>>this week on world business... >>it may live in the shadow of its larger neighbours, but south korea is still an economic force to be reckoned with... >>india's rail network should be the envy of the world, but it is crumbling and losing money. sound up

>>they need to develop their infrastructure, they need to make more trains like these. >>and why a investing in a spitfire might be a better bet than the stock market sound up >>if you purchased the correct object; if you say kept a very good object for say 10 to 15 years, you probably are likely to double your money >>reporter: hello and welcome. i'm raya abirached and this is world business, your weekly insight into the global business trends shaping our lives. since its formation just after the end of the second world war,south korea has risen meteorically to become the 14th biggest economy in the world. it's pushed an export-driven model; is now one of the most wired nations on the planet, and a centre

for high-tech that rivals neighbour japan. >>reporter: south korea has had to fight hard to achieve success. >>the country was hammered by war with its northern neighbour, was hit hard by the asian financial crisis and has to compete with the two economic giants that flank it. >>young-shim: i think sometimes, we are a little shrimp between two whales, so when two whales fight, we are caught in between. sometimes we see ourselves as a little bridge between giant japan and giant china. >>reporter: since the civil war the country has changed almost beyond recognition. gdp per capita leapt from a mere $80 dollars in 1960 to

over $20,000 today. last year the economy grew by 6 percent - from almostzero in 2009. the country has achieved this transformation despite serious obstacles. >>young-shim: we look at korea, what do we have? this much land, 70 percent is hills and mountains, and this many people with no natural resources, harsh weather, how could we make today's korea? it's a miracle, it's truly a miracle. >>reporter: the miracle was made possible by relentlessly climbing up the economic value chain, while china became the factory of the world and japan stagnated, south korea embraced high tech growth, copying and then beating many of its competitors. >>rooney: it has used that human talent first in what i call the perspiration society, working hard, copying the technology of others...but again about ten years ago that started to shift...and korea

started toshift from being a follower to starting to have certain industries that it became a leader in. >>reporter: especially manufacturing. the sector is hugely important to the country accounting for over 40% of gdp. the success of the last thirty years has been largely due to the chaebols - family-run conglomerates that dominate the economy. these are brands, like samsung and hyundai recognized by consumers across the world. >>ahrens: the hyundai motor group now has as its business 3 main pillars - hyundai & kia motors, hyundai steeland hyundai engineering and construction...we believe these 3 core businesses will take us forward in a fashion that will create an integrated industrial complex instead of just one business. >>reporter: but such giants and the power they wield in the domestic economy can harm the country's smaller businesses; like alphachem which produces inkjet cartridges and laser printer toners for export. it alsomakes components for chaebols but finds its profit margins squeezed

by the power of the big firms. >>kyu-oh cho wants his firm to expand, but says it is impossible for a small companies to ever challenge a chaebol. >>kyu-oh cho: if the small company wants to become a larger company, it is very very difficult, because samsung, lg, sk, and hyundai groups produce all products. >>reporter: the government is trying to help these smaller companies compete on a more equal footing, by pressuring the chaebols to share some of their record profits. >>sahoo: it is a disadvantage when you have very strong monopolistic kind of structure in the market. but at the same time it has also created complementary industries across sectors, in manufacturing in particular. >>rooney: they sound like they are big and important because they appear to have a large share of the exports but that's only because they are the final product

maker...and not necessarily that they have created that value added themselves. so the real heart of this economy is...based on small and medium enterprises who represent more than eighty five percent of all employment in korea... so these are the unsung heroes of the economy. >>reporter: south korea's economy is largely built on exports, with 80 percent of its manufacturing shipped across the world. >>but increasingly the country has to find its own niche for its products, caught between tech-heavyjapan on the one hand and low-cost china on the other. >>there is talk of a trade agreement between the 3 countries, but for now they compete and cooperate. >>young-shim: i think korean government, we played our role wisely - we are a sandwich between china and japan. obviously, japan became an advanced economy much before china, and japan was our role model. koreans business went to japan and learnt a lot. >>rooney:

korea's future is really going to be driven by how successfully that inspiration society emerges, where its human talent, where its service industries, where its knowledge based skills, things that drive innovation, things that drive new technologies, where you are a leader and not a follower. >>reporter: but human talent is where the country may find its biggest stumbling block in the years to come. south korea has one of the lowest birth-rates among developed economies almost one-third of south koreans in their 30s are not married; the delay in marriage means couples are having fewer children. >>young-shim: they are having one child, sometimes no child. when i was gring up, we had to educate people not to have more than two children...now, government is saying, please have babies,

we will subsidise -that's how much korea is changed. >>sahoo: there will be less working population, so obviously you come down a point where the cost of labour is very high. that would effect the kind of remarkable success they had in the industrial sector. >>reporter: success that has improved living conditions across the country since its birth just over 60 years ago. for the country to continue on its path of prosperity it will need more young people.... >>reporter: in an attempt to maintain economic growth and move itself forward in the 21st century, india is investing heavily in roads. but the country already has a massive established transport network in the form of its national railways. however this has been neglected and is crumbling and other forms of transport are stealing ahead.

>>reporter: india has the biggest railway network under single management in the world. >>every year it moves more than 7 billion passengers and 350 million tonnes of freight. it's a greenform of transport ideally suited to the 21st century. >>agnihotri: it is much cheaper in terms of utilisation of fossil fuel, and fossil fuel is something which is very scarce in this world and any transport system which uses less fossil fuel has to be utilised by everybody and that is the reason why america and africa and china, everybody is going in for making more and more railway systems. because railway uses one sixth of the petroleum requirement compared toroads. so you can carry six times more traffic with the same petroleum product.

>>reporter: yet in india the trains are neglected and the system is creaking. >>construction started in the mid-1800s and rail was nationalized in the 1950s. >>this points control equipment was installed in 1932 and has seen better days. >>agnihotri: it faces the problem of funding. they only have to make a road and the trucks and everything else isbrought by somebody else. in railways you not only make railway lines you have to provide for locomotives, coaches, wagons, everything. so it is actually what i should say a very intensive utilisation of capital. >>reporter: the focus for the government in recent years has been on expanding the roads. it has embarked on a programme to build 15,000 kilometres of new roads at an estimated cost of 30 billion dollars. cheaperthan improving the rail freight network, but perhaps only in the short term. >>mehrotra: over a long-distance

transportation, roads can never match the cost benefits which the rail transportation gives. rail transportation will be at least 3 times cheaper than road transportation. >>reporter: there are plans to extend the rail network and build dedicated freight corridors connecting delhi and mumbai and the east but these are stagnating as political will seems to be lagging. >>expanding freight also impacts upon the millions of passengers who still use the railways every day. >>chikermane: these essentially as you know are exclusive corridors will only carry freight which right now are inefficient because passenger traffic travels on the same lines and therefore freight has to wait, andtherefore it slows down business and turn-around times. >>reporter: the railways have slipped. in 2006 they made a profit of 4.5 billion dollars. today they spend over 110 rupees for every 100 they earn. >>passengers - the lifeblood

of the business - pay fares frozen for almost a decade, but many would prefer better service instead. >>dridathi: they need to develop their infrastructure, they need to make more trains like these. and also they need to increase the seating capacity because their tickets are not available, readily available, you need to book them in advance. >>reporter: and this could be the driving force behind a new development in india, the rise of internal flights. >>seth: people have started travelling by air who were travelling earlier by railroad. the airlines have tapped into that sort of market >>reporter: with de-regulation and a recent explosion of low-cost airlines, air travel within india is booming. this january domestic passenger traffic was up 20 percent on the year before. >>at new delhi airport's recently opened terminal 3, it's not difficult to see why commuters might want to swap cramped slow trains for air travel.

>>sengupta: i think let's begin. it's important that we start somewhere. it takes a long time to build infrastructure. >>reporter: the new terminal cost 3 billion dollars to build and will handle 34 million passengers a year. clearly its investors believe that air travel has a solid future in the country. but with oil prices rising and stocks dwindling is this really the case in the long term. >>inderwildi: we'll reach peak oil at some point, that's the point where oil demand outstrips oil supply, and the smith school has just recently published a study in this. and if you are in such a scenario it will be troublesome to get enough oil. >>reporter: meaning that trains would once again be needed, but after years more of underinvestment it would be a very tough task to get them back on track. >>reporter: still to come on world business... >>with stock markets in turmoil, we look at some alternative luxury

investments. >>and we meet the men who put their life on the line, in the world's fastest accelerating motorsport. >>drag addicts... and the rest in just a moment on world business... >>with stock markets around the world volatile, investors have been looking for alternative investments and safe havens to store their capital. the most obvious example of this has been the spike in gold prices. but other more unusual asset classes are also doing well, as people go to greater lengths to find better returns. in these troubled times investors are increasingly looking to art and antiques.

>>reporter most of us may not be able to afford this painting by francis bacon. an eye-watering price tag of 26million dollars at auction.... >>but there's a reason why global art dealer christie's -- among others -- are showing record spikesin revenues this year. >>shapero: more people have more and more wealth as the world's population's getting richer in general terms; people are looking to acquire assets - whether they be property, vintage motorcars or antiquarian books, the whole art world is expanding, the collector base is increasing and therefore in due course the prices have to go up. >>tomasso: if you purchased the correct object; if you say kept a very good object for say 10 to 15 years, you probably are likely to double your money. >>reporter: it's not just art -- other

high-end collectables are also holding their value. >>this prototype spitfire, the warplane that symbolised the battle of britain is now on sale with a guide price of 13 million dollars -- some consider it a sure fire investment in this volatile climate. >>woodham-smith: there is a new sort of way of using money that has come out since the recession or lehman brother's collapse, or whatever you might want to call it; where you don't lose your money. it's sort of like locked in value and in buying a classic car or even buying the spitfire behind me. also you're looking at something that's not going to suddenly be worth chump change or jt like the newspaper yesterday, you wrap your chips in today, then you throw away. no you're looking at real contained, locked in value. >>reporter: and that's why people are

flocking to fine art and antique fairs like masterpiece london. >>sculptures, classic cars, gem stones, furniture, books and even maps are all now being snapped up by collectors, but with an eye for an appreciating asset. >>apter: in a way it's an investment but if you buy a side table or a dining table or a bookcase you've got to have somewhere to put it; you can't sort of lock it up and put it in the bank vault. so you've gotto live with it, you get to enjoy it, you get to appreciate it. >>easen: alternative assets such as collectibles may be fun to get involved with and many do appreciate in value over time. the question is; which sector to invest in? art, antiques, classic cars or in this case - an antique dresser worth more than a quarter million dollars. >>mould: my advice to people who want to buy is conversations; get to know the dealer, get to know the history of these

particular items - how they've been over the last 30, 50, 100 years. get a feel for the craft. use their eyes as your eyes, trust is very, very important. get that sort of attachment, get adialogue going. and when that happens i think often the risks are minimized and the fruits are richer. >>reporter: with more wealthy collectors globally, people are increasingly moving beyond traditional assets as some categories become scarce. >>and in the process they're also creating a new trend in the art world. >>mould: we are seeing a little bit more diversity and you could say boldness. and for me, the idea of andy warhol hanging next to a portrait of henry viii is actually quite exciting. >>woodham-smith: it's known as the new medici. and the new medici are the incredibly wealthy; they have made themselves a fortune but they don't want

to be told, they don't want to be governed what they can and cannotbuy... >>apter: ... people have a different lifestyle now and mixing and matching. so you take a great eighteenth century commode or side table and you'll put fantastic maverick painting above it and you'll put some funky porcelain, or funky sculpture underneath it or on top of it. and you'll have a 3d television on the wall. >>reporter: as long as financial markets are shaky and new money pours in to collectables from around the world.>>there's a good chance this asset class in all categories will be as good as gold. >>reporter: during the us prohibition era, moonshine runners would put faster, more powerful engines in their cars in the hope of evading lawmen. in later

years, those cars would race each other down the main drags of american tns, giving birth to drag racing. it took hold in the uk in the 1960's, but although the cars are lightening fast, the sport's growth has been glacial. today, however, things may be moving up a gear. >>jong: just imagine...engines screaming at over 130 decibels. 8000hp hurling a couple of dragsters down here at over 300mph. just imagine it. because we ain't gonna see it today. >>it's very disappointing...we need to see some cars. >>unfortunately there is one natural enemy in drag racing and it is rain >>reporter: but the santa pod raceway is not always like this..... >>junior: when you hit the throttle there's no doubt you're going straight forward in a hurry.

>>carter: it's 5g's when you leave the starting line. >>junior: it accelerates harder than the space shuttle does. >>carter: and then when you pull the parachutes at the other end it's minus 7g's. >>junior: with 8000hp the earth will move under your feet when a top fuel dragster goes by. >>reporter: born in the usa....but now growing up across the atlantic...drag racing is coming of age in europe... >>bartlett: this type of event would have 30 or 35,000 people appear over 4 days. >>reporter the main draw for those fans...the top fuel class...25ft wheeled bullets powered by nitro methane, avolatile and somewhat destructive propellant.... >>carter: we run the car and every quarter of a mile we have to rebuild the whole engine. >>allum: the life expectancy of a top fuel motor on full throttle is about 8 seconds. >>reporter: what? everything just starts to disintegrate because

of the pressure? >>precisely. >>reporter metal just melts. >>absolutely >>reporter: this year 16 top fuel cars will contest a european championship that has tracks in scandinavia, germany and england, and covers 5 rounds..... >>bartlett: that is going to change. i would say to you that in 3-4 years that would be 8-10 rounds. >>reporter: the ultimate goal for the european championship is to mirror the pinnacle of the sport...the national hot rod association's series in the usa.... >>junior: the corporate sponsorships are there. 22 races a year on a tour every year... >>reporter: now cars with a fuel economy of about 300 feet per gallons - similar to a jumbo jet - with engines that fall to bits after 1300 feet are never going to be cheap to run...... >>carter: it costs 8.5 thousand pounds every time the car goes quarter oa mile. >>bartlett: even those that are doing ok are underfunded. no question - all underfunded. >>reporter: one serious drawback from that

lack of funds...a shortage of testing opportunities... >>junior: we make 2 or 300 runs a year at home in the states. these guys will be lucky to make 30 or 40 runs ayear... >>reporter: despite that disparity at 317mph, the european speed record is just 10mph short of the usa's and organizers here believe new tracks are key to closing that gap further... >>bartlett: we are now involved with 3 other tracks that we are purchasing outright...building or working with >>reporter: but whatever track you're on...is there really any skill in driving 440 yards in a straight line? >>junior: i mean everyone thinks you go straight line...hit throttle and hold on...but there's a lot of feel for the car. it never wants to go straight. >>carter: you might make 10 or 12 corrections on the steering wheel on the way down. pull the brake lever to slow the rear wheels down. come on the throttle twice >>junior: i'm driving by the seam of my pants by the feel; i'm driving by my eyes to see where i'm going. i'm driving by my ears to hear the engine and know what it's supposed

to sound like. >>reporter: whichever part of your body you're driving with....if things go wrong...your entire anatomy will very rapidly find itself at risk of serious damage... >>carter: if you have an accident...you've got to react within a micro second...otherwise you're in the wall...then you're upside down...then you're on fire...then you're in big trouble >>bruton: his legs are strapped in. his arms are tied down. he couldn't get out if he wanted to. >>reporter: his arms are literally strapped into the frame. >>his arms are strapped to his waist so his arms can't fly out in the event of an accident. >>reporter: in the last 3 years, 3 drivers have been killed in nhra events in the usa...and at this weekend's event at santa pod, there was a graphic example of why the line between driver and toasted marshmallowcan be a very fine one... >>tonseth: >>reporter: are you frightened? >>no never afraid. but of course you've got to be nervous. if not you will not be able to be focused.

>>tonseth: >>reporter: as a father though you must go ooooh. >>yeah. every time. a little bit scary. >>junior: i've never had fear. i figure if i had fear i shouldn't be in it. >>reporter: of course it's not just the drivers taking risks. on a day like this it's easy to see why being a motorsport promoter can be such a tenuous occupation...if the santa pod raceway is a money maker.... >>bartlett: it's now a profitable company that actually turns a profit every single year which not many companies in motorsport do. >>reporter: behind that profit...what can only be described as a serious drag addiction... >>allen: when i put my foot to the pedal my head goes back so far and then you have to look back down. it's amazing. >>tonseth: >>reporter: it's just bam! intense. 5 or 6 seconds and she's all over. and then go and wait again. >>yeah. >>junior: to go faster and faster and faster it can be a very addicting thing. >>reporter: and that addiction affects even the sport's hardest headed businessman... >>bartlett: my heart doesn't' rule my head...my head rules

my heart. it's gotta make a profit at the end of the year. keith bartlett ceo, santa pod & european drag racing championship ...if it dries today...i will run this race. nobody's on the bank. nobody's come to the stadium. i have got a disease, i will stand there with 20 people and run that first round. reporter: but if he has a disease....he's certainly not alone....and next time...his fellow addicts will be back for another hit of the sound, the fury and the top fuels.... >>it's the way it goes through your body. a physical, total experience. reporter: that's it for this week's world business. thanks for watching. we'll see you again at the same time next week.