[New Release] Korea at a Crossroads of 'Peak Korea' Amid Extreme Conflicts and Trump Crisis... A 32-Year Bank of Korea Veteran's Solution

A 32-Year Bank of Korea Veteran Publishes 'Rebuilding Korea'
Park Yangsu, Head of the Korea Chamber of Commerce and Industry's Sustainability Growth Initiative
A Productivity-Driven Growth Strategy to Overcome Barriers of Low Birthrate and Aging Population
Discovering New Industries and Promoting Structural Reforms in Labor, Pensions, and Fiscal Policy

The Korean economy stands at a crossroads of the so-called 'Peak Korea,' a concern shared by investors worldwide. 'Peak Korea' means that Korea is currently at its peak and will decline in the future. While the world is engaged in fierce competition in advanced industries and climate technologies, Korea's key industries have seen little change over the past 20 years. Due to the extreme low birthrate phenomenon, the average economic growth rate might turn negative by the late 2040s. Additionally, the extreme political and social conflicts expressed by the declaration of martial law last December, and the unpredictable global economic order following the inauguration of the Trump administration's second term, foreshadow a perfect storm ahead. Will the 'Korean economic ship' run aground amid this complex crisis?

A '32-year Bank of Korea veteran' offers solutions to this question in his new book, Rebuilding Korea. The author, Park Yang-su, Director of the Korea Chamber of Commerce and Industry's Sustainability Growth Initiative (SGI), served 32 years at the Bank of Korea, working in key departments such as the Research Department, Financial Stability Department, Economic Statistics Department, and the Economic Research Institute, before moving to the Korea Chamber of Commerce in 2023. He has authored numerous academic papers and books including The Reality of Economic Forecasting: The Comprehensive Art of Intuition and Models and Heterodox Economics for 21st Century Capital.

In this book, the author points out that "the most serious problem facing the Korean economy is the lack of leadership caught in ideological disputes, preventing any progress." He criticizes that "amid critical situations such as fostering advanced industries, developing climate technologies, and surging energy demand, ideological disputes over nuclear power, renewable energy, income-led growth, and basic income cause each administration to change policy directions, so which company would invest challengingly from a long-term perspective?"

"As the saying goes, crisis is opportunity. With heightened awareness of crisis due to the presidential impeachment and the inauguration of the Trump administration's second term, now is the opportunity to push reforms for the nation's leap forward," the author says, advocating for the Korean economy's resurgence. So, how should Korea's economy be revitalized?

First, adopting a 'productivity-driven growth strategy' based on value-neutral, practical leadership focused on people's livelihoods and pragmatism is essential. The production systems of new industries such as advanced industries and climate technologies operate with endogenous growth mechanisms. Even with the same labor and capital input, productivity can be exponentially increased through technological innovation, deregulation, and market preemption. As Charles Kindleberger said, if reforms inject dynamism and flexibility into the rigid economic and social system in decline, a second S-curve, that is, an economic leap forward, can be expected.

The author proposes, "In the current situation of heightened social conflict, let's improve institutions such as research and development, education, finance, and regulation centered on new industry policies targeting growth industries, and promote structural reforms in labor, pensions, and fiscal policy." This is based on the idea that newly emerging fields are future promising industries, making it easier to persuade the public and that regulatory reforms are relatively easier due to fewer vested interests.