[Lee·Yoon Economic-nomics Analysis] Hajun-gyeong: "Government to Induce Private Innovation through Market-friendly Investment"

Lee Jae-myung's Economic Strategist, Professor Ha Jun-kyung of Hanyang University
"Government Leads with Early Investment to Open Pathways
Then Induces Private Sector Investment in Areas with Reduced Uncertainty"

Professor Hajun Kyung, Department of Economics, Hanyang University

[Asia Economy Reporter Koo Chae-eun] “If the government strategically makes seed investments in new industry sectors such as digital, artificial intelligence (AI), and energy transition, private sector innovation investments will follow. The government and the private sector are not competitors. The government plays a complementary role to the market while making market-friendly national investments.”

Professor Ha Jun-kyung of Hanyang University’s Department of Economics, known as the ‘economic strategist’ for Lee Jae-myung, the Democratic Party candidate, mentioned the $2.3 trillion infrastructure investment plan called the American Jobs Plan promoted by U.S. President Joe Biden during a phone interview with Asia Economy on the 23rd. He said, “Advanced countries are also strategically playing a governmental role instead of the private sector to maintain hegemony.” Professor Ha serves as the chairman of the Transformative Fair Growth Committee directly under Lee in the Democratic Party’s election campaign committee. He laid the theoretical foundation for Lee’s primary pledge, ‘Transformative Fair Growth.’

Candidate Lee plans national fiscal investments totaling 85 trillion won (30 trillion won for infrastructure investment, 40 trillion won for new industries and startup growth support, and 15 trillion won to guarantee digital sovereignty). The plan is to attract 30 trillion won in private investment through this. He said, “The EU is making large-scale investments in digital transformation and green energy, and China and Japan are also investing heavily in science and technology. In an era of uncertainty, if the government takes the lead and paves the way, industries with reduced uncertainty can form markets centered on the private sector.”

Regarding opposition parties’ criticism that issuing government bonds for expansionary fiscal policy could threaten fiscal soundness, he responded, “In a situation where individual debt is rising to dangerous levels and polarization is intensifying, the state needs to support economic agents.” On the appropriate debt-to-GDP ratio, he explained, “There is a theory that it should be managed around 60%, but there is no empirical evidence, and it is difficult to determine an optimal figure. It is preferable to judge at a level that does not burden the overall macroeconomy by considering interest rates, inflation, and exchange rates.”

Professor Ha identified ‘fairness’ as the key word emphasized throughout Candidate Lee’s economic policies. He said, “If the strong (large corporations) push down prices for the weak (small and medium enterprises), the ‘trickle-down effect’ where the fruits of growth reach the bottom can be broken, and the ‘fountain effect’ where young people create unicorn companies and build a startup ecosystem can also be limited. We will break such unfair cycles and create a virtuous macroeconomic cycle where dynamic trickle-down and fountain effects can occur.”

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