South Korea


Key Challenges

Future depends on
next government
The review period closed with just a few more months remaining to the Moon administration, leaving it unable to achieve aspects of its 100 Policy Tasks and New Deal. While the Moon administration laid the groundwork for a just and “people-centered” society, the survival of this vision – given the long-term, structural changes required – will be determined by the administration change in 2022.
This is a critical turning point, as many of the New Deal policies remain relevant and important for the future of South Korea.
Reducing power of “imperial” presidency
The reform of core political institutions is another major task that has been identified by most experts as well as politicians of all camps as being important and ever more urgent for enhancing South Korea’s quality of democracy. Above all, it will be necessary to decentralize power away from the “imperial presidency,” for example by strengthening the prime minister, introducing two four-year terms instead of the hitherto single five-year term, and/or placing new limits on the constitutional powers of the president. The reform of the electoral system is another major task needed to ensure more appropriate translation of the voters’ will, for example by extending the share of proportional representational seats at general elections.
Transition to “fourth industrial economy”; policies must be more boldly implemented
What is at stake economically is whether Korea stagnates due to declining productivity and export competitiveness, or whether it is able to refashion itself through concerted efforts to transition to a “fourth industrial economy.” Though key macroeconomic indicators in South Korea remained robust as of the end of the review period (indeed, growth forecasts for 2021-2023 now exceed 3% annually and are higher than the 2% or lower rates forecast in the pre-coronavirus era), the country’s dependence on exports leaves it vulnerable both to global economic volatility and external political conflicts. The tide of global trade protectionism, rising interest rates in the United States, the spreading currency crises in emerging economies, and environmental limits all pose serious challenges for the South Korean economy. The Green and Digital New Deals developed by Moon offer promising opportunities for Korea to move to a phase of healthy and stable growth. But to achieve this, existing and new New Deal initiatives will have to be more boldly implemented. Reverting to big-business-as-usual – that is, led by oligopolistic and carbon-intensive growth – may help pull Korea out of the immediate crisis, but will not stave off the structural slowdown that was underway pre-pandemic for long.
Old social challenges remain unaddressed
The ability to transition to a new economic model hinges on Korea’s ability to tackle old social challenges. Several long-standing tasks remain important, including: enhancing social mobility and improving job conditions for non-regular workers, women, and the younger generation; addressing the challenges posed by an aging society; making the transition to a more multicultural society; reforming elitist and inflexible education practices; reducing unsustainable household debt levels; and making housing more affordable. The issues these tasks address all pose major challenges to life satisfaction, social cohesion and, indeed, the socioeconomic vitality of the country. The world’s lowest birth rate and highest suicide rate are red flags signaling the human toll imposed by the past several decades of inequitable, unsustainable growth.
New social compact
Importantly, President Moon emphasized that the Human New Deal completes and makes possible the realization of the Green and Digital New Deals. The Human New Deal offers a new social compact whereby Korean people can both contribute to and benefit more from the new economy. However, as with the Green and Digital New Deals – perhaps even more so – major structural and cultural shifts are required and must be sustained by the next several administrations to come.
Catching up with
OECD standards
While Moon initially implemented bold measures increasing the minimum wage, expanding public employment and improving the social welfare system, the administration has over time proved more receptive to business-sector lobbying, and has backtracked from some of its original promises. While the overall unemployment rate remains low, the labor market participation rate remains below the OECD average. Youth unemployment, precarious working conditions, exploding housing prices and old-age poverty are among the country’s most serious social issues. Social welfare and environmental sustainability remain problematic policy areas in which Korea still needs to catch up with OECD standards. Particularly with regard to the transition to a carbon-neutral economy, Korea is falling ever further behind the leaders in this field.
Balancing act between U.S., China; larger
global role for Korea
Internationally – beyond the issue of relations with North Korea, which is a priority for any South Korean administration – the next administration will continue to face the tough task of balancing or choosing between the U.S. (its dominant security ally) and China (its largest trade partner). The Moon administration laid the groundwork to pursue the path of strategic autonomy. Throughout his administration – despite the COVID-19 crisis, and even turning this into a diplomatic opportunity – Moon has actively cultivated new partners via the New Southern Policy, the New Northern Policy and various other fora. As with its own domestic situation, Korea faces a crossroads here – it must decide whether to remain invested in the great powers’ game, albeit as a satellite player, aligned with either China or the U.S.; or to embrace a more diverse, inclusive foreign policy collaborating with a broader range of medium-sized and emerging powers. The North Korea issue affects the calculus, given the influence both China and the U.S. wield in determining the trajectory of peninsular relations. As a member of the G-20, and as the world’s 10th-largest economy, Korea may ultimately be asked by its partners to show more leadership in creating a more stable and sustainable global governance system, including by contributing more to reducing global inequalities and averting climate disaster.

Party Polarization

Parties often seen as too similar; partisanship driven by history, not ideology; political gridlock common
Party polarization in the sense of political and ideological polarization is not a problem in Korea. On the contrary, the main political parties (the Democrats and the conservatives, currently called the People Power Party) are generally criticized for being too similar, with the exception of a few positions on contentious topics such as policy toward North Korea. Indeed, it has not been uncommon for politicians to shift their allegiances between the country’s main political parties, or even to dissolve parties when this has seemed likely to further their political ambitions. Partisanship in Korea is not primarily driven by ideologies or political goals but rather by history. Historically, this stark division between “us against them” (Shin 2020) can be explained by the division into the two camps that have been struggling for power at least since the 1970s: the conservative party representing military rule and its legacy, and the Democratic party representing the fight against military rule. The conservative opposition stokes Cold War-reminiscent fears of the communist enemy and brands any government policies with which it disagrees as “socialist.” The two political camps fight tooth and nail over seemingly minor differences, each portraying its side as the moral defenders of democracy fighting against the dangerous (if not evil) ideas of the opponent (Kim 2020; Shin 2020). For example, the pandemic disaster relief allowance was characterized by some in the then-opposition not just as wasteful but as flirting with socialism (Kim and Kim 2020). For its part, the Democratic party is keen to link the conservative party to its history of military rule and colonial collaboration to discredit the opposition. As most Koreans identify themselves as “moderately progressive” (38%) or centrist (32%), both sides seem to believe they can benefit from branding their opponent as extremists (Kim 2020). Thus, regardless of the degree of party polarization or the trend of converging policies among parties, Korea’s National Assembly has been notorious for political gridlock. Moreover, even though Korea uses a presidential system, the effects of this parliamentary gridlock were substantial under the Moon government. (Score: 5)
Do, Je-hae. “Moon under Mounting Criticism over Coronavirus Responses.” The Korea Times, February 27, 2020.
Kim, Jung. “[Asia Democracy Issue Briefing] Party Polarization without Party Sorting in South Korea: Centrist Voters in Drift.” EAI 동아시아연구원, November 9, 2020.
Lee, Min-ji. “Ruling Party Pushes Opposition over Virus Relief Funds.” Yonhap News Agency, April 22, 2020.
Sang-young Rhyu. “How to Make Democracy Sustainable in South Korea: A Look at Three Years after the Candlelight Vigils.” East Asia Foundation Policy Debates 143, July 21, 2020.
Shin, Gi-Wook. “Korean Democracy Is Sinking under the Guise of the Rule of Law.” Stanford Walter H. Shorenstein Asia-Pacific Research Center, April 1, 2020.
Yi, Joseph, and Wondong Lee. “Pandemic Nationalism in South Korea.” Society 57: 446-451, July 21, 2020.
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