Korea’s Bold AI Strategy for Economic Revival
The Korean government has announced a comprehensive plan to integrate artificial intelligence (AI) across public and private sectors. This initiative centers on 15 flagship AI projects aimed at reversing economic decline and stimulating growth.
Private companies will spearhead seven key projects involving robotics, automobiles, shipbuilding, home appliances, drones, factory operations, and semiconductors. Meanwhile, public sector efforts will focus on welfare, employment, taxation, clinical testing, talent development, public data sharing, and research and development (R&D).
Addressing Economic Challenges with AI
Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol highlighted Korea’s long-term slowdown in growth potential. From a steady 3% in the 2010s, growth is projected to fall below 1% by the 2040s. Factors such as population decline, regional imbalances, polarization, shifts in global trade, and rapid advances in China’s technology contribute to this trend.
To reflect these challenges, the government lowered the 2025 GDP growth forecast from 1.8% to 0.9%. In this context, AI adoption is seen as a critical opportunity—and perhaps the last chance—to boost economic performance. Successful AI integration could raise GDP growth by 4.2% to 12.6% over time.
Broader Innovation Roadmap
The AI projects are part of a larger plan that includes 30 initiatives encompassing green technology, advanced manufacturing, and cultural exports. Among other focus areas are liquefied natural gas cargo tanks, solar and wind energy, smart farming, high-resolution satellites, biotechnology, webtoons, cosmetics, and food industries.
This multi-pronged approach aims to advance AI alongside other technological innovations to maximize economic impact.
Establishing Five Regional Hubs
To support balanced regional development, the projects will be distributed across five regions outside Seoul:
- Busan: Automobiles and shipbuilding
- Gwangju: Renewable energy and food
- Daegu: Robotics and biotechnology
- Daejeon: Semiconductors
- Gangwon and Jeju: Green energy and tourism
Talent and Funding
The government plans to attract up to 2,000 AI engineers from abroad by easing visa restrictions. Incentives will also be offered to retain domestic talent and prevent brain drain.
AI integration in daily life will be supported through the AX-Sprint 300 program, targeting 300 widely used products in manufacturing, housing, and logistics.
A fund of 100 trillion won (approximately $71.5 billion) will be raised: 50 trillion won devoted to nurturing high-tech industries and future growth sectors, and 50 trillion won allocated to programs improving public welfare, such as low-interest loans and support for small and medium-sized enterprises (SMEs).
Support for SMEs and Workforce Adaptation
SMEs will receive assistance adopting AI-enabled smart factories to reduce production costs and increase scale. Additionally, AI-driven business district analysis and management diagnostics will help small business owners improve competitiveness.
To ease the transition for citizens unfamiliar with AI and digital technologies, educational sessions will be offered.
Green Transition and Market Reform
A special law will establish a new industrial cluster dedicated to the RE100 initiative, encouraging businesses to source 100% of their electricity from renewable energy. The law will offer incentives such as regulatory easing and procurement cost reductions.
Further economic reforms include shifting investment flows from real estate to financial markets, enhancing corporate governance, cracking down on unfair trading, and preparing an MSCI inclusion roadmap this year.
This comprehensive strategy reflects a clear government commitment to leveraging AI and innovation to secure Korea’s economic future.
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