Foreword

The Inclusive Growth Review of Korea applies the OECD Framework for Policy Action on Inclusive Growth at the national level to examine Korea’s opportunities and challenges of delivering a “people-centred growth model”. The central proposition of this framework is that anyone can contribute to growth and should benefit from it. Promoting growth and efficiency of markets is important to increasing living standards, although by itself may not address the inequality challenges and the lack of equal opportunities for all. A “whole of the government” approach is advocated to ensure that policies are designed to leverage the equality-growth nexus. At times when countries worldwide are confronting the severe health crisis of the Covid-19 pandemic, Korea stands out as a success in limiting its damage on the economy and people. However, keeping inclusiveness in check is now critical more than ever before.

The Review is underpinned by rigorous statistical analysis, which makes use of the most relevant, comparable and novel OECD and national statistics and policy-relevant information. The Review includes guidance to complement Korea’s policies for inclusive growth and deep-dives into 1) growth dynamics and income distribution; 2) distribution of labour markets outcomes across workers and productivity trickling down across firms, 3) equality of opportunities and foundations for future prosperity; and 4) inclusive forms of governance. Moving beyond GDP metrics and statistical averages, the Review puts people at its centre, focuses on a range outcomes that matters to people’s well-being, including their distribution across different groups of Korean population.

Creating opportunities for all requires a balanced approach of taking both efficiency and equity concerns into account. While Korea has demonstrated an outstanding capacity to catch up with the most-advanced economies, several dualisms have driven discrepancies in the economy. The Review discusses how Korea could further improve inclusive growth through three main levers for policy action: 1) Investing in people and places left behind; 2) supporting business dynamism and inclusive labour markets; and 3) building an efficient and responsive government.

The Review has three chapters. Chapter 1 uses the OECD Inclusive Growth Dashboard to assess the overall progress towards inclusive growth in Korea and outlines the main issues for policy consideration consistently with the Framework. Chapter 2 examines the inclusiveness of Korean labour market in view of past and most recent policy developments in the context of a changing nature of work driven by technological progress, globalisation and demographic change. Chapter 3 combines for the first time new OECD data on productivity, business dynamism and global value chains (GVCs) to understand better the main issues for policy consideration to support the future of doing business. A range of product-market, industry, innovation, trade and investment policies are being discussed in the context of labour market reforms (discussed by Chapter 2) to help Korea assess potential synergies and trade-offs to support the inclusive growth agenda. To realise its vision of becoming a “people-centred, sustainable growth economy”, it is key for Korea to continue and step up, where necessary, monitoring and aligning policies across the government, while running the inclusive growth agenda through a broad coalition of actors.