South Korea has unveiled one of its most ambitious economic transformation plans in decades, placing artificial intelligence at the center of its strategy to revive slowing growth and strengthen its position in global technology markets. The administration of President Lee Jae Myung announced a sweeping initiative that combines public and private capital into a 100 trillion won (approximately $71 billion) national investment drive aimed at accelerating AI development across both industry and government.
The announcement comes at a delicate moment for Asia’s fourth-largest economy. Growth forecasts for 2025 hover below 1%, weighed down by weakening exports, demographic pressures, and softer global demand for manufactured goods. Policymakers say traditional stimulus tools are no longer enough — and that long-term competitiveness must now be driven by advanced technologies.
ai as the new growth engine
The government’s strategy outlines more than 30 large-scale projects designed to embed AI systems across key sectors of the economy. At least 15 of these initiatives are classified as “core transformation projects,” targeting industries where South Korea already holds global influence — including semiconductors, robotics, automotive manufacturing, consumer electronics, and digital services.
Officials say AI integration will expand into autonomous vehicles, industrial robotics, smart appliances, and next-generation drone systems used in logistics and agriculture. The policy also prioritizes the development of advanced AI semiconductors capable of high-speed on-device processing, a move seen as critical to preserving South Korea’s competitiveness in the global chip market. Broader technology coverage can be found in our ai section, where we track emerging global AI policy trends.
South Korea is already home to major chip manufacturers and electronics giants, but policymakers believe future dominance will depend not only on hardware production but also on integrated AI ecosystems that combine data infrastructure, cloud services, and intelligent automation.
modernizing government through automation
The transformation plan extends beyond the private sector. The administration has outlined a vision for what it calls an “AI government,” aimed at streamlining public administration and improving service delivery. Proposed reforms include AI-assisted screening of pharmaceutical applications to accelerate drug approvals, automated tax filing systems with built-in fraud detection, and predictive analytics to improve welfare distribution.
Officials argue that modernizing public services will create immediate domestic demand for AI solutions while increasing efficiency in government operations. Such measures could also help offset demographic pressures, as South Korea faces one of the world’s lowest birth rates and a rapidly aging population.
For more on how governments worldwide are adapting to technological disruption, see our broader coverage in global & regional government.
the 100 trillion won national growth fund
Central to the initiative is the creation of a massive national growth fund, which will combine state-backed capital with private investment from pension funds and financial institutions. The two-track financing model is designed to support innovation at multiple levels: long-term equity investment for startups and venture firms, and ultra-low-interest financing for large-scale industrial facilities and infrastructure projects.
The government also plans to introduce tax incentives of up to 35% for qualifying AI and semiconductor investments, along with expedited regulatory approvals for strategic technology projects. By lowering financial and administrative barriers, policymakers hope to attract both domestic entrepreneurs and foreign technology firms seeking a stable innovation hub in East Asia.
Economic analysts note that this approach reflects a broader global shift toward state-supported industrial policy, as nations compete for leadership in artificial intelligence, advanced chips, and digital infrastructure. Similar policy debates are unfolding in the United States, Europe, and parts of Asia as governments weigh the balance between market forces and strategic intervention. Related market dynamics are covered in our markets and investments sections.
challenges ahead
Despite the scale of the investment, experts caution that funding alone will not guarantee success. South Korea must address workforce training, data governance standards, cybersecurity protections, and energy demands associated with AI data centers. The expansion of AI infrastructure also raises regulatory and ethical questions, particularly around data privacy and algorithmic accountability.
Another key challenge will be ensuring that AI-driven growth translates into broader economic inclusion. Small and medium-sized enterprises, which form the backbone of South Korea’s economy, will need support to adopt advanced technologies without widening inequality between major conglomerates and smaller firms.
positioning for global competition
By placing artificial intelligence at the core of its national strategy, South Korea is signaling that digital innovation will define its next chapter of economic development. The initiative seeks not only to counter near-term stagnation but to secure long-term strategic influence in a world increasingly shaped by data, automation, and intelligent systems.
Whether the 100 trillion won investment achieves its intended impact will depend on execution, global demand conditions, and sustained policy coordination. What is clear is that Seoul is making a decisive bet: that artificial intelligence will serve as the foundation of its economic revival and its continued relevance as a technological powerhouse.
