President Lee Jae-myung's administration has unveiled its '345 Vision,' which targets a potential growth rate of 3%, positioning South Korea among the world's top four exporters, and achieving a per capita income of $50,000. In a context of persistent low growth, increasing competition from China, and rising protectionist barriers from the U.S., the government's commitment to rejuvenate the economy is commendable. Clear goals are essential for both citizens and businesses in economic policy. However, as the clarity of the numbers increases, the methods to achieve them must be equally precise and realistic.
The '345' vision evokes memories of the '747' plan introduced by the Lee Myung-bak administration two decades ago. That government promised an average annual growth rate of 7%, a per capita income of $40,000, and entry into the ranks of the world's seven largest economies. While the slogan was memorable and instilled national confidence, the outcomes fell significantly short of the targets. During Lee Myung-bak's five-year term, the average growth rate was about 2.9%, and the 7% growth target was never met.
Of course, the global financial crisis that erupted in the first year of his administration was a significant setback. It was challenging for South Korea to maintain high growth amid a global economic freeze triggered by the crisis that began in the U.S. However, attributing the failure of the '747' solely to the financial crisis does not allow for valuable lessons to be learned. It was overly optimistic to base growth expectations on a 7% target during a time when the economy was already larger and the growth of the working-age population was slowing.
When numbers are predetermined, policies can easily be swayed by them. There is a greater temptation to rely on short-term stimulus measures, such as manipulating exchange rates, increasing fiscal spending, and boosting construction and real estate markets, to elevate growth rates within the term. Structural reforms, which often face significant opposition from stakeholders and yield delayed results, can be sidelined in favor of immediate growth through fiscal expansion and infrastructure projects. When goals become a report card for the administration rather than a compass for policy, long-term economic improvement is pushed aside.
The relationships among the numbers in the '747' plan were also unclear. It was suggested that achieving 7% growth would naturally lead to a per capita income of $40,000 and entry into the world's top seven economies, but per capita income is influenced by factors such as exchange rates, inflation, and demographic changes. The criteria for evaluating 'the world's seven largest economies' were also ambiguous. Memorable numbers do not necessarily equate to sound policy goals.
Thus, the '345' vision must be even more meticulous. Specifically, achieving a potential growth rate of 3% is fundamentally different from temporarily raising the actual growth rate to 3% through fiscal expansion. It requires addressing labor shortages due to low birth rates and an aging population, increasing corporate investment, and enhancing technological innovation and productivity. This is not a goal that can be achieved by avoiding difficult and unpopular tasks such as labor, education, pension, and regulatory reforms.
Relying solely on the semiconductor boom will not sustain the goal of becoming a top four exporter. The export structure, which is currently concentrated on specific products and markets, must be diversified, and the competitiveness of exports from service sectors, content industries, and small to medium-sized enterprises must be strengthened. Similarly, achieving a per capita income of $50,000 cannot be meaningful if it is solely based on exchange rate effects or the performance of a few large corporations. True progress to a $50,000 income level must be reflected in increased productivity leading to higher wages and household incomes, allowing citizens to feel the change in their lives.
The government must clearly outline the annual implementation pathways and policy measures for each of the '3', '4', and '5'. It should also specify how it will adjust its goals and policies in response to changing external conditions. If the government resorts to excessive fiscal spending, policy financing, or real estate stimulus to achieve these targets, it will be difficult to avoid the fate of the '747'.
The '345' vision is not a slogan to be mocked or dismissed as a failure before it begins. Raising the potential growth rate, expanding export territories, and reaching a per capita income of $50,000 are essential challenges for the South Korean economy. However, the more ambitious the goals, the more they must be grounded in a realistic understanding of the current situation rather than blind optimism. The greatest lesson from the '747' experience is not to lower expectations but to prioritize establishing a clear execution path over mere numbers and to focus on transforming the economic structure rather than short-term results. This is the first condition for President Lee Jae-myung's '345' to avoid repeating the mistakes of the '747'.
* This article has been translated by AI.
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