Project

SBS Cultural Foundation - IFS

The stagnant growth crisis: national strategy for economic prosperity

1. Industrial Development Strategy

□ Innovation Base Theory and Production Zone Theory
Korea urgently needs to prepare a response strategy to overcome international political risks such as high-tech competition from the US and China and supply chain risks. Therefore, a dual approach strategy of innovation zones and production bases is proposed. The aim is to realize a stable supply chain in which global technology companies build innovative industries in Korea's innovation zones and produce innovative products in production bases worldwide.

□ (Internal dimension) Building Korea's Innovation Zone
In building Korea's innovation zone, it is necessary to review two models of innovation zones: Silicon Valley and Shenzhen. Silicon Valley has formed an innovation ecosystem with a talent pool that can develop and commercialize advanced science and technology, collaboration with research institutions, and a financial system supporting the commercialization of innovative technologies. In Shenzhen, the Silicon Valley-like innovation ecosystem has been artificially transplanted by government policy.
The Korean government needs policies to replicate Silicon Valley's innovation environment in Korea. The key is to create a free and open innovation space where innovative companies from around the world can enter or start-up.
Models such as Silicon Valley and Shenzhen can provide policy alternatives, including Building an innovation ecosystem through policies such as encouraging the nomadization of high-tech talent, supporting the establishment of world-class research and development labs, creating regional innovation hubs led by local governments, and creating investment capital for innovative technology companies.
At the institutional infrastructure level, a liberal foundation should be established so that innovative products or services can be the first to be commercialized in Korea. Regulation of innovative industries should be done reactively after a problem has occurred.

□ (External dimension) Protecting the global production base
The 'Multiple Hub & Spoke' production base theory is ultimately a strategy to secure economic territory and goes beyond the free trade agreements (FTAs) that Korea has been pursuing.
After crossing the border line through FTAs, it is now about securing sites to expand the space for economic innovation.
Private sector-led manufacturing, investment, and R&D are linked, innovation is carried out on a global basis, and logistics-based trade is connected in the form of the center axle and spokes of a cartwheel.
Korea should be the hub space connecting each global hub. Once the location of each global hub is determined, the Korean government should sign some form of 'Comprehensive Partnership Agreement' with the government of that country and jointly develop a radial production zone in the form of a rim.
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2. Security Strategy: Managing Security Risks in the Economic Prosperity Network

□ Security conditions for economic prosperity
To build a global innovation and production network centered in Korea, a strategy is needed to minimize security risks.
Korea's maritime strategy is a means to ensure the security of Korea's global industrial network. South Korea faces maritime security threats as China, a status quo disrupter, and the United States, a status quo maintainer, engage in a maritime power competition in the Indo-Pacific region.
The Taiwan Strait crisis, disputes in the South China Sea, as well as China's expanding naval power in the West Sea have heightened real-world security concerns. As South Korea relies on maritime transportation routes for much of its logistics, security risks at sea threaten its industrial and trade networks.
Historically, South Korea has enjoyed a free ride on the public good of secure maritime transportation routes in the Indo-Pacific region, a public good that has been maintained by U.S. military power. The problem is that the security of maritime transportation lanes, which has been maintained by U.S. hegemony, is facing a decline in relative U.S. power.

□ (Bilateral) Expanding the role of the U.S.-ROK alliance in the Indo-Pacific region
South Korea should pursue a strategy that supports the status quo of the maritime security order, which has been based on U.S. military power. The U.S. 2022 Indo-Pacific Strategy seeks to secure the collective capabilities of allies, friends, and regional organizations in the Indo-Pacific against the Chinese threat.
South Korea needs to strengthen its security partnership with the United States to expand its military capabilities, which have been limited to deterrence against North Korea, to ensure maritime security in the Indo-Pacific region.
Provide defensive military support, including reconnaissance, escort, and networking for U.S. naval power access to the Indo-Pacific region. In addition, South Korea's world-class shipbuilding capabilities should be utilized to support the construction, docking, and repair of U.S. Navy ships.
To facilitate such maritime security cooperation, close communication and cooperation between defense and high-tech companies in the two countries is also required.
There is a need to expand the role of the ROK-US alliance, especially after the November 2024 US presidential election, through proactive policy proposals by South Korea in response to the US' public strategy toward China.
To this end, we will attempt to identify specific and creative policies through meetings with Korean government and business practitioners and U.S. policy experts, as well as the expertise of the participating co-researchers.

□ (Multilateral) Maritime Security Cooperation Initiative
South Korea should cooperate with countries that respect the value of free trade in the Indo-Pacific region. Cooperation with countries at the crossroads of maritime transportation routes is particularly important.
South Korea should establish a maritime security council. Regularly conduct joint naval exercises with countries located at choke points on maritime transportation routes.
Joint naval exercises are aimed at deterring potential threat actors from attempting to control the sea and protecting maritime transportation routes in the event of an emergency.
However, South Korea can build cooperation with other Asian countries, including China, if it can make the case for shared security and freedom of navigation on maritime transportation routes.
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3. Talent strategy: Korean-style immigration policy based on political, economic, legal, and ethical considerations

□ The need to secure high-tech talent overseas
A prerequisite for the creation and attraction of innovative technology companies is the influx of high-tech workers.
Korea is facing a shortage of high-tech manpower resources due to a low birthrate and a shortage of science and technology workers.
For innovative technology companies to be created and developed in Korea, it is necessary to attract talented overseas workers. To do so, Korean culture, living conditions, and educational conditions must be changed to meet global standards, and the openness of Korean society must be significantly increased.

□ Selective immigration policies that reflect international norms
A country's immigration policy is a measure of the community's views and attitudes toward strangers and its acceptance of the norms of the current international order, including international human rights law and refugee law.
Successful immigration policy is not just about economic considerations, but also political, legal, and ethical issues.
Some economists have noted that the economic benefits of immigration may also depend on the extent to which immigration policies meet international standards in protecting the rights and interests of foreign nationals and their human rights, thus requiring a comprehensive examination of the economics of immigration and the law, politics, and ethics of immigration.
Considering that the direction and nature of immigration and migration globally may undergo significant changes in response to changes in international politics and economics, the establishment of effective immigration policies in the long term requires a longer and broader perspective than the current labor demand.

□ Research Methodology and Expected Outcomes
Based on the expertise of the participating co-researchers, we will seek expert advice from various fields such as economics, political science, law, demography, and regional studies, and seek comprehensive and systematic policy improvements.
It is expected to complement the fragmentation of existing research on immigration policy.
It can also contribute to shedding light on when and under what conditions immigration policy can be a (partial) solution to population problems and labor crises.
In short, to stabilize the type of immigration needed to address the current labor crisis in Korea, policies and institutions need to be developed to ensure that it is reasonable for immigrants to plan for a long-term settlement in Korea, and that they are treated in accordance with international human rights standards, and that there are reasonable institutional pathways to attain community membership status such as permanent residency and citizenship.