"We Must Deflate the Real Estate Bubble First to Avoid the Advanced Country Trap... Farmland and Greenbelt Policies Need to Be Reconsidered"

2026 Joint Economics Conference Held
Special Lecture by Kim Injun, Honorary President of the Korean Economic Association
"Asset Polarization Fuels Intergenerational Conflict and Political Instability"

"When asset polarization deepens due to a 'real estate bubble' and political instability grows, it is ultimately the future generations that suffer the most. To avoid falling into the trap that advanced economies face, we must first resolve the real estate bubble as our top priority."

Kim Injun, Honorary President of the Korean Economic Association and Emeritus Professor in the Department of Economics at Seoul National University, delivered a special lecture titled "At a Crossroads of Overcoming the Advanced Country Trap" at the 2026 Joint Academic Conference on Economics held at Chung-Ang University in Seoul on the 5th.

Kim Injun, Honorary President of the Korean Economic Association, is presenting at the 2026 Joint Conference on Economics on the 5th. Photo by Lim Onyu

Honorary President Kim defined the advanced country trap as "a state in which the economy stagnates over the long term, fails to secure growth engines, and faces instability in national security." He expressed concern, saying, "We, too, can fall into the advanced country trap."

Domestically, the real estate issue was cited as a major cause. As one of the indicators showing that the domestic real estate market is overheated, Honorary President Kim pointed to the ratio of national net assets to gross domestic product (GDP). He noted, "From 2011 to 2017, it remained at a stable level between 7.5 and 7.8, but as of the end of 2024 it rose to 9.4 and has since stayed at a high level."

He also interpreted the price-to-income ratio (PIR) for Seoul housing, which exceeds 15 times annual income, and the jeonse-to-price ratio in the Gangnam area, which is over 40%, as signs of a real estate bubble.

As the background to the real estate bubble, Honorary President Kim cited the supply-demand imbalance in housing centered on the Seoul metropolitan area and excess liquidity caused by a prolonged period of monetary easing. He pointed out, "The real estate market bubble ultimately intensifies asset polarization, thereby deepening intergenerational inequality and potentially causing political instability." He added, "In the end, that burden will be passed on to future generations."

As a measure to deflate the real estate bubble, Honorary President Kim proposed expanding the supply of residential land in Seoul and the wider metropolitan area. He explained, "The government should boldly implement policies that expand the supply of residential land in Seoul and the metropolitan area and aim to stabilize prices," adding, "Through bipartisan agreement, we should also reconsider long-standing policies on absolute farmland and greenbelts."

In addition, securing new growth engines was mentioned as a way to avoid falling into the advanced country trap. Honorary President Kim said, "We must secure international competitiveness by focusing on three pillars: semiconductors and artificial intelligence (AI), energy, and bio, and pursue balanced national development by linking these with regional economies."

He went on to say, "The government and companies must move forward together with new industrial policies, and in the AI era we need to establish a new labor-management relationship."

Lee Geun, a professor at Chung-Ang University who has completed his term as president of the Korean Economic Association, is giving a farewell lecture at the 2026 Joint Academic Conference on Economics on the 5th. Photo by Im Onyu

At the conference that day, Professor Lee Geun, a distinguished professor at Chung-Ang University who has completed his term as president of the Korean Economic Association, gave a "farewell lecture" titled "New Schumpeterian Economics and the Catch-up and Overtaking of Latecomers." He cited short-cycle technological innovation as the key that enabled Korea to avoid the middle-income trap and catch up with advanced economies. The middle-income trap refers to a situation in which a country becomes stuck at the middle-income stage of development and fails to advance to high-income status.

Professor Lee analyzed, "Korea and Taiwan were able to escape the middle-income trap by specializing in short-cycle technologies with short life cycles." Short-cycle technologies are characterized by low entry barriers and high growth potential. He added, "Now we are smoothly entering long-cycle technology industries, moving beyond specialization in short-cycle technologies," and explained, "The transition from short-cycle technologies in the early stage to long-cycle technologies in the later stage is the reason Korea was able to avoid falling into the middle-income trap."

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