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Can South Korea engineer a second Miracle on the Han River? Seoul’s Horatio Alger–inspired rags-to-riches story is well-known: the country went from a war-torn, impoverished nation to a global industrial powerhouse in just two generations. Before this turn of events, no one could have imagined that South Korean actors would win an Oscar and an Emmy or that K-pop would reach a global audience. A country that relied on U.S. aid until the 1960s is now investing tens of billions of dollars to build new electric vehicles, next-generation batteries, and semiconductors in the United States.

But South Korea faces unparalleled challenges too, including the demographic fallout of having the world’s lowest fertility rate and being one of the planet’s fastest-aging societies, all-around economic competition from China, vulnerable supply chains, and much lower growth rates. If these weren’t enough, South Koreans also confront a neighboring North Korea with an increasing arsenal of nuclear weapons and a growing Chinese military footprint nearby. As U.S.-China competition intensifies, South Korea finds itself straddling a precarious fault line. More recently, as the tragic October 29, 2022, stampede in the Itaewon district in Seoul illustrated when at least 150 people died (most of whom were in their twenties and early thirties), including a number of foreign nationals, South Korea must ensure the highest levels of public safety. Being a super-connected and globally competitive society is crucial for South Korea’s longer-term prosperity. But equally important is preventing critical blind spots.

Chung Min Lee
Chung Min Lee is a senior fellow in Carnegie’s Asia Program. He is an expert on Korean and Northeast Asian security, defense, intelligence, and crisis management.
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While there are no short answers, and South Korea faces immense hurdles, the only way forward for South Korea is to enhance its competitiveness. If South Korean corporations don’t become movers and shakers in the age of artificial intelligence (AI) and the Fourth Industrial Revolution, the country is destined to fall even further behind as anemic growth becomes the new normal. Even if the private sector takes the lead in undertaking structural reforms, South Korea’s deepening political divide will likely remain a serious impediment. The left and the right wings of the country’s political spectrum have opposite views on how to foster a global Korea: the left continues to highlight the need to rein in corporate power with greater regulatory controls, while the right argues that only by unleashing the vitality of the private sector can South Korea hope to compete in the post-pandemic world.

If household brand names like Samsung, LG, and Hyundai supercharged the South Korean economy for the past four decades, next-generation companies must take the lead in fueling the country’s resurgence for the Fourth Industrial Revolution. But in an era when governments are taking charge of economic security and companies are on the front lines of crucial supply chains, a new partnership between the state and the market is needed.

The essays in this compendium highlight the challenges and opportunities South Korea faces in the world of businesses and entrepreneurship, high-end technologies such as AI, sustainable development and building a green economy, projecting a louder voice on the global commons, and revamping its national security paradigm. It is not just the economy and the private sector but how Korea sees itself in the global commons.

Jung Ku-hyun argues that while conglomerates have dominated the South Korean economy and will continue to be major drivers, the Korean companies’ ability to maintain global competitiveness will rest on a proliferation of start-ups that can shape the country’s economy at the dawn of the Fourth Industrial Revolution. Meanwhile, Hana Anderson and Jacob Feldgoise compare South Korea’s and Japan’s AI ecosystems and note how both countries have cultivated often-overlooked roles in the manufacturing of high-end semiconductors. And as U.S.-China competition heats up, Japanese and South Korean efforts to shore up new supply chains will become even more important. At the same time, South Korea, like other advanced economies, has little choice but to address the risks of accelerating climate change. Juhern Kim writes that if South Korea adopts more sustainable energy policies and spearheads a green revolution at home, it could become a new global model for others. This is a key opportunity for Seoul to become a global pioneer in striving to reach net-zero emissions.

Taking a worldwide perspective, Lee Jung-eun writes that while South Korea has garnered greater attention on the world stage, it must do much more for the global commons. It is particularly important that South Korea, as one of Asia’s most vocal democracies and its fourth-largest economy, strives to strengthen its commitment to human rights in Asia and around the world. South Korean soft power has made huge strides over the past decade, but it is time for Seoul to use this cachet to advance global public goods. Finally, I argue that South Korea’s national security framework has to be modernized and revamped to ensure the country’s economic security and to combat hybrid threats. Indeed, South Korea stands out because it faces a potent mixture of geopolitical, geoeconomic, and technological threats. Any new national security grid the country adopts will have to bolster the nation’s resilience at home so that it can cope with these unparalleled challenges.

These essays highlight the seminal importance of innovation and reform, sustaining global outlooks and assuming greater international responsibilities, and building a bipartisan competitiveness strategy that will make South Korea into a truly global, pivotal state. In the current political environment, such a task borders on mission impossible. If blood, sweat, and tears characterized South Korea’s accelerated economic rise from the early 1970s, future prosperity is going to be shaped and driven by nurturing a new competitive edge. Entrenched interest groups and the political expediency of business-as-usual may still win. But if that happens, South Korea will lose the last best chance of propelling its competitiveness in Asia and across the world.