AI-Driven Growth: How President Lee Plans to Boost Korea’s Economy and Productivity

Accelerating the Realization of President Lee's Economic Pledges

The Ministry of Economy and Finance is focused on securing key strategic resources—labor, capital, and technological innovation—to support tax systems and boost Korea’s potential growth rate. Central to this effort is the integration of artificial intelligence (AI) to enhance total factor productivity.

AI as a Catalyst for Growth

The Ministry emphasizes that achieving President Lee Jae-myung’s pledge of a 3% potential growth rate requires a fundamental transformation that embeds AI across all sectors of the economy and society. AI-driven technological innovation is expected to raise total factor productivity and reverse the decline in growth potential.

Earlier reports to the National Planning Committee highlighted the need for stronger measures. After feedback pointed out gaps in the Ministry's previous proposals, a third report underscored AI’s role in increasing productivity and restoring growth.

Supporting this view, the Bank of Korea's recent report, AI and the Korean Economy, projected that AI adoption could raise productivity by 1.1 to 3.2 percent and boost GDP by 4.2 to 12.6 percent—enough to counteract challenges from aging and shrinking labor supply.

National Planning Committee’s Vision

In the government’s new growth policy, Strategy for Real Growth in Korea, AI investment is identified as essential not only for hitting the 3% growth target but also for positioning Korea among the world’s top five AI-competitive countries.

To support this, the Regulatory Rationalization Task Force recently visited Samsung SDS’s Sangam Data Center, a critical AI infrastructure. The government plans to classify AI data centers as key national social overhead capital (SOC), increasing public investment and expanding tax credits to encourage private sector participation.

Human Capital: The Other Growth Driver

Labor input remains crucial for growth, but Korea faces demographic challenges. The working-age population is shrinking due to rapid aging and declining employment interest among younger generations. High-tech sectors such as AI, semiconductors, and bio industries struggle to attract and retain skilled talent.

Addressing this, the State Planning Committee’s economic division called for urgent strengthening of science and technology talent policies. Proposals include:

• Expanding support for science and engineering students and emerging researchers
• Securing legal status for postdoctoral researchers
• Supporting the return of female scientists and technologists
• Encouraging research activities of retired scientists with strong expertise

Capital Investment and Regional Revitalization

Capital investments in AI, upgrading traditional manufacturing hubs (known as the South Coast Rust Belt), regional growth bases, and energy infrastructure are also key to restoring growth potential. The rust belt includes industrial cities like Yeosu, Ulsan, Changwon, Pohang, and Gwangyang, which face challenges from competition and industry downturns.

The National Planning Committee warns that the decline of these industrial regions poses a serious risk to the national economy. Regional policies must prioritize enhancing growth potential, boosting local economies, and improving living standards.

R&D System Reform

The Ministry also reported plans to reform the national R&D system to ensure better allocation and transparency of funds. Although the national R&D budget was restored recently, concerns remain about inefficient distribution and execution. New legislation aims to secure continuity, transparency, and expertise in R&D financing, with a focus on intensifying AI-related research and expanding tax incentives.

Final Thoughts for Finance and HR Professionals

For those working in finance and human resources, these developments signal a clear shift towards integrating AI technologies and reshaping workforce strategies. Effective AI adoption requires careful planning to translate investment into productivity gains across industries.

Strengthening human capital policies, especially in science and technology, will be key to sustaining innovation and competitiveness. Meanwhile, capital investments targeting both emerging technologies and regional revitalization will support balanced economic growth.

Staying informed about these government initiatives and aligning workforce and investment strategies accordingly will be critical for professionals managing finance and talent in Korea’s evolving economic landscape.

For more insights on AI integration and workforce development, explore professional training options at Complete AI Training.