## Republic of Korea: Selected Issues

_IMF Staff Country Reports, February 7, 2025_

## Source details

**Canonical URL:** [Republic of Korea: Selected Issues](https://www.imf.org/en/publications/cr/issues/2025/02/07/republic-of-korea-selected-issues-561785)

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- [Markdown version](/en/publications/cr/issues/2025/02/07/republic-of-korea-selected-issues-561785/index.md)
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## Bibliographic details
- Published: February 7, 2025
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798229001540.002

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### 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.*

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## Content in this bundle

- **Republic of Korea: Selected Issues; IMF Country Report No. 25/42; January 21, 2025**
  - [Republic of Korea: Selected Issues; IMF Country Report No. 25/42; January 21, 2025 (Markdown version)](/-/media/files/publications/cr/2025/english/1korea2025002-print-pdf.pdf.md){rel="alternate" type="text/markdown"}
  - [Republic of Korea: Selected Issues; IMF Country Report No. 25/42; January 21, 2025 (PDF)](/-/media/files/publications/cr/2025/english/1korea2025002-print-pdf.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2025/02/07/republic-of-korea-selected-issues-561785_