[Insight & Opinion] The Real Issues Overlooked by the Lee Administration's "Genuine Growth Strategy"

On August 13, the National Policy Planning Committee held a public briefing and announced the "Five-Year National Policy Plan." In particular, the first economic subcommittee presented the new administration's "framework for genuine growth" and specifically set a goal to achieve a potential growth rate in the 3% range through an "AI Grand Transformation," ultimately aiming to realize the "dream of becoming one of the world's top five economies." Based on this, the Ministry of Economy and Finance announced the "New Administration's Economic Growth Strategy." Unfortunately, however, this ambitious vision of the new administration overlooks important truths, raising concerns about its validity as an economic policy indicator.

The National Policy Planning Committee pointed out that the current economic situation urgently requires structural reform and proposed restoring the birth rate, expanding employment for the elderly, and boosting productivity through technological innovation as key solutions to revitalize the economy. However, despite mentioning the need for restructuring outdated industries and uncompetitive companies that have already lost competitiveness and entered a phase of structural stagnation, as well as the issue of polarization in sectors such as self-employment, neither the committee nor the Ministry of Economy and Finance offered any concrete measures.

The production index for retail, where most self-employed people work, as of July, has declined by as little as 5% and as much as 20-30% compared to July 2019, five years ago. In manufacturing, the producer shipment index, excluding semiconductors, actually fell by 4.2% compared to July 2015, ten years ago. Over the same ten-year period, the production index for large corporations rose by 32%, while that for small and medium-sized enterprises fell by 7.3%. As a result of this industrial polarization, the Bank of Korea's 2024 Corporate Management Analysis found that 41% of Korean companies are unable to cover even their interest expenses with operating profits.

Regarding the seriousness of these polarization and restructuring issues in the Korean economy, the Bank of Korea pointed out, "If we rely solely on short-term measures while ignoring structural problems, we may only exacerbate side effects such as rising prices, increasing debt, housing price bubbles, and greater exchange rate volatility" (Why Is the Central Bank Talking About Structural Reform?, August 2025). Nevertheless, both the National Policy Planning Committee and the Ministry of Economy and Finance are deliberately turning a blind eye to structural reform.

Furthermore, to achieve the new administration's vision of "inclusive national growth," the most urgent challenge is addressing issues of polarization-of wealth, of regions, and of industries. A "genuine growth strategy" that lacks rigorous reflection and alternatives for these uncomfortable truths cannot help but be a "false growth strategy." Moreover, any plan to enhance productivity and revitalize the economy while ignoring the problem of industrial polarization is nothing more than a slogan that sounds good to the public.

In addition, the "genuine growth strategy" of the National Policy Planning Committee presented a vision for an "AI strategy" to the public. The committee's and the Ministry of Economy and Finance's strategy for an "economic and social transformation through the era of artificial intelligence" is entirely valid. However, the AI strategy is highly likely to widen productivity and income gaps not only between industries but also between high-skilled, highly educated jobs with high AI exposure and jobs with low AI exposure. As such, the AI strategy carries the risk of further exacerbating polarization.

For the "genuine growth strategy" to truly improve the economic lives of the people, it must present the best possible solutions to the uncomfortable yet important truths of outdated industries and polarization. It is hard not to question whether the potential growth rate can be raised from 1.5% to 3% through fiscal expansion alone, without addressing the structural problems that have accumulated over the past 25 years since the foreign exchange crisis.

Kim Dongwon, Former Visiting Professor at Korea University