Korea’s Paradigm Shift for Sustainable and Inclusive Growth: A Proposal
IMF Working Papers, November 20, 2017
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- Korea’s Paradigm Shift for Sustainable and Inclusive Growth: A Proposal
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Bibliographic details
- Authors: Yangho Byeon, Kwanghae Choi, Heenam Choi, Jun I Kim
- Published: November 20, 2017
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484329931.001
Key challenges identified
- Productivity growth has been on a trend decline amid demographic headwinds.
- Societal demand for inclusive growth has been on a steep rise.
- The government-led unbalanced growth model—which served Korea well in the past—has become less effective and politically palatable in recent years.
- Policy response has been modest with no major reforms being implemented over the past two decades.
Core proposal: paradigm shift in economic framework
- Simultaneous big push for greater economic freedom and stronger social protection.
- Reform design constrained by the parameters set by long-run fiscal sustainability.
- Detailed account provided of:
- Structural reforms to boost economic freedom.
- Sustainable funding plans for stronger social protection.
Substantive findings and emphasis
- Korea needs a major paradigm shift to embark on a new sustainable and inclusive growth path.
- The proposed approach pairs liberalizing reforms (to address productivity and allocative efficiency) with expanded social protection (to meet rising demand for inclusiveness) while preserving long-run fiscal balance.
Policy recommendations (overview)
- Implement broad structural reforms to enhance economic freedom across product and labor markets, targeting allocative efficiency and the productivity slowdown.
- Strengthen social protection mechanisms, including measures related to income, income inequality, unemployment insurance, and replacement ratios, with sustainable fiscal financing arrangements.
Subjects and keywords (as listed)
- Subjects: 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.
Content in this bundle
- Korea’s Paradigm Shift for Sustainable and Inclusive Growth: A Proposal, WP/17/260, November 2017