Facing a period of unprecedented economic stagnation and global trade headwinds, the South Korean government has launched a massive, strategic initiative to use Artificial Intelligence (AI) as the primary engine for national growth. The new economic policy, announced by the administration of President Lee Jae Myung, includes over 30 major AI and innovation projects and is backed by a colossal 100 trillion won (~$71 billion) public-private fund. The ambitious plan aims to pull the nation out of its current slump, with a projected growth rate of just 0.9% in 2025, and catapult it into the top tier of global AI leaders.
This initiative, which officials have described as a comprehensive “AI transformation,” is targeting a wide range of industries where South Korea already has a global foothold. The 15 core AI projects are set to integrate intelligent systems into everyday life and business. In the private sector, AI will be embedded into robotics, autonomous vehicles, smart home appliances, and drone technology for applications in logistics, agriculture, and emergency services. The government also plans to accelerate the development of AI semiconductors for on-device computing to maintain its edge in the global chip industry.
The public sector is not being left behind. The plan envisions an “AI government” where AI is used to streamline public services such as welfare delivery, tax compliance, and new drug approvals. For instance, AI will be used to automatically screen pharmaceutical applications to reduce approval times and restructure the tax system with automated filing and fraud detection. These measures are designed to enhance efficiency and create initial demand for private sector AI technologies.
To fund this transformation, the government will create a “national growth fund” by combining a new advanced strategic industry fund with private capital from pension funds and private finance, resulting in a scale of over 100 trillion won. The fund will use a “two-track” investment method, providing long-term equity to ventures and small businesses, while offering ultra-low interest loans for large-scale facility investments. The government will also offer generous tax incentives—including investment credits of up to 35%—and streamlined regulatory processes to attract domestic and foreign investment.
By placing digital innovation at the heart of its economic strategy, South Korea is not only aiming to reverse its demographic challenges and slow growth but also to solidify its position as a global technological powerhouse.
