A new strategy to help South Korea’s economy escape from the low-growth tunnel is gaining attention. The Lee Jae-myung administration is pursuing an ambitious plan to revitalize the country’s stagnant growth potential through an innovative approach that integrates artificial intelligence (AI) technology across the entire economy.
South Korea’s potential growth rate is currently showing a serious downward trend. The OECD estimated this year’s potential growth rate at 1.9%, a figure that evokes a sense of dramatic change compared to the 5% level reached in the early 2000s. More worryingly, the Korea Development Institute (KDI) forecasts that the potential growth rate will plummet to the 0% range by 2040.
Amid this sense of crisis, the government is embarking on fundamental structural improvements while executing a 32 trillion won supplementary budget. The key figure is Koo Yun-cheol, the Deputy Prime Minister for Economy nominee, known as an ‘AI evangelist’. Through his book ‘AI Korea’, he has argued that AI technology should be the core driving force for South Korea’s economic transformation.
The government’s strategy is being materialized through the concept of ‘AI+X Strategy’. This approach involves integrating AI not just into specific industries but across all sectors including manufacturing, services, and agriculture to maximize productivity. Nominee Koo presented a vision that “AI should be as easy to learn as Hangul for everyone,” and unveiled a plan to train one million young AI talents.
To implement this strategy, the government has established a task force composed of the Ministry of Economy and Finance, the Bank of Korea, and KDI. Each ministry’s policies will be linked to AI development tasks, and expansion of tax and budget support for companies adopting AI is under consideration.
Particularly noteworthy is the future society vision presented by nominee Koo. In preparation for an era where AI replaces labor, he proposed a concept of “a new distribution system that collects taxes from the added value created by AI to provide basic income.” This is significant as a proactive response to social changes brought about by technological advancement.
Experts predict that if the government’s AI strategy succeeds, South Korea’s economy could secure new growth momentum. However, structural problems such as low birth rates, aging population, and rigidity in business environments remain, making policy implementation capability crucial.
The Lee Jae-myung administration’s goal of recovering a 3% potential growth rate is by no means an easy task. However, if productivity innovation through AI technology succeeds, South Korea’s economy could face a new turning point.
