McKinsey: "If Korea Implements Growth Tasks, It Can Become the World's 7th Largest Economy"

Global consulting firm McKinsey & Company (hereinafter McKinsey) explained that if South Korea successfully implements eight major tasks, including industrial structure reform, it could enter the ranks of the world's seventh-largest economy.

On the 19th, McKinsey introduced the contents of the report "Korea's Next S-Curve" to international media at the Shilla Hotel in Seoul, presenting a new "Korean-style economic growth model" to overcome South Korea's long-term low-growth phase.

McKinsey explained that South Korea has gone through the first S-curve, which was the transition to an economy centered on heavy and chemical industries, and the second S-curve, where advanced manufacturing such as semiconductors, automobiles, and electronic devices emerged as the core. Now, it is entering the third S-curve phase, which requires a shift to a high value-added economy focused on semiconductors, bio, and artificial intelligence (AI).

However, McKinsey noted that the situation is challenging due to worsening population imbalance caused by low birth rates and aging, and labor productivity being poor compared to advanced countries.

Nonetheless, McKinsey stated, "If these tasks are boldly implemented with a growth mindset, it is possible to achieve a per capita GDP of $70,000 by 2040 and enter the ranks of the world's seventh-largest economy."

There may be doubts about whether South Korea, having reached the ranks of advanced countries and exited the low-growth phase, can achieve 4-5% growth again. However, McKinsey pointed out that Germany achieved 4% growth in the 2000s through labor reforms and manufacturing innovation efforts, and the United States recorded a 4% growth rate in the 1990s through fostering high-tech industries and government monetary and fiscal policies.

To this end, McKinsey emphasized that the Korean economy must implement three major pillars?restructuring, transformation, and building?and eight implementation tasks. The eight tasks are industrial structure reform, business model reform, transition to high value-added sectors, shift to new businesses centered on core technologies, AI transformation, establishment of an industrial innovation foundation, creation of a virtuous capital market, and development of a core talent cultivation system.

They advised boldly restructuring the petrochemical industry while discovering new growth engines by creating ultra-gap industries based on core technologies in fields such as future mobility, clean energy, bio-pharmaceuticals, and semiconductors. Also, by improving corporate governance and regulations, the attractiveness of capital market investments should be enhanced, and active efforts should be made to cultivate talent and attract overseas experts with the goal of training a "large force of 50,000 AI advanced personnel."

McKinsey forecasted that if South Korea undergoes such structural improvements, it will produce more than two globally leading ultra-gap industries and create more than three world-leading industrial clusters by 2040. Additionally, the number of companies with sales of $100 billion is expected to increase from the current three to eight, and companies with sales over $10 billion from 54 to 74.

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