Republic of Korea: Selected Issues

International Monetary Fund

No 2025/042, IMF Staff Country Reports from International Monetary Fund

Abstract: This Selected Issues paper examines the impact of artificial intelligence (AI) in Korea. As a leading innovator and semiconductor producer, Korea is highly exposed to AI. Korea is widely recognized as a leading technology innovator and consistently ranks high on various global innovation indexes. AI usage is rising in Korean firms, notably among large, young, and tech-related firms. Empirical analysis confirms the significant role of firm size, age, and complementary assets in driving AI adoption. AI exposure tends to be higher for high-income groups, but potential gains from AI also increase with income. AI adoption leads to significant output and productivity gains, especially in Scenario 3 featuring both high labor complementarity and high overall productivity. Active and ongoing policy efforts are being made to promote AI adoption while managing potential risks. High labor market duality poses significant challenges for workers to switch jobs, especially for elderly groups. The authorities have taken proactive steps to advance AI development and adoption, expand the AI talent pool, and establish regulations to manage associated risks.

Keywords: Korea export share; profitability regression; AI adoption; E. AI preparedness; AI usage; Exports; Productivity; Trade tensions; Competition; Global; North America (search for similar items in EconPapers)
Pages: 36
Date: 2025-02-07
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