Republic of Korea: Selected Issues
IMF Staff Country Reports, February 7, 2025
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Bibliographic details
- Published: February 7, 2025
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798229001540.002
Overview
- Examines the impact of artificial intelligence (AI) in Korea, highlighting Korea's status as a leading innovator and semiconductor producer and noting high exposure to AI.
- AI usage is rising in Korean firms, with notable adoption among large, young, and tech-related firms.
- Empirical analysis emphasizes the significant role of firm size, age, and complementary assets in driving AI adoption.
- AI exposure tends to be higher for high-income groups, while potential gains from AI also increase with income.
Key Findings on AI Adoption and Effects
- AI adoption leads to significant output and productivity gains.
- Gains are especially pronounced in Scenario 3 featuring both high labor complementarity and high overall productivity.
- AI usage patterns:
- Higher among large firms.
- Higher among young firms.
- Higher among tech-related firms.
- Determinants confirmed by empirical analysis:
- Firm size.
- Firm age.
- Complementary assets.
Distributional and Labor Market Implications
- AI exposure is higher for high-income groups, with potential gains also increasing with income.
- High labor market duality poses significant challenges for worker mobility and job switching.
- Elderly groups face particular difficulty switching jobs in the current labor market structure.
Policy Response and Recommendations
- Authorities have taken proactive steps to:
- Advance AI development and adoption.
- Expand the AI talent pool.
- Establish regulations to manage associated risks.
- Ongoing policy efforts aim to promote AI adoption while managing potential risks associated with technology diffusion and labor market disruption.
Scenarios and Policy-Relevant Outcomes
- Scenario 3 (high labor complementarity and high overall productivity) yields the most significant output and productivity gains from AI adoption.
- Policy design should consider:
- Enhancing complementary assets that facilitate adoption among smaller, older, or non-tech firms.
- Addressing labor market duality to improve worker mobility, with attention to elderly workers.
- Expanding training and talent pipelines to capture gains across income groups.
Republic of Korea: Selected Issues — IMF Staff Country Report No. 2025/042.
Content in this bundle
- Republic of Korea: Selected Issues; IMF Country Report No. 25/42; January 21, 2025