Seminar at the Korean Economic Association on the 10th
Topic: 'The Revival of Industrial Policy and Korea's Economic Response'
There has been a suggestion that South Korea's new industrial policy should place short-term emphasis on 'securing supply chain stability.'
On the 10th, Professor Lee Geun, Chair Professor of the Department of Economics at Seoul National University, held a seminar at the Korean Economic Association on the theme of 'The Revival of Industrial Policy and the Response of the Korean Economy,' stating, "Korea's core competency lies in the ability to manufacture technologically strategic products," and added, "The key here is the stability and internalization of the supply chain in manufacturing."
Professor Lee diagnosed that since South Korea is different from the current hegemon, the United States, and also different from China, which is still in pursuit, it must set policies, concepts, goals, and priorities distinct from those of the US and China.
According to Professor Lee, major foreign countries place different weights on their main industrial policy goals. He explained that, commonly, the importance of economic security and supply chain stability has increased.
Lee Geun, Distinguished Professor, Department of Economics, Seoul National University. [Photo by Korea Economic Association]
Professor Lee said, "The United States had not pursued traditional industrial policies that emphasize existing industrial competitiveness and new growth industries," adding, "Since the US-China hegemonic competition, the US has begun to prioritize economic security and, as part of that, supply chain stability. Due to the characteristics of the Democratic administration, it also places certain weight on the environment and job creation."
Regarding China, he analyzed, "China, which focuses on catching up, still values traditional industrial policies centered on existing industrial competitiveness and new growth industries," and "Recently, it has placed importance on supply chain stability and economic security in response to US containment."
Accordingly, Professor Lee argued that South Korea needs to refer to the goals and priorities of countries like Germany and Japan.
He explained, "Germany has emphasized strengthening existing industrial competitiveness and sustainability through initiatives like 'Industry 4.0,' but recently it has also placed importance on discussions about technological sovereignty and supply chain stability," and "Japan, as an aging society, has fundamentally focused on the people's livelihoods and strengthening lagging existing industrial competitiveness, but recently it has also come to emphasize supply chain stability, which is similar to Germany."
He emphasized, "Pursuing 'economic security,' which mobilizes all economic and non-economic means of economic powers like the US and China, may not be South Korea's top priority," adding, "Securing supply chains and technological sovereignty based on inter-state solidarity and cooperation, like Germany, is more important."
He also suggested, "While artificial intelligence (AI) and semiconductors fall under the realm of economic security for the US, for South Korea they belong to the domain of maintaining existing industrial competitiveness," and "Considering South Korea's unique situation, it is appropriate to focus investment on the defense industry, which has rapidly emerged after the Russia-Ukraine war, as a new leading industry following IT and bio sectors, thereby creating new growth engines while also aiming to strengthen 'security' capabilities."
Finally, he said, "Alongside policies centered on large and medium-sized enterprises like the AI alliance, it is necessary to continue strengthening and maintaining reshoring policies that automate and smarten grassroots industries expected to face technological discontinuity and hollowing out, as well as processes that have moved overseas."
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