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Management Report

Management reports, briefs issued by Samsung Economic Research Institute

Corporate Efforts to Support Rural Community

Corporate Efforts to Support Rural Community

MIN Seung-Kyu

Apr. 24, 2006

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Korea's agricultural sector is increasingly facing more difficulties. As a growing number of rural inhabitants move into urban areas, farming communities face depletion of working age people. While farming in other advanced industrial economies thrives through constant restructuring, Korea's rural communities are saddled with worsening income disparity.

In 2005, rural household income was worth 78% of urban household income. The market opening measures taken under Free Trade Agreements have strained relations between cities and rural areas. A steady deterioration of this relationship has fostered the feeling that farms have been relegated to a status of sacrificial lamb for the urban economy. For their part, those living in cities feel as if the rural farming sector is standing in the way of a successful trade negotiation.

In the midst of this woeful sentiment, however, a consensus has been developed that the country as a whole should help the agricultural sector cope with its mounting difficulties. The corporate Korea is expected to cover much of the assistance by getting involved in a variety of projects designed to help both parties to strengthen their partnership. In the context of mutual support, Korean companies began actively participating in "One Company - One Rural Community" campaign of forging sisterhood relationship with the farming community.

In the past, companies used to provide unilateral, one-way help to farming households without any preconditions. This pattern is now changing as the National Agricultural Cooperative Federation (NACF) and Federation of Korean Industries strive to foster mutually beneficial relations between urban corporations and rural communities. At the end of 2005, a total of 8,677 such sisterhood relations had been set up to help promote cooperation.

The corporate sector needs to change the way it provides social services. In other words, the giver-taker relationship should be replaced by a more mutually beneficial relationship.

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