Bank of Korea (BOK) Gov. Rhee Chang-yong speaks during a press briefing in Seoul, Feb. 26. Yonhap
Asian countries should reduce reliance on government-led industrial growth policies and adopt a risk-sharing approach involving private sector participation to sustain long-term growth, Korea's central bank chief said Thursday.
Bank of Korea (BOK) Gov. Rhee Chang-yong made the call in his keynote speech at the Asia in 2050 Conference in Bangkok organized by the International Monetary Fund (IMF).
"In Korea and other East Asian economies, government-led industrial policy was highly effective for catching up, imitating advanced manufacturing and learning technology. But circumstances have changed," Rhee said.
"Asian economies must now recalibrate their expectations of what governments can and should do," he added, stressing the need to diversify the scope of industrial policy beyond manufacturing.
Rhee stressed that industrial policy should shift toward sharing risks with private financial institutions, such as through indirect support involving on-lending arrangements, while emphasizing the need for structural reforms for sustained growth.
"For more industrialized Asian economies, relative efficiency must be reassessed," Rhee said. "Nurturing strategic industries like artificial intelligence (AI) is essential, but so is investing in structural reforms to address population aging through labor market flexibility, pension reform and expanding economic participation among women and older workers."
Highlighting major factors challenging Asia's traditional growth model, he pointed to deglobalization, the fragmentation of the global economy into regional blocs and the reshaping of global supply chains, among others.
"Asia's economic success is not preordained," Rhee said. "It is time to compare the returns on industrial policy with those on structural reform and deploy both complementarily."
Source: Korea Times News
