Korean firms have begun to recruit foreigners studying in Korea and begun training them to run subsidiaries in their home countries.

3Korean Students Abroad chapter abstract

Koreans study at U.S. and Canadian universities to receive what they perceive to be a better education. On average, such students have a moderately high desire to return to Korea after completing their degrees, being more familiar with the Korean environment and wanting to spend more time with family and friends back home. Indeed, many individuals want overseas work experience to enhance their career prospects when they eventually return. However, two subgroups of Korean students abroad have less desire to return home. Choki yuhak students, who started studying overseas at a relatively young age, have become acculturated into in the U.S. and Canada and feel more comfortable there than in Korea. Also, students who attend Korean churches feel less homesickness, as these churches function as small-scale ethnic enclaves. Although they prefer to remain abroad, both groups have the capability and desire to bridge Korea with their host societies.

4The Korean Diaspora chapter abstract

The Korean diaspora includes some of the best-educated citizens of the U.S. and Canada. This group encompasses a range of individuals, from corporate ladder-climbers to freewheeling artists, who may or may not be familiar with Korea. Individuals unfamiliar with Korea express a strong desire to sojourn in Korea to reclaim their lost identities, but react very differently to actual sojourns based on their goals and interests. While business-oriented individuals react positively to the ample opportunities they encounter in Korea, others react negatively to the conformity and sexism they perceive as being prevalent. Individuals more familiar with Korea have little need to reclaim identities they never lost, and express greater interest in relocating to Korea long-term based on career opportunities they find there. Overall, a shared ethnic identity draws the diaspora back to Korea, where they can potentially contribute the abundant human and social capital they possess.

5Expatriate Indians and Korean Engineering chapter abstract

The manufacture and export of high-technology goods represents a crucial pillar of the Korean economy. Yet, the ongoing convergence between hardware and software threatens to topple this pillar, given Korea's shortage of software engineers. India produces more high-quality software engineers than its economy requires, creating an opportunity for foreign firms to recruit skilled engineers. However, Korean firms face competition from American rivals and are handicapped by Korea's ethnic nationalism. Although Korean firms may have difficulty recruiting graduates of the elite Indian Institutes of Management (IIMs), they are nevertheless attractive to non-IIT graduates who are nearly as qualified. Indeed, such individuals express special interest in East Asian countries to avoid social competition with IIT graduates. This example illustrates how social differences amongst skilled foreigners create opportunities for countries like Korea to recruit highly desirable groups despite intense competition.

6Towards a Global Korea chapter abstract

This book examines four different groups of skilled foreigners in the Korean context. The findings presented in the book have important theoretical and practical implications. Theoretically, the findings not only integrate geographic research on cross-national boundary spanners with sociological research on transnationalism, but also illuminate why individuals consciously decide to function as transnational bridges. Practically, the findings not only suggest how governments and firms might benefit from transnational bridging, but also how they might promote such behavior through university reforms and public diplomacy. However, the findings also suggest that Korea cannot fully benefit from transnational bridging without fundamental changes to its social institutions and corporate organizations. Although the book focused on the Korean context, its findings are also relevant towards many other economically advanced countries characterized by ethnic nationalism, such as Germany and Japan.

Editorial Reviews

"Overall, this book offers theoretical lessons for general research on transnationalism and cultural and social capital of highly skilled migrants, even though it focuses most explicitly on business and labor markets. It invites the attention of policy makers and business strategists, who also appear to be its intended audience." —Keumjae Park, International Migration Review

"Advanced economies like Korea face a growing mismatch between low birth rates and increasing demand for skilled labor. Shin and Choi use original, comprehensive data and a global outlook to provide careful, accessible and persuasive analysis. Their prescriptions for Korea and other economies challenged by high-level labor shortages will amply reward readers of this landmark study."—Mark Granovetter, Professor of Sociology, Stanford University

From the Publisher

"Overall, this book offers theoretical lessons for general research on transnationalism and cultural and social capital of highly skilled migrants, even though it focuses most explicitly on business and labor markets. It invites the attention of policy makers and business strategists, who also appear to be its intended audience."

International Migration Review - Keumjae Park

"Advanced economies like Korea face a growing mismatch between low birth rates and increasing demand for skilled labor. Shin and Choi use original, comprehensive data and a global outlook to provide careful, accessible and persuasive analysis. Their prescriptions for Korea and other economies challenged by high-level labor shortages will amply reward readers of this landmark study."

Stanford University - Mark Granovetter