Korea needs to think strategically how to position itself advantageously in today’s rapidly changing and uncertain world. This paper focuses on three economic and geostrategic challenges. These are the trade war between the U.S. and China, the challenges and opportunities presented by the rapid development and application of disruptive technology, and those presented by the rapid rise of China. The three are interrelated. The trade war between the U.S. and China are fundamentally about competition between the leading global economy and a new superpower revolving over leadership in new and potentially disruptive technologies. This has serious implications for Korea because China and the U.S. are Korea’s largest trading partners. The first part of the report lays out the context and challenges. The second part lays out some of the actions that Korea should consider on the international side as well as on the domestic side to improve its competitiveness and flexibility to deal with these challenges. 

JELClassification:F13(Trade Policy), F50(General International Relations, National Security, International Political Economy), O33 (Technological Change)
Key words:China, Korea, United States, Disruptive Technology, Trade, International Competition
 

Executive Summary

Contributors

Introduction

Part One. The Changing Constellation of Risks and Opportunities
Section A. Three Key Trends
Trend 1. Protectionism and Trade War
Trend 2. Rapid Development and Spread of DisruptiveTechnologies
Trend 3. The Rapid Rise of China

Section B. Main Challenges for Korea
Dealing with the Increasing Frictions Between the United States and China
Dealing with the Challenge of a Stronger and More Dominant China
Dealing with Disruptive Technology
Conclusion

Part Two. Possible Korean Policy Responses
Section C. Repositioning Korea on Trade
Reducing Dependence on Trade and Finding New Trade Partners
Exports to the World
Developing New Products and Services for Export
Navigating a New Korea-China Relationship on Trade and Technology: Where to Compete, Where to Concede, and Where to Cooperate
Where to Compete and Where to Concede
Where to Cooperate
Future Prospects
Compete
Cooperate
Concede

Section D. Increasing the Competitiveness, Flexibility and Resilience of the Korean Economy
Benchmarking Korea on International Competitiveness and Flexibility
Benchmarking Korea on Innovation
Conclusion

Appendix

References