South Korea’s Presidential Hopefuls Clash Over AI, Deregulation, and Economic Revival Plans

South Korea’s Presidential Candidates Focus Economic Strategies on AI, Deregulation, and Reshoring

As South Korea's presidential election period begins, the leading candidates are centering their campaigns on ambitious economic policies aimed at revitalizing the nation’s growth. The focus is clear: artificial intelligence (AI) development, deregulation, and reshoring of manufacturing are top priorities for the frontrunners.

AI as a Core Economic Driver

Both Lee Jae-myung of the Democratic Party and Kim Moon-soo of the People Power Party view AI as pivotal to South Korea’s economic future. Each pledges investment totaling 100 trillion won (about US$70.4 billion) to position the country among the top three AI powers globally.

• Lee Jae-myung’s Plan: Expand AI-related government budgets significantly and secure over 50,000 high-performance GPUs to boost AI capabilities.
• Kim Moon-soo’s Plan: Create a joint public-private AI fund of 100 trillion won and nurture up to 200,000 AI specialists by expanding graduate programs focused on AI and software.

These initiatives reflect a strategic push to make AI a central engine for economic recovery and long-term growth.

Deregulation and Corporate Reform

Removing regulatory barriers forms a critical part of the economic agenda. Kim Moon-soo emphasizes overhauling corporate regulations and tax systems to encourage private investment. His proposals include:

• Legislating a basic act on economic innovation to eliminate red tape in emerging sectors.
• Lowering corporate and inheritance tax rates.
• Introducing more flexible workweek arrangements based on labor-management agreements.

Lee Jun-seok from the New Reform Party also prioritizes deregulation, with plans to ease restrictions on companies and incentivize the return of manufacturers who offshored production. His approach includes a special pension system for outstanding researchers and engineers to bolster science and technology talent.

Reshoring and Industrial Revitalization

Bringing manufacturing back to South Korea is another shared goal. Lee Jun-seok proposes targeted support and incentives to revive domestic industrial regions, aiming to strengthen the country’s manufacturing base. This effort complements broader strategies to cultivate key sectors such as defense industries.

Lee Jae-myung plans to develop defense as a flagship sector, including:

• Establishing a control tower for defense exports.
• Increasing investment in defense-related AI.
• Introducing new tax incentives for companies engaged in defense exports.

He also targets cultural industries, aiming to boost annual cultural exports to 50 trillion won by supporting K-content and domestic OTT platforms.

Economic Challenges and Stakeholder Concerns

South Korea faces mounting economic challenges. The OECD projects a decline in potential GDP growth from 2.02% this year to 1.98% by 2026. Additionally, major business groups including the Korea Chamber of Commerce and Industry (KCCI) and Federation of Korean Industries (FKI) issued a comprehensive 269-page joint policy recommendation highlighting concerns over low growth, aging demographics, and global trade protectionism.

A KCCI official emphasized the need for bold new growth strategies to counteract the economy’s slowing momentum.

Implications for Government Officials

For government professionals, these policy proposals underscore a shift toward fostering innovation through AI, streamlining regulatory frameworks, and reinforcing domestic industries. Understanding and supporting such initiatives will be critical for effective policy implementation and sustaining South Korea’s economic competitiveness.

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