2. Economic Policy Goal - ′Co-Prospering Economy’
KOREA REPORT(2017, #1)
Economic Policy Goal - ′Co-Prospering Economy’
2. The Moon Jae-in Administration’s Economic Policy Goal - ′Co-Prospering Economy’
The values and philosophy of ‘Co-Prospering Economy’
Paradigm shift to ‘people-centered economy’
- Former government’s economic policy focused on the conglomerates and investment in physical capitals, which resulted in the problems of economic polarization and income inequality.
- ′Co-Prospering Economy’ seeks to transform the previous state-and-business centered economy to ‘individual citizens and households’-oriented economy, wherein the profits of economic growth are evenly distributed to every individual.
- Growth in household income and reinvigoration in investment and production may create a virtuous cycle of economic growth, which can also alleviate and overcome the problems of long-term low growth economy.
Economic system of ′Coexistence′ and ′Innovation‘
- Creating economic/business ecosystem wherein the conglomerates compete in the global market, while the SMEs can progress further, and small and independent businesses pursue their potentials and creativity in the domestic market.
- Fostering innovative venture enterprises and entrepreneurs by actively promoting investment and growth in science and technology, as well as future industries.
Enhancing the government’s active role in the economy
- The government should play an active role in the economy via job creation, taxation, and fiscal policies, rather than remaining a passive onlooker in the economy.
- Via taxation and transfer payments, the government should improve the distribution structure of the economy, alleviate income inequality, and thereby contribute in economic growth in the longrun.
Five national agendas and twenty-six policy tasks for ′Co-Prospering Economy’
1st Strategy : ’Job-creating Economy for Income-led Growth’ (seven policy tasks)
- The government has created 810,000 jobs in the public sector, leading the country’s momentum for job creation. The businesses and workers have come down to a significant social compromise and strong industrial innovation creating new jobs in the economy.
- The government seeks to alleviate the economic conditions of the people by writing off household debts, which have been holding down the disposable income.
- The government seeks to enhance job security in order to alleviate the peoples’ fear for unemployment and retirement and thereby lead to increase in spending.
2nd Strategy : ’Exuberant Fair Economy’ ‘(five policy tasks).
- Reform the parts of market system that induce unfair transactions and enhance surveillance measures to foster fair trade.
- Reinforce consumer remedies, which will allow the consumers to actively claim against the businesses’ unfair practices.
- Provide guarantee for micro start-up businesses and develop a new model for cooperative profit sharing system to promote win-win cooperation between the large conglomerates and SMEs.
3rd Strategy: 'Civilian Economy for the Masses and Middle-Class' (Five Tasks)
- To lessen the liabilities of the SMEs and small business owners and also to increase their economic competence, the government will take on measures to institutionalize the safeguarding mechanism to prevent small businesses to be forced out of market: lowering the credit card commissions; introducing tax deductions on medical and education costs for 'conscience' business owners.
- Cutting back living costs: inventing financial commodity for the people to accumulate property and prepare for the retirement; introducing money-saving inter-city transportation card; lowering communication expenses.
4th Strategy: 'The 4th Industrial Revolution through the Development of Science Technology' (Six Tasks)
- Spread new technologies such as AI, IoT, 5G, etc., and provide secure jobs and basis for growth through development of core technologies and fostering of new industries.
- Cultivate creative personnels who are to lead the 4th Industrial Revolution by expanding software and syncretic education; Construct dynamic 'venture ecosystem' by providing support for startup companies.
5th Strategy: 'New Enterprises and Innovative Growth Led by Small/Mid-Sized Ventures' (Three Tasks)
- Upgrading Department of SMEs, which had been in charge of providing support for small to mid-sized businesses, to Ministry of SMEs and Startups to provide more systematic and stronger government support for small- and mid-sized venture companies.
- Mitigate income disparities between large corporations and SMEs by offering income subsidies; construct holistic system to provide support for new ventures as well as bailouts for failed business.
It is critical to implement diverse measures on 'job creation' and 'taxation and fiscal policies' to realize 'Co-prospering Economy'.
The Moon administration is steadily undertaking specific measures to achieve 'co-prospering economy.'
- On July 22nd, with the passing of related supplementary budget with the size of about KRW 11 trillion, the government began implementing concrete policies on job creation.
- On July 25th, the government announced 'People-centered Economy' as the new economic paradigm, and proposed policy directions centering on income-led growth, employment economy, fair economy, and growth through innovation.
- On August 2, the government introduced tax reform bill, and made clear statement regarding tax increase for the highest socioeconomic group as well as the enhancement of the role of the government.
It is critical to steadfastly implement a variety of economic policies to realize 'co-prospering economy'.
- Necessary to pursue additional economic policies for job creation and fostering of new business ventures through the Commission for Job Creation and the Commission for the 4th Industrial Revolution, etc.
- To induce paradigm shift from the existing growth strategy to the new 'Co-prospering Economy,' instead of introducing a few new policy measures, it is necessary to promote consistent and holistic economic policies from wider perspective.