SOUTH KOREA:In the face of a major recession, South Koreans are again turning to the determination and innovation which transformed their post-war country into an economic powerhouse

THE CHEONGGYECHEON stream runs through downtown Seoul, a clean channel of water, elegantly lit several metres below street level, where the traffic in this city of 20 million chugs along. Families stroll past in the chilly winter evening, joggers run along and it's a picture of urban harmony.

The stream feeds into the fast-flowing Han river at the heart of the South Korean capital. It used to be covered by a motorway until the government tore it down to expose the rivulet. But this is more than just a picture of urban renewal. The stream is lined with sensors, showing water quality, water levels and other important gauges to ensure the smooth running of the facility. And as befits one of the world's most interconnected cities, the area along its banks is a free Wi-Fi access zone.

This is a fiercely innovative and determined country. It lay in ruins - bitterly divided - in 1953 in the aftermath of the Korean War and yet has managed to become one of the world's 10 richest countries, using a combination of industrial strength and sheer force of will. It is Asia's fourth-largest economy and one of the continent's few democracies. The country's determination to dig itself out of the mire is remarkable. When Koreans say they are going to do something, it is wise to believe them.

At a time when the Irish government has just introduced a plan to provide broadband for all, the South Koreans are surging ahead, fine-tuning their free wireless internet access plans in many of the major thoroughfares. The Cheonggyecheon stream project is a template for other projects in this city, which sees innovation as a way out of the economic recession devastating the South Korean economy.

President Lee Myung-bak says South Korea is facing a state of economic emergency. Gross domestic product fell a seasonally adjusted 5.6 per cent in the last quarter of 2008 from the previous three months.

Key to understanding how the South Korean economy works are the hugely powerful chaebol, the giant business conglomerates which are often larger than the entire economy of a country and which have interlinked interests spread throughout the economy.

The Korean word translates as "business group" or "trust" and basically means "big business". There are several dozen family-run chaebol in Korea which spearheaded the drive out of post-war devastation by channelling entrepreneurship and foreign investment into the economy. Some are well-known brands in the West, including Samsung, LG and Hyundai. They are closely linked to the government and there are regular calls for their power to be limited, though they are simply too big to rein in effectively. But the chaebol too are feeling the effects of the downturn. In late January, South Korea's biggest company, Samsung, reported its first net loss since the company started disclosing quarterly results in 2000. The global downturn had demolished demand for electronics, hitting the company's component-manufacturing operations, its TV unit and its mobile phone unit hard. LG and Hyundai also reported disastrous figures.

You see the influence of the chaebol everywhere, from the Hyundais on the streets to the ubiquitous LG phones, even down to the exclusive, high-end Italian "retail lifestyle space" Corso Como, which last year opened a flagship shop in Seoul's exclusive Cheongdam-dong shopping street, its second store outside Italy. The store is operated in tandem with Samsung.

Top Korean actress Minhee Kim and her model boyfriend Soohuk Lee brush past us as we enter the store. "We have higher-limit customers, so haven't been affected much by the recession. We also have a wide offering of goods," says spokeswoman Zoe Yoonkyung Kim.

At the Bongeunsa temple downtown, one of the biggest Buddhist temples in the city, anxious parents pray at a special shrine devoted to ensuring their children make it into Ivy League colleges in the United States. Getting ahead is a national pastime in South Korea.

Vice-mayor Junghee Song is the city's chief information officer. Her office has a flatscreen TV which keeps tabs on the wide network of computer operations she oversees in the city. Song is an avid proponent of e-government, which she sees as a terrific way of creating more openness and transparency in the city's workings. She enthuses about plans to make getting the bus a more streamlined process by upgrading bus stops with electronic timetables.

"We are turning Seoul into a 'ubiquitous city'," she says. "Information technology is a necessary tool to help us create something coherent that citizens can see what we have achieved." In many countries, what Song is trying to do would seem an insurmountable task because it involves getting a municipal bureaucracy to co-operate and streamline decision-making processes. But civic duty is a strong point in South Korea.

Song says the programme of introducing e-government is about improving the quality of life for the people in the city by surrounding them with secure, convenient services offered by the government.

Over 95 per cent of the population of Korea have access to the internet, but part of the city's programme is to make sure the remaining 5 per cent are also cared for. Citizens donate old PCs to be passed on to the have-nots. Civil servants give up their free time to coach those not familiar with the internet.

Most people use their mobile phone networks to access the internet. South Korea has had 3G services for a long time, so the government uses all the main mobile and fixed-line operators to provide its services. "We can do things to help cut congestion - such as providing information about traffic by mobile phone message," she says.

Next year, Seoul is planning to host the first general assembly of e-governments, with mayors from 35 cities coming together to compare notes on using networks to provide services. Other programmes include schemes to reduce traffic, where drivers promise to drive on odd or even days and are monitored using windscreen tags. Those who do so qualify for tax breaks, while repeat offenders are kicked off the programme.

The environment is also an issue and Song talks about ways to cut carbon emissions linked to PC use and how the Seoul government is trying to integrate its operating systems to become an environmentally friendly data user.

A major part of the e-government project is closed-circuit television. While this is a major privacy issue in most of the world, and Seoul has strict guidelines for how it is employed, most people seem delighted to have it, and its presence is proudly trumpeted in public areas as a guarantee of safety rather than any kind of infringement of individual rights.

More than 10,000 small-to-medium sized internet, game, and telecommunication firms are located in Seoul and the process of turning Seoul into a wired, clean and attractive city really shifted up a gear under former mayor, now president, Lee Myung-bak.

Lee, known as "The Bulldozer" for his aggressive nature and his background in the construction arm of the Hyundai chaebol, has had a tough time in office, and one of the biggest challenges he faces is over a financial news blogger, Minerva, who has been detained on charges that he spread false economic information on the internet.

The case has drawn heated debate over freedom of speech and become another headache for Lee's increasingly unpopular government.

The decision to prosecute Minerva has angered human-rights groups, who fear freedom of speech is being undermined. The blogger, identified only by his surname, Park, became prominent because some of his gloomier predictions about the global economy, including the collapse of Lehman Brothers, proved accurate. He is accused of spreading false information on an internet discussion site, of saying that the government had ordered major financial institutions and trade businesses not to purchase US dollars.

But the case could also damage Korea's international reputation and its high-tech credentials. It is an IT manufacturing centre, so any efforts to control free speech on the internet could undermine a key pillar of economic growth. You can see how important a pillar this is at the DMC, which is a major centre for the Seoul government's focus on innovation. DMC is an abbreviation for "Digital Media City", a project in Sangam-dong focused on developing innovation in IT, with a focus on digital cultural content and software.

Careful pronunciation is needed when asking a taxi driver to take you to the DMC, as it is linguistically close to the DMZ, the demilitarised zone which separates South Korea and the Stalinist North.

The centre is about 30 minutes away from Incheon airport and is close to the stadium used for the opening games of 2002 World Cup. The 560,000sq m facility has been built largely on reclaimed land or landfill, and heating and cooling is carried out using locally produced methane. The environmental aspect is important, but also crucial in luring companies to the site are the large financial inducements on offer.

The project is a bold move for a country where English is still not widely spoken, but the Koreans do not lack ambition here.

There are some great gadgets on display, using the kind of interfaces familiar to fans of Steven Spielberg's Minority Report: large glass walls which change wallpaper and visual effects as you need; health check-up devices which are regularly updated; and all manner of games, including one rather bizarre item where you design a digital fish which follows you around.

Among the tenants already in the park are Woori Bank, a data centre for the Korean IT giant LG, as well as its telecoms hub, and local media groups KBS and SBS.

"We are focusing on digital media and entertainment here and that makes us unique. We don't need factories," says our guide as we travel through the park, which is a mixture of building site and technologically advanced urban environment.

One of the sites still under construction is a centre for the entertainment and media group CJ, which is one of the giants of the Asian entertainment business. The centre will be used as a strategic base for the group for each of its business sectors, including post-production facilities, game production and research and all kinds of broadcast production and distribution.

What is striking is how the focus is very Korean in the DMC, with only a couple of German firms providing evidence of an internationalised approach. The domestic market has been so strong for so long, and such an engine of growth, that there is a structural resistance to opening up the economy to more foreign investment, certainly direct foreign input, and this is one dimension that will have to change if Korea wishes to use a more internationalised approach to lift its economy.