Seoul: The Lee Jae Myung government's newly unveiled economic blueprint aims for a sweeping "AI transformation" to rejuvenate South Korea's economy and achieve a 3 percent growth rate. This ambitious plan seeks to leverage artificial intelligence to elevate the nation back among the global top five powers, despite current economic challenges.
According to Yonhap News Agency, the government plans to invest 100 trillion won (US$72.2 billion) over the next five years to accelerate AI adoption across various sectors, including manufacturing, logistics, health care, and public services. Key initiatives include the development of a sovereign Korean-language AI model in collaboration with domestic companies like Naver and SK Telecom, as well as the deployment of humanoid robots in warehouses, and the commercialization of autonomous vehicles by 2027 and unmanned ships by 2030.
This strategic shift comes in response to South Korea's stagnant export-led growth, exacerbated by global trade challenges and demographic shifts. With a shrinking working-age population, AI is perceived as a crucial lever to counteract economic stagnation. The government is increasing next year's research and development budget by nearly 20 percent to a record 35.3 trillion won, with AI funding more than doubling to 2.3 trillion won. Investments in science and engineering talent will also see a boost.
However, the plan poses significant challenges to institutions and labor markets, which face potential disruptions from AI-driven transformations. While the government emphasizes "super-innovation," there are concerns about the displacement of workers and the need for education reform, vocational training, and transition programs to mitigate the impact. The blueprint currently lacks detailed measures to address these issues.
Political developments further complicate the economic landscape. The recent passage of the "Yellow Envelope Act" by the ruling Democratic Party of Korea has expanded labor dispute scopes and limited corporate claims against strikes, raising concerns among business leaders about potential capital flight.
The Lee administration's approach underscores the importance of aligning labor, regulatory, and corporate policies with the AI ambition to avoid economic pitfalls. Without creating a business-friendly environment, South Korea risks being outpaced by competitors in the global AI race. The country's future success hinges on not only capital and talent but also on addressing structural liabilities and fostering a conducive climate for investment.