Distinguished Participants,  Ladies and Gentlemen. 

 It is truly a great pleasure and honor to be here for the conference on “Expanding Social Finance to Promote Social Economy.”  I would like to thank the Korean Ministry of Strategy and Finance, and Korea Social Enterprise Promotion Agency  for their strong cooperation in organizing this important and timely event.   I would also like to thank all of the distinguished participants including Prof. Akira Kurimoto, Clifford Rosenthal, and Director Cristobal Dobrzanski for joining us here today to share their insights and expertise.  

 Today, we are gathered here to discuss how Korea can promote social finance and how to achieve meaningful results.  As Korea addresses the challenge of sustaining economic growth, I firmly believe that we must also address growing social and economic concerns such as 1) income inequality, 2) economic exclusion, and 3) worsening quality of life among the youth and elderly.  In other words, more focus is needed on promoting the well-being of the Korean people and the nation. 

 I believe we first must understand how Korean society is changing. Korea is experiencing dramatic changes such as 1) growing poverty among the elderly, 2) declining birth rate, 3) increasing youth unemployment, and 4) weakening social mobility and social cohesion, which are all complex social challenges.  And we need to better understand the factors behind these social changes such as the growing elderly poverty rate which is about 50%, as well as the increasing despair among young generations’ future prospects.  This is a serious social issue in Korea !!  Some of this is related to structural issues such as rigid labor market, aging population, and education that does not meet the needs of younger and older generations.  For example, many workers are forced to retire early before the retirement age due to the seniority-based wage structure. However, these workers do not have opportunities to re-train and find a new job.  As a result, many people (who retire early) engage in unsuccessful self-owned businesses and experience financial hardship.  This is a growing social challenge in Korea !!

 Moreover, we have to understand each issue as part of a whole process, and not just in isolation.  We know that human capital plays a key role in the economic success of people and countries.  We understand the economic importance of education in providing the knowledge and skills to produce output which leads to economic growth.  We also know that health is a key factor to human capital development.  Indeed, good health leads to greater productivity and growth.  If we look back Korea’s economic development for the past several decades, early successful interventions in public education and health were critical to Korea’s own rapid transformation.  We also know that human capital development is a complex process that starts from birth to adulthood, reminding us that early childhood development is just as important as lifelong learning.  

 Now we are starting to understand the importance of social capital, or the values and norms that allow people and communities to trust each other and to work together, and how this impacts on human capital development.   Indeed, human capital and social capital are linked and interact with each other.  For instance, many have observed that high social capital can be linked to stronger communities, better education outcomes, and greater social cohesion.  Many observed that social cohesion has been weakening in Korea; however, we are not sure why this is occurring, whether it is due to changes in social values and community, or weakening social mobility.   Indeed, the success of community-based social finance will depend on understanding the links between people and their community.  

 I also want to emphasize the importance of education in promoting the development of credit cooperatives, both formal education such as finance and accounting and informal education such as principles of cooperatives: 1) self-help, 2) self-reliance, 3) ownership and 4) accountability.  

 Moreover, the relationship between human capital and social capital is impacted by economic, political, and legal institutions, which determine whether the economic and social benefits of growth are inclusive and broad-based.  It has been shown that inclusive formal and informal institutions together with highly skilled labor force can result in sustained economic development.  In Korea, we have entrepreneurs with new business ideas or students that want to learn Big Data; however, our business regulations or higher learning institutions are not changing to support this new demand.    

 Ultimately, we must understand the complex nature of the economic and social issues we face today to know where and how social finance can have an impact in Korea.  

 I believe that the question is not whether social finance can have a positive social impact.  The question is how can Korea successfully implement social finance, which can help address social challenges and promote the well-being of people, communities, and the nation.  1) How will the public, private, and nonprofit sector work together to promote social finance?  2) Are Korea’s legal and regulatory institutions ready to support social finance funds?  

 Our hope is that today’s forum will provide an opportunity to address these questions and more from both a research and policy standpoint.

Thank you for your attention.