South Korea’s Plan to Vault from Pandemic Recession into Accelerating an Advanced Economy
By Daniel Browning
COVID-19 Outbreak and Mitigation in South Korea
After reaching 7,362 confirmed cases of COVID-19 at the highest point of its fight with the virus on March 21st, South Korea is now reporting infection rates of 15-20 new cases per day, and 987 cases are open as of May 21, 2020. A quick response was needed, and delivered, following the virus outbreak starting around February 21st. Through close monitoring and tracing of illness and concerted efforts to expand testing availability and capacity, the nation has come back to a new ‘normal life’ relatively quickly.
Despite effective management and mitigation of COVID-19 infection, unemployment has hit the South Korean population hard. According to the Financial Times, April left the country with 476,000 fewer jobs, a single month drop not seen since the Asian financial crisis of the late ‘90s. So far, South Korea has taken several steps to hedge the impact of the public health emergency. The government’s key effort to date has included $200bn in direct economic relief. Beyond the sort of economic security stimulus seen elsewhere, their efficacy in reducing infection has brought day-to-day activity back to relative normalcy, while many Western countries are just beginning to do the same.
International Responses to COVID’s Economic Impact
Around the world, nations are having to weigh their tolerance for public debt in their response to the global pandemic. Similarly sized economies on a per-capita GDP basis have taken a wide range of approaches to hedge against unemployment and productivity stagnation during this time.
- Czechia has provisioned interest free loans and direct aid of approximately $40.2bn, equivalent to 18% of its GDP.
- Spain’s $218.45bn stimulus plan, worth 20% of its GDP, similarly provides for short-term social services and direct aid needs.
- Japan’s stimulus of $1,086.61bn represents approximately 20% of its GDP, delivered primarily as direct payments to each person in the country.
- France, in particular, is responding with significant stimulus funding of $120bn, but, in doing so, anticipates exceeding 115% of its GDP in national debt this year.
- By contrast, South Korea’s initial outlay in support of its immediate economic challenges is a bit lower than these similar economies, amounting to 13% of its GDP.
The approach to tiding short term economic stoppage seen across these countries brings to light the sentiments shared by each of their governments. Few have shown concern about economic turmoil beyond the immediate impacts of quarantine efforts, and few think the solution must be greater than bridging a gap of temporary inactivity.
In contrast, South Korea’s response has been measured and influenced by a pragmatic view of its resources, but the country is preparing for something more transformative in the aftermath of COVID-19. Though neighboring states such as China could soon follow, the strategic pivot from economic stabilization to ‘big bet’ investment by the nation is, for now, unmatched.
South Korea’s “New Deal”
Korea’s big bet comes in the form of a recently announced plan to create a “New Deal” inspired initiative of public investments targeted to bolster cutting-edge industries and build employment security for people increasingly feeling the risks of a Pandemic-induced recession. This move, while not planned before the spread of the virus, is in line with other actions taken by South Korea’s recently elected Democratic legislature.
As the leading member of the party, the President, Moon Jae-in, has encouraged significant reform and investment over the past several months. In the lead up to April’s election, the Democratic Party positioned a “Green New Deal” as a cornerstone of its platform for the coming term. The government has announced the pursuit of considerable technology investment in parallel with a climate agenda that will force a profound shift in the nation’s power infrastructure over the next several decades.
Impacts of New Deal Investment in South Korea
The proposed “New Deal” requires financial accommodation over the next three years and will provide developmental support for work in Artificial Intelligence (AI), 5G wireless adoption, and Data Infrastructure throughout the country. In each of these domains, South Korea is already a major player on the world stage. However, its decision to jump-start progress in these sectors could pay off to great effect.
Improving Virus Response with South Korea’s Most Recent Artificial Intelligence Innovations
Consumer applications within Korea for AI have trended recently towards health and medicine, with telecommunications providers creating tools specifically for Seniors, and startups applying AI in diagnostics and treatment for illnesses via x-ray interpretation. This has led to immediate health benefits during the pandemic, which may also provide a platform for even further accelerated progress in health applications when compared to other countries developing this technology. While there is clear value to South Korea in AI applications for healthcare and social wellbeing, there are many more being discussed.
5G Quickly Becomes a New Platform for Both Communications and Computing
The second of the three key pillars called out in South Korea’s New Deal, 5G adoption, is already a priority for the country. 5G on its own has massive implications for both Consumer and Enterprise applications. One nascent area for telecommunications operators, and what some experts say is a key value driver for 5G, is smart networking functionalities akin to the advanced computing management enabled by cloud virtualization on Microsoft Azure, Amazon Web Services, and similar platforms. One industry expert, Kamal Bhadada of Tata Consultancy Services, sees the ability to provide automatic, on demand provisioning and management of networking services as the next evolutionary step forward for 5G.
Development of rapid provisioning at scale could create its own value chain and is already being planned and built by the main communications providers in Korea to enable smart factory and plant management. 5G investment then, is not constrained to building networks; it enables these new value chains, through novel concepts like Multi-Access Edge Computing.
Korea is poised to become a world leader in its 5G adoption, permitting greater use than the United States of mid-band spectrum blocks that balance range with speed. Further acceleration enabled by this new investment could position the country as a leader in the next generation of intersected communications and computing.
Analytics Adoption Enables Korea to Get Back to Work Quickly
On the big data front, South Korea has made extensive use of analytics in planning and responding to COVID-19. Drawing from other public health emergency experiences in recent years, the nation has been able to leverage combined transactional telephone, payment card, and other location data as a mechanism for contact tracing during the current pandemic.
These advanced approaches to monitoring disease spread and understanding social behavior have helped the country respond to the current crisis and has likely generated many nuanced concepts for further big data applications. Investment added to projects in public health, along with the myriad of other projects the country is undertaking, could soon position Korea as a leader in big data.
Daniel Browning is the Business Development Coordinator at Automation Webstore. In his spare time, he writes about automation, AI, technology, and the IoT.