Korea’s Paradigm Shift for Sustainable and Inclusive Growth: A Proposal

By Yangho Byeon, Kwanghae Choi, Heenam Choi, Jun I Kim

November 20, 2017

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Yangho Byeon, Kwanghae Choi, Heenam Choi, and Jun I Kim. Korea’s Paradigm Shift for Sustainable and Inclusive Growth: A Proposal, (USA: International Monetary Fund, 2017) accessed December 3, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Korea is facing mounting economic challenges. Productivity growth has been on a trend decline amid demographic headwinds, while the societal demand for inclusive growth has been on a steep rise. Furthermore, the government-led unbalanced growth model—which served Korea well in the past—has become less effective and politically palatable in recent years. As such, Korea needs a major paradigm shift to embark on a new sustainable and inclusive growth path. But policy response has been modest at best with no major reforms being implemented over the past two decades. We propose a paradigm shift in Korea’s economic framework, involving a simultaneous big push for greater economic freedom and stronger social protection within the parameters set by long-run fiscal sustainability. We also provide a detailed account of structural reforms to boost economic freedom and sustainable funding plans for stronger social protection.

Subject: Education, Income, Income inequality, Labor, Labor markets, Macrostructural analysis, National accounts, Structural reforms

Keywords: Allocative efficiency, Debt limit, Economic freedom, Economic growth, Financial crisis, Fiscal sustainability, Global, Growth paradigm, High-productivity firm, Income, Income inequality, Income share, Job market, Korea's challenge, Korea's immigration, Labor markets, Paradigm shift, Product market, Productivity slowdown, Replacement ratio, Social protection, Structural reforms, Unbalanced growth, Unemployment insurance, WP

Publication Details

Pages:

41
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2017/260
Stock No:

WPIEA2017260
ISBN:

9781484329931
ISSN:

1018-5941

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