Seoul to promote recovery through accelerated digitalization . . .
South Korea’s finance ministry announced on May 7, a series of new policies, ambitiously named the Korean New Deal, designed to promote economic recovery after the COVID-19 pandemic in the same way that the U.S. did following the Great Depression. The Korean New Deal, however, will focus on data infrastructure, artificial intelligence (AI), and cybersecurity, instead of roads and bridges. The policy will revolve around three main pillars – digital infrastructure, ‘untact’ (contact-less) services, and digitalization of social overhead capital (capital goods provided to everyone) – and 10 key projects on data collection, 5G, AI, cloud services, cybersecurity, and more. Details on funding and implementation will be announced in June.
Same direction, more momentum . . .
The Korean New Deal does not lay out a new policy agenda, but rather expresses the intent to accelerate the pace of its existing agenda. Seoul has consistently invested in digitalization, seeing innovation as a key tool to boost its economic growth. The three pillars identified in the Korean New Deal had been selected as areas of strategic investment since the beginning of President Moon Jae-in’s administration in 2017. However, the pandemic has created an opportunity to add momentum to the existing policy direction. Social distancing measures have increased the reliance on digital technologies (e.g. remote work, e-learning, e-commerce), and the economic crisis has created the need for drastic government action for rapid recovery. In this context, Seoul has found an opportunity to accelerate digitalization across all sectors through large stimulus packages and policy reforms.
Demand for New Deals around the world . . .
Even prior to the COVID-19 outbreak, there had been calls for New Deal-like policies to tackle long-standing, structural issues such as climate change, income inequality, and disruptions caused by digital technologies. The pandemic has further highlighted these challenges, and added to the call for greater investment in health care and even universal basic income. In the post-COVID world, governments around the world will face a serious reckoning with large amounts of debt and a weaker global economy. In this context, we will likely see more New Deals as countries emerge out of the pandemic.
- The Korea Herald: ‘Korean New Deal’ aims to revive economy through digitalization
- Ministry of Economy and Finance: ‘한국판 뉴딜’ 추진방향
- The New York Times: The New Great Depression is coming. Will there be a New New Deal?