🚨 Lee Jae-myung Government Announces 123 National Tasks
Today Korean Economic News for Beginners | 2025.08.14
0️⃣ 100 Trillion Won National Fund and AI Top 3 Goal for 3% Growth
📌 210 Trillion Budget & 100 Trillion National Fund Start 'Real Growth'... 3% Growth Rate Target
💬 Lee Jae-myung's government announced 123 national tasks aiming to achieve 'AI Top 3 Country, 3% Potential Growth Rate, World's 5th Strongest National Power' over the next 5 years. They plan to boost advanced industry competitiveness through a 100 trillion won National Growth Fund and deregulation, and invest 210 trillion won in regional fiscal expansion and industrial hub development for balanced growth. The government said it will greatly reduce regulations on three new industries: semiconductors, batteries, and biotechnology, and diversify growth engines by expanding K-Culture and K-Food exports. They also plan to reduce Seoul area concentration and promote balanced national development through the '5 Poles 3 Special Areas' regional development strategy.
1️⃣ Easy to Understand
The government's '3·3·5' strategy is a big plan to push artificial intelligence, industrial innovation, and balanced growth all at once. Simply put, it's an ambitious plan to grow the economy with technology, reduce regional gaps, and make Korea one of the world's top 5 powers.
Let me first explain what 'AI Top 3 Country' means. Currently, the United States and China are the overwhelming 1st and 2nd places in artificial intelligence. The government set a goal for Korea to secure world-class AI competitiveness at the 3rd place level. For this, they plan to focus large investments on semiconductors, data centers, and AI research and development.
'3% Potential Growth Rate' means raising the basic economic strength that allows healthy growth to 3%. Korea's current potential growth rate is estimated to be around 2%, and to raise this to 3%, productivity must be greatly improved. For this, they said they will create a 100 trillion won National Growth Fund to invest in advanced technology and innovative companies.
'World's 5th Strongest National Power' is a concept that includes not only economic power but also culture, science and technology, and international influence. Currently, Korea ranks around 10th in economic size, but the government believes it can enter the top 5 when including soft power.
Looking at specific implementation methods, they will first greatly reduce regulations. Especially in semiconductors, batteries, and biotechnology, they will push 'zero regulation' policies to help companies innovate faster. For example, greatly shortening the time needed for new drug development or autonomous vehicle testing.
For regional balanced development, they will introduce the '5 Poles 3 Special Areas' strategy. They will divide the country into 5 regions (Seoul area, Chungcheong area, Honam area, Gyeongbuk area, Gyeongnam area) and 3 special areas (Gangwon Special Self-Governing Province, Jeju Special Self-Governing Province, Busan·Ulsan·Gyeongnam Megacity) to develop each area's unique industries.
They also plan to actively develop K-Culture and K-Food industries. They want to increase Korean Wave content exports and expand agricultural and food exports to diversify growth engines. They also plan to attract more foreign tourists to grow the service industry together.
In the end, this plan can be called a comprehensive growth strategy that includes technological innovation, regional balance, and cultural industry development.
2️⃣ Economic Terms
📕 Potential Growth Rate
Potential growth rate is the growth rate that a country's economy can achieve long-term without inflation pressure.
- It's a concept that comprehensively considers the economy's health, productivity, labor force, and capital.
- Korea's current potential growth rate is estimated to be around 2%.
- To raise the potential growth rate, technological innovation and productivity improvement are essential.
📕 National Growth Fund
The National Growth Fund is a large-scale investment fund created jointly by the government and private sector.
- It provides long-term, low-interest funding to high-growth areas like advanced industries, startups, and innovative companies.
- Created with 100 trillion won, it serves as a catalyst to promote private investment.
- It has the effect of attracting private capital for large-scale investments that are limited by government finances alone.
📕 Zero Regulation
Zero regulation is a policy that greatly eliminates or eases various legal and administrative regulations in specific industries.
- The purpose is to induce rapid growth of new industries and promote innovation.
- Advanced industries like semiconductors, batteries, and biotechnology are the main targets.
- However, managing side effects like safety, environment, and consumer protection is an important task.
📕 5 Poles 3 Special Areas Strategy
5 Poles 3 Special Areas is a regional development strategy that divides the country into 5 regions and 3 special areas to develop each area's unique industries.
- 5 Poles: Divided into Seoul area, Chungcheong area, Honam area, Gyeongbuk area, and Gyeongnam area.
- 3 Special Areas: Gangwon Special Self-Governing Province, Jeju Special Self-Governing Province, and Busan·Ulsan·Gyeongnam Megacity.
- It aims for balanced development by developing specialized industries using each region's unique strengths.
3️⃣ Principles and Economic Outlook
✅ Supply-Side Innovation and Growth Potential Expansion
Productivity innovation through AI and advanced industry investment will be the core driver of long-term growth.
First, artificial intelligence investment can greatly improve productivity across the economy. We can expect effects similar to how the United States greatly raised its potential growth rate through the IT revolution in the 1990s. AI is a general-purpose technology that can increase productivity in all fields including not only manufacturing but also finance, healthcare, education, and services. Especially when combined with semiconductor technology where Korea has strengths, we can secure competitiveness in the global AI market.
Second, the 100 trillion won National Growth Fund is expected to serve as a catalyst for private investment. When government funding makes leading investments, a 'crowding in' effect can appear where private capital follows. Especially semiconductors, batteries, and biotechnology are fields where initial investment scale is large and recovery period is long, making private investment alone insufficient. If the National Fund fills this gap, it can create new growth engines in the long term.
Third, accelerating innovation speed through deregulation is also an important growth factor. Korea has often had delayed innovation due to excessive regulations. For example, commercialization of new technologies like autonomous vehicles or drone taxis was later than other countries due to regulations. If the zero regulation policy succeeds, innovative companies can grow faster, which will increase the dynamism of the entire economy.
If supply-side innovation succeeds, Korea's economic basic strength, the potential growth rate, can be raised to the 3% level.
✅ Fiscal Expansion and Balanced Growth Policy
210 trillion won fiscal input and regional balanced development policy are expected to expand the scope of growth.
First, large-scale fiscal input will bring strong economic stimulus effects in the short term. 210 trillion won is a huge amount equivalent to 40% of Korea's annual budget. When this funding is put into infrastructure construction, regional industry development, and job creation, it can inject vitality into the entire economy. Especially demand in related industries like construction and machinery is expected to increase greatly.
Second, the 5 Poles 3 Special Areas strategy can ease Seoul area concentration and activate regional economies. Korea has had deepening regional imbalances with excessive concentration of population and industry in the Seoul area. If industries suited to each region's characteristics are developed, quality jobs can be created in local areas and Seoul area concentration pressure can also be reduced. For example, the Gyeongbuk area would specialize in semiconductors and displays, while the Honam area would specialize in batteries and renewable energy.
Third, however, concerns about worsening fiscal soundness must also be considered. Investing the huge amount of 210 trillion won could greatly increase national debt. We should refer to Japan's case where it continuously expanded fiscal policy from the 1990s but economic growth rate actually slowed. It's important to increase fiscal input efficiency and maximize economic growth effects compared to investment.
For balanced growth policy to succeed, efficient fiscal allocation and securing competitiveness of specialized industries by region are key.
✅ Cultural Industries and Global Competitiveness Enhancement
Growth engine diversification through K-Culture and K-Food will create long-term competitive advantages.
First, Korean Wave content is already our strong competitiveness verified in the global market. K-pop, K-dramas, webtoons, and games are popular worldwide, and this is soft power that raises national brand value beyond simple entertainment. If the government expands support for this field, it can further strengthen the global competitiveness of the content industry. Especially, development of new forms of content combined with new technologies like metaverse and AI is expected.
Second, K-Food export expansion can become a new growth engine for agriculture and food industries. As overseas interest in Korean food like kimchi, ramen, and K-barbecue increases, related food exports are also growing greatly. This means transformation from primary agriculture to high-value-added food industry. Also, as Korean restaurants and Korean ingredient stores spread worldwide, opportunities for service industry overseas expansion are being created.
Third, attracting foreign tourists has direct effects on service industry growth and job creation. If we increase the number of foreign tourists, which was around 17.5 million annually before COVID-19, a wide range of service industries including accommodation, restaurants, shopping, and transportation can benefit. Especially if we develop high-value-added tourism products like experience tourism linked with Korean Wave, medical tourism, and beauty tourism, tourism income can also increase greatly.
Cultural industries will create added value of national image improvement and soft power expansion beyond economic effects.
4️⃣ In Conclusion
Lee Jae-myung government's 123 national tasks are a comprehensive growth strategy encompassing technological innovation, regional balance, and cultural industries. The '3·3·5' goals are ambitious, but efficient policy implementation and side effect management are essential for success.
The biggest strength of this plan is its comprehensive approach across multiple areas rather than a single field. It invested in AI and advanced technology while not missing regional balanced development, and diversified growth engines by including cultural industries. Especially the 100 trillion won National Growth Fund can serve as a catalyst to attract private investment, making possible large-scale investments that are limited by government finances alone.
Innovation promotion through deregulation is also a timely policy. Korea has often had slower innovation speeds due to excessive regulations, and if the zero regulation policy succeeds, an environment where companies can innovate faster will be created.
However, there are also some concerns. First, there's the possibility that the huge fiscal input of 210 trillion won could worsen fiscal soundness. If investment efficiency cannot be increased and a virtuous cycle structure leading to growth cannot be created, it could become a situation like Japan's 'lost 30 years.'
Second, there's concern that investing in too many fields simultaneously could reduce focus and disperse effects. Setting priorities on how to allocate limited resources is important.
Third, careful management is needed so that deregulation doesn't cause side effects like safety or environmental problems. We must find a balance point that promotes innovation while ensuring public safety.
To increase the possibility of success, several conditions must be met. First, efficient execution of investment funds is essential. Rather than simple infrastructure investment focused on civil engineering like in the past, we must focus on fields that actually increase productivity and strengthen competitiveness.
Also, maximizing the use of private innovation capabilities is important. Rather than the government leading everything, it should focus on creating an environment where the private sector can innovate creatively.
In the end, for these national tasks to lead to 'real growth,' policy implementation that aims for long-term competitiveness enhancement and sustainable development, not just focusing on short-term results, is necessary. For the goals of achieving 3% potential growth rate and entering the world's top 5 to become reality, citizens, companies, and government must all work together.
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