Evaluation of Future Growth Drivers
22 December 2016
Since 2000, Korea has been striving to shift its economic growth model from a model that follows to one that leads. As part of such efforts, the government has released a new industrial policy for discovering and fostering future growth drivers every five years when a new administration takes office. However, various economic players and market experts continue to raise doubts about how well such short-term policy changes undertaken by the government can be sustained or implemented.
This is a report on a comprehensive analysis and evaluation of the continuity of the policy initiatives, their effectiveness in areas of investment, as well as the appropriateness of investment strategies by analyzing the progress and status of policies on future growth drivers implemented since the transition to Participatory Government.
The outcomes of the evaluation are as follows:
First, in Korea, every new government administration has made changes and expanded the focus areas of development by pursuing new policies for discovering and fostering growth drivers. The 10 Drivers of Growth of Participatory Government expanded into the 17 New Drivers of Growth during the Lee Myung-bak administration. Retaining seven areas and adding six new ones, the incumbent administration has earmarked 19 Areas of Future Growth. In addition, the analysis revealed that the implementation of policies during transition stages is inefficient. Therefore, the government will have to develop strong policy measures to secure consistency in future growth driver initiatives in the medium-to-long term.
Second, an analysis of the effects of investment in each of the future growth drivers designated by the government revealed that there are ripple effects on industries. Thus, it was determined that the government designated adequate targets for future growth drivers in terms of ripple effects. However, since there were gaps between the effects on production and the ripple effects of area-specific investments, resource allocation should be made towards reaching an optimal balance.
Finally, investment strategies for future growth drivers such as private-led, public-private partnerships, private-public partnerships and government-led strategies proposed by the government after taking into consideration each industry’s level of maturity and leading party were found to be mis-matched with actual investment programs. Furthermore, there were many programs that were found to be contradictory to the government’s investment strategy such as those related to big data, converged-compound materials, and deepwater/extreme environment offshore plants. Therefore, the government needs to strengthen concrete linkage between the strategies and actual investment programs regarding future drivers of growth, and incorporate appropriate roles to be played by both the government and the private sector.