[In-Depth Look] South Korea's 'Great Reset'

Kyung-Yeop Jo, Director of Economic Research at the Korea Economic Research Institute

The COVID-19 pandemic has brought about a great transformation in our society. Klaus Schwab, the author of "The Great Reset" and the first proponent of the concept of the Fourth Industrial Revolution, argues that the existing order, which has collapsed due to COVID-19, must be reinvented for human prosperity. Since we cannot avoid the structural problems accumulated over a long period and the enormous changes brought by COVID-19, we must begin the "Great Reset" to recreate the existing order.

Domestically, we face a multifaceted crisis including low growth, low birthrate and aging population, collapse of the ladder of hope, breakdown of the virtuous cycle of growth and employment, national division, and loss of trust. Externally, the Fourth Industrial Revolution is accelerating due to COVID-19, global supply chains are being reorganized, and country-centered new industrial policies are being strengthened. We stand at a crossroads amid the US-China hegemonic competition and face the difficult task of achieving carbon neutrality by 2050. South Korea is at a turning point between soaring again or falling. This is why public expectations for the next government are higher than ever.

The next government must embark on a grand journey to "reset" the rules of society as a whole to create a "Korea where we all prosper together" amid the massive changes of the post-COVID era. Although it is a difficult and arduous path, achieving the "Great Reset" will realize national integration and a society of trust, activate economic incentives, give birth to unicorn companies and global top-tier enterprises, restore hope to young people, and enable adults to live stable and happy lives, thereby building a great Korea. To successfully fulfill this solemn historical responsibility given to the next government, it is necessary to start now by preparing an accurate diagnosis of reality and a flawless detailed implementation strategy.

The most difficult and urgent task for the next government is to build a society of trust for integration and coexistence. Under the current government, which emphasized fairness and justice, polarization has deepened, and social trust in the public sector?including the government, judicial system, non-profit organizations, and public enterprises?is collapsing. The current government's policy stance, which divides the people and is ideologically biased, has caused division and widespread distrust among the public. As unfair law enforcement, distrust in finance and property rights protection, undemocratic exercise of power, corruption, and personnel scandals increase, the perception that violating norms and laws is beneficial is spreading. According to the "2020 Legatum Prosperity Index" published by the UK think tank Legatum Institute, South Korea's social capital index ranks 139th in the world, a very serious level. The trust indices for the judicial system, government, and politicians are particularly low, ranking 164th, 123rd, and 111th respectively.

Structural and institutional reforms are necessary to enhance fairness and transparency, which form the foundation of trust. Laws must be applied consistently and fairly, and social trust is restored when law enforcement is fair and strict. By eliminating unreasonable regulations and breaking the vicious cycle of "regulation-corruption-trust decline," we can build a vibrant free market economy full of freedom and creativity. When the legal system is properly established and social capital overflows, growth is possible, and the results of growth lead to employment and distribution, enabling the construction of a Korea where all prosper together. South Korea's "Great Reset" is an unavoidable historical responsibility for the next government.

Kyung-Yeop Cho, Director of Economic Research, Korea Economic Research Institute

This content was produced with the assistance of AI translation services.