South Korea is accelerating its push to become one of the world’s top three artificial intelligence (AI) powerhouses, unveiling a sweeping strategy that combine large-scale investments, regulatory reforms, and industry innovation to counter slowing economic growth.
According to the government’s newly released “Five-Year State Administration Plan,” President Lee Jae-myung’s administration has identified AI as the cornerstone of its economic transformation. The plan outlines investments in an “AI highway,” next-generation AI semiconductors, core algorithm development, and an integrated ecosystem to advance applications across robotics, autonomous vehicles, smart factories, cultural products, and more.
Reuters reports that as part of the first biannual economic policy update, the government will introduce policy packages for 30 major AI and innovation projects starting in the second half of 2025. These initiatives will span sectors including automotive, drones, home appliances, healthcare, and chips, while also boosting exports of “K-beauty” and “K-food.”
To finance this transformation, Seoul will establish a ₩100 trillion ($71.5 billion) National Growth Fund in partnership with the private sector. Tax incentives, regulatory reforms, and streamlined approval processes will also be rolled out to attract domestic and foreign investment.
The administration frames AI innovation as critical to overcoming structural challenges, including a record-low birthrate and persistent trade headwinds following U.S. tariffs. South Korea’s growth forecast for 2025 has been revised down to 0.9% from 1.8%, underscoring the urgency of the strategy.
Beyond industry, the plan envisions South Korea becoming the “world’s leading AI government” by opening public data, building digital trust frameworks, and fostering top-tier AI talent.
“AI-driven transformation is the only viable path to sustainable growth,” the Ministry of Economy and Finance said in a statement.
With 123 national tasks tied to innovation, the government expects its multipronged approach to raise South Korea’s potential growth rate from 2% today to 3% in coming years.
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