A 1% Increase in Registered Foreigners Boosts Regional Economy by 0.11%
Proposals Include Creating Specialized Cities and Attracting Semiconductor Fabs
Amid concerns over labor shortages caused by low birth rates and an aging population, an analysis has found that increasing the number of foreign talents residing in South Korea by one million could generate an economic effect equivalent to 145 trillion won, or 6% of the nation’s GDP.
On August 13, the Korea Chamber of Commerce and Industry (KCCI), in collaboration with Professor Kim Deokpa’s research team at Korea University, released a report titled "Economic Impact Analysis of Attracting Overseas Citizens." The report presented the results of a panel regression analysis on the impact of registered foreigner inflows in 17 regions nationwide from 2012 to 2023 on economic growth.
According to the analysis, when the proportion of registered foreigners to the economically active population increases by 1 percentage point, the per capita Gross Regional Domestic Product (GRDP) rises by approximately 0.11%. Applying this finding, an additional influx of one million foreigners would yield an economic effect equivalent to 6% of GDP. If the current number of registered foreigners, which stands at 1.35 million, increases to 5 million, the effect is estimated to reach 361 trillion won.
The report identified attracting foreign talent as a core task for Korea’s growth and proposed strategies to address four key areas: Artificial Intelligence (AI), Birth rate, Competitiveness, and Domestic demand, collectively referred to as the "A·B·C·D" strategy. Specifically, the report suggested the creation of foreigner-friendly specialized cities, attracting global semiconductor manufacturing plants (fabs), and developing customized domestic training programs for overseas talent.
Foreigner-friendly specialized cities would support the long-term settlement of foreign workers by offering industrial clusters, incentives for global companies, visa and tax benefits, and robust education and medical infrastructure. Attracting global fabs would simultaneously expand the foundation for high-tech industries and secure specialized talent. The "train first, recruit later" strategy, in partnership with overseas universities, involves operating integrated "talent training-employment-settlement" programs targeting students from friendly countries such as Vietnam and Indonesia.
Lee Jongmyung, Head of the Industrial Innovation Division at KCCI, stated, "In the era of AI, the global competition to secure talent is intensifying," adding, "It is urgent to create globally competitive cities through mega sandboxes and implement policies that enable foreign talent to settle quickly."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
