[Public Opinion Briefing Vol. 52-3] Issues Surrounding the Economic Crisis and Global Public Opinion

[Public Opinion Briefing Vol. 52] Causes and Solutions of the Global Financial Crisis as Seen by the World

1. Global Public Opinion Demands More Active Government Response

2. The Economic Crisis is a Joint Product of the U.S. and Other Governments, Finance, and Consumers

3. Issues Surrounding the Economic Crisis and Global Public Opinion

Should large corporations in crisis receive public funds? Majority in most countries except the U.S. are in favor.

Barriers to protect domestic companies face strong opposition from major trading partners; Korea also opposes at 68%.

Should large corporations in crisis receive public funds?

58% in 19 countries surveyed are in favor, 34% are opposed.

Only the U.S. shows strong opposition; most countries except the U.S. are in favor.

Korea: 59% in favor

In the 19 surveyed countries, 58% of respondents were in favor of providing public funds, compared to 34% who were against it. Generally, countries like Pakistan (77%), China (73%), and Turkey (71%) showed the highest public support for government intervention to rescue large manufacturing corporations in crisis. Although not as high, a majority of citizens in Western developed countries such as the UK (57%), Germany (56%), and France (55%) believe that injecting public funds is justified to rescue companies in distress. In Korea, support was 59%, exceeding the 39% opposition. This is likely due to the significant economic ripple effects that large corporations have on the national economy when they face bankruptcy.

However, only 28% of Americans agreed with injecting public funds into companies in difficulty to prevent economic collapse and mass unemployment. A significant 70% of Americans responded that injecting public funds into struggling companies would not prevent their insolvency and would ultimately burden the national economy. In other words, the prevailing American sentiment is that failing companies should be allowed to fail. While the strong influence of market liberalism in American public opinion is a factor, the public's sentiment appears to have significantly worsened due to the moral hazard and lukewarm attitude towards restructuring shown by companies that received substantial public funds earlier in the year.

[Figure 1] Perception of Public Fund Injection into Failing Companies (Unit: %)

Barriers to protect domestic companies: A solution to the economic crisis? Support and opposition are divided at 48% vs. 45%.

In Western developed industrial nations, China, and Korea, which have export-driven economies, criticism of protectionism is growing.

Korea, at 68% opposition, is among the most critical of protectionist policies, alongside Germany and the UK.

As the economic crisis has spread, concerns have been raised about the intensification of economic nationalism and protectionism in various countries. This was one of the key agenda items at the G20 Summit. When global public opinion was surveyed on measures to raise entry barriers for foreign companies into the domestic market to protect domestic industries, 48% were in favor, while 45% were opposed, indicating a close division.

Ultimately, a country's stance on protectionism can be seen as influenced by its industrial structure and dependence on the global economy. That is, citizens in countries with high trade dependence on resources, technology, and markets, and with strong manufacturing bases, tend to be more critical of protectionist attitudes, whereas countries with vulnerable domestic industrial bases but abundant resources tend to exhibit stronger protectionist tendencies.

Indeed, conversely, in African countries categorized as economically developing, such as Nigeria (70%) and Kenya, and in oil-producing nations like Egypt (69%), Turkey (67%), and Indonesia (55%), public opinion in favor of establishing trade barriers to protect domestic companies exceeded a majority.

Conversely, countries with high trade dependence and a significant export share, such as Western developed nations and newly industrialized countries, are critical of establishing protectionist barriers for domestic companies. In Western developed countries like Germany, the UK, and France, the proportion of public opinion in favor of establishing protectionist barriers was 25%, 29%, and 36% respectively, while opposition was 68%, 68%, and 57%, with opposition being overwhelming. The U.S., while showing a slightly more protectionist tendency than other developed nations (42%), had 55% opposition, making protectionist sentiment a minority view. In export-driven economies like China and Korea, support for protectionist barriers was only 31% and 30% respectively. Opposition stood at 63% for China and 68% for Korea. Korea, along with Germany and France, is classified as one of the countries most opposed to protectionist policies among the 19 surveyed nations.

This demonstrates that while the majority of South Koreans held protectionist views during the period of economic liberalization and trade opening policies in the 1980s and 1990s, fundamental changes in public economic attitudes have occurred over the past 20-30 years. The majority of the public is concerned that government protectionist policies may provoke further trade protectionism from other countries, ultimately resulting in a boomerang effect on the Korean economy. It appears that protectionist policies are deemed insufficient to offer a viable path forward and vision for the Korean economy, given South Korea's high external dependence on resources and markets, and its comparative advantage in human capital.

[Figure 2] Perception of Protectionist Trade (Unit: %)