[Market Pulse] The Accelerator Pedal of the AI World: The 4S

Transition to a Creative Economy Driven by Soft Power
The 4S: Speed, Security, Sensing, and Scalability as Key Pillars

Yoon Jongrok, Former Vice Minister of the Ministry of Science, ICT and Future Planning

South Korea, which has the highest proportion of manufacturing among OECD countries, is facing the dual challenges of industrial economic stagnation and a declining population. Relying solely on hard power, it is no longer possible to sustain a growth model due to a shrinking workforce and stagnant productivity. The solution lies in reestablishing an economic strategy centered on soft power. This means transforming a hard power economy, where labor is at the core, into a creative economy driven by imagination and soft power.

As Peter Thiel, the leader of the "PayPal Mafia" and an icon of innovation, emphasized in his book "Zero to One," the goal is to become a frontrunner in the soft power competition that turns imagination (zero) into innovation (one). So, what is the accelerator pedal for this strategy? There are four key conditions, which can be summarized as the 4S of the AI era.

The first is Speed. Artificial intelligence, which processes massive volumes of data, is fundamentally an industry of speed. If data collection, learning, inference, and execution are slow, AI loses its competitiveness. In the past, scale was the competitive edge in industrial economies, but in the AI economy, speed is synonymous with survival. In a society with a shrinking population, each decision and execution must be even faster, and AI becomes a tool that dramatically expands the speed of human decision-making. If the speed of networks and data, as well as the speed of thought, do not keep up, we risk falling back into the role of a fast follower. A "chutzpah culture" that triggers immediate action from imagination, rather than letting it remain just an idea, is also an accelerator.

The second is Security. AI operates in cyberspace. The moment data and algorithms are connected, security is not an option but a prerequisite. If security fails in healthcare, finance, or administration, trust itself collapses. In the AI era, security is not just a matter of technology but is a core infrastructure that supports social trust. While some countries struggle with security, others, like Israel, thrive on it.

The third is Sensing. For AI to connect with the real world, every physical phenomenon must be converted into ultra-precise data through various sensors. What cannot be sensed does not exist for AI. The competitiveness of "physical AI," which steps out of the screen to provide real-world assistance, depends on ultra-precise sensing technology. This leads innovation across manufacturing, healthcare, cities, and the environment.

The fourth is Scalability. AI innovation fundamentally takes place on a global stage. Technology must spread and scale rapidly, and systems and finance must also be designed with expansion in mind. For countries with declining populations, expanding markets beyond borders through technological dominance and scalability is essential.

The 4S share a common trait: they originate from soft power, which is neither visible nor tangible. Speed is a matter of culture before technology; security is trust; sensing begins with observation and imagination. Scalability does not function without a culture of openness and cooperation. In short, the 4S are not issues of hard power, but indicators of a nation's level of soft power.

Therefore, competitiveness in the AI era depends not only on technology itself, but also on paradigm shifts in education, finance, and culture. Education should move away from simply increasing the amount of knowledge and instead broaden the spectrum of imagination. Finance should not be about avoiding risk, but about embracing challenges and continuously learning from failures through feedback. Culture should shift from a society that demands the right answer to one that encourages questions.

Countries that achieve renewed growth even in an era of population decline have one thing in common: strong soft power that transforms imagination into innovation. Now is the time to choose: will we remain bound by the inertia of the industrial economy, or will we design a new creative economy based on the 4S?

Yoon Jongrok (Adjunct Professor at KAIST, Former Vice Minister of the Ministry of Science, ICT and Future Planning)