In the era of neomercantilism, Korea’s next president must focus on one pledge

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In the era of neomercantilism, Korea’s next president must focus on one pledge

Published: 07 May. 2025, 00:04

Audio report: written by reporters, read by AI

Park Sun-Young

The author is a professor of economics at Dongguk University.

Since the 1997 Asian financial crisis, Korea has cycled through three progressive and three conservative administrations. Each of them — Kim Dae-jung, Roh Moo-hyun and Moon Jae-in on the left, and Lee Myung-bak, Park Geun-hye and Yoon Suk Yeol on the right — has proposed sweeping economic agendas. Yet with each presidential election, voters are once again presented with campaign pledges that often lack clear financing plans or realistic paths to implementation. Despite decades of experience, both ruling and opposition parties continue to repeat the same mistakes.

Presidential candidates attend a celebration ceremony for Buddha’s Birthday in front of the main hall at Jogye Temple in Jongno District, central Seoul, on May 5. From right in the front row: Lee Jae-myung of the Democratic Party, Kim Moon-soo of the People Power Party, Kim Jae-yeon of the Progressive Party, Kwon Young-guk of the Justice Party, and independent hopeful Han Duck-soo. [PRESIDENTIAL OFFICE PHOTO POOL]

A review of the unfulfilled economic pledges made by the six past administrations reveals three persistent flaws.

First is the overreach in goal-setting. The Kim Dae-jung administration introduced the National Basic Livelihood Security Act, laying a foundation for Korea’s welfare system. But its promise to raise the welfare budget by over 30 percent annually and fully guarantee minimum living standards went unmet. Other administrations fared no better. Roh Moo-hyun pledged 2.5 million new jobs, Lee Myung-bak proposed his “747” vision (7 percent growth, $40,000 per capita income, and Korea's ascent to become the world’s seventh-largest economy), Park Geun-hye vowed to raise the employment rate to 70 percent and Moon Jae-in promised a minimum wage of 10,000 won ($7.24). These slogans made headlines but lacked the realism of actionable state policy.

Participants practice operating ballot paper issuers during a training session for overseas election officials for the 21st presidential election at the National Election Commission's Election Training Institute in Gwonseon District of Suwon, Gyeonggi, on May 1. [YONHAP]

Second is the lack of clear financial sourcing and execution plans. Every administration pledged to supply hundreds of thousands of public rental housing units. None fulfilled the promise. Kim Dae-jung’s promise to write off farm debt, Park Geun-hye’s pledge of a basic pension of 200,000 won and Moon Jae-in’s plan to create 810,000 public sector jobs all faltered for similar reasons — insufficient budget planning. With Korea’s aging population rapidly driving up welfare costs and tax revenues declining amid an economic slowdown, financing has become a structural challenge that no government can afford to ignore.

Third is a consistent failure to secure political and social consensus. Roh’s administrative capital relocation plan, Lee’s cross-country canal project, Moon’s nuclear phaseout policy, and Yoon’s labor market reforms all faced pushback due to weak legal grounds, political discord or social resistance. Without national consensus, implementation stalls. Campaign pledges that fuel ideological divides risk undermining the very governance capacity they seek to advance.

In addition, external shocks and domestic political turmoil make fulfilling pledges even harder. The global financial crisis, Covid-19, housing market instability and the recent project financing crisis have derailed even the best-laid plans. When exacerbated by political infighting and electoral cycles, it is not surprising that so many presidential pledges end in failure.

Looking ahead, the policy environment for the next administration will be more unforgiving than ever. Global economic uncertainty looms large, and Korea’s economic vitality is waning. Any campaign promise must be crafted under the assumption of limited fiscal space, diminished public trust and an increasingly volatile international order.

Yet unrealistic pledges persist. This suggests that political parties underestimate the Korean electorate. What the country needs now is not grand slogans but a singular, achievable plan backed by sustained focus and bipartisan support. The next president must be willing to invest all available political capital into a single national policy capable of altering Korea’s trajectory.

That singular focus must be economic survival and renewal.

Korea faces a dual crisis of structural low growth and cyclical slowdown. The window for a fundamental overhaul is narrowing fast. In five years, more than half the population will be over 50 years old. That demographic shift will shrink the labor pool, strain pensions and sap consumer demand. The next administration will decide whether Korea misses its final chance at economic reinvention — or seizes it.

To survive, the country must stabilize in the short term and rebuild for the long haul. Immediate aid to vulnerable groups and struggling small businesses, along with a successful resolution to tariff negotiations with the United States, will help cushion the downturn. But that is only triage.

The real work lies in long-term structural reform. Korea must invest in high-value manufacturing, strengthen its AI ecosystem and transition from outdated industries to innovation-driven growth. Industrial revitalization is not optional — it is existential.

The Presidential Committee on Aging Society and Population Policy at the Government Complex Seoul in Jongno District, central Seoul. [YONHAP]

Today’s global landscape is shaped by a return to neomercantilism. Trade, technology, and security are now interlinked in complex geopolitical competition. In this new order, the most critical campaign pledge is a coherent, realistic industrial strategy.

Many of Korea’s entrenched social problems — from low birthrates and income polarization to excessive private education costs and metropolitan overconcentration — ultimately stem from the same root cause: a shortage of quality jobs.

Quality jobs are not created by government slogans. They are born from globally competitive industries. That is why the most essential pledge in this presidential election is not about housing, welfare or education in isolation. It is a national commitment to building the next generation of strategic industries.

Korea’s future depends on whether the next government can back that commitment with action.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.