This paper investigates the global race in industrial policy and its intersection with national economic security strategies, examining how the Republic of Korea (ROK) can establish its strategic direction to mitigate risks from policy competition while maximizing its national interests. Driven by isolationist motives, a new trend in industrial policy has emerged, leading to the fragmentation of global value chains and, even worse, toward “deglobalization.” This trend threatens not only the international free trade system but also potentially undermines the ROK’s economic security interests. To address these challenges, we draw upon empirical and model evidence to propose strategic positioning for the ROK through clearly defined industrial policies.

Chapter 2 analyzes historical trends in industrial policies across the United States, the European Union, and China, emphasizing government interventions in the semiconductor industry, secondary battery sector, and critical mineral supply chains. Our analysis reveals that since 2010, industrial policies have become increasingly integrated with national economic security interests. In response to political restrictions and shortcomings in government action, these countries implemented various isolationist measures through their industrial policies. In the U.S., industrial policies reemerged after a long period of institutional hibernation, though the sustainability of their current political and industrial success remains uncertain. The EU developed a horizontal industrial policy framework to coordinate member states’ interests, although their responses to economic security risks have been delayed by substantial coordination costs. China’s industrial policy incorporated state objectives and an “asymmetric decoupling strategy” for strategic sectors, though this commitment to national autonomy ironically requires international cooperation. Isolationist approaches to industrial policy face a fundamental “trilemma” between simultaneously promoting domestic industrial competitiveness, safeguarding national security interests, and maximizing economic profits.

Chapter 3 examines international trade flows, investment patterns, and research and development (R&D) cooperation to assess the impact of government interventions since the 2010s. Using the Global Trade Alert (GTA) data set, we confirm an increasing trend in harmful (“red-alerted”) government interventions, which we use as a proxy for isolationist industrial policy. As countries have diversified their trading partners, China’s share of global trade has declined. However, global dependence on China for energy and critical minerals sector continues to increase. Our findings indicate that harmful industrial policies are contributing to a fragmentation of global trade flows between the global North and South. Using the Orbis Crossborder Investment data set, we observe declining investment flows between the U.S. and China, creating an “investment gap. This gap has been partially filled by countries such as Korea, Japan, and Vietnam, which have either captured China’s previous investment share in the U.S. market or attracted investment capital seeking to detour U.S.-China tensions While China has nearly matched U.S. levels of R&D investment since 2010, bilateral R&D cooperation has declined significantly as tensions between the two nations have escalated. Similar decoupling trends are evident in Life Sciences, Artificial Intelligence, and Secondary Battery research. This growing separation poses significant challenges for addressing global challenges such as climate change and digital transformation.

Chapter 4 investigates the global competition in industrial policies and its associations with the ROK’s semiconductor and secondary battery sectors using data sets from New Industrial Policy Observatory and Korea Customs Service. The data shows that government interventions have been more pronounced among advanced economies compared to developing countries. Across all country groups, policy implementation has focused primarily on dual-use products, advanced technologies, and the low-carbon sector, indicating that global policy competition targets similar strategic sectors for economic security purposes. In the ROK’s semiconductor and secondary battery industries, exports of final products and machinery to the U.S. have increased while the same exports to China have declined. In contrast, imports of materials and equipment from China have shown significant growth in both sectors. To quantify the direct effects of global policy competition, we build a Bayesian Network Model incorporating government interventions and global uncertainty. Our counterfactual analysis illustrates that the benefits of participating in the policy race are minimal, resulting in an export trade-off between the US and China. These findings imply that the ROK needs a balanced strategy of cooperation with both the U.S. and China, rather than exclusively aligning with either nation, to retain the benefits of international trade.

In the final chapter, we propose a strategic framework to guide the ROK’s industrial policy development. Best practice in industrial policy requires clear targets, well-defined national priorities, effective policy instruments and robust governance structure, all informed by comprehensive private sector feedbacks. However, the ROK’s current industrial policy tends to imitate global policy trends without establishing distinct domestic directions and objectives. To address this, we introduce the “CORE” framework to reshape the philosophical foundation of the ROK’s industrial policy. “C” represents cooperative and coexistent approaches, “O” emphasizes openness, “R” stands for resilience, and “E” encompasses efficient and eco-friendly values. Following these CORE principles, we recommend that the ROK position itself as a “Green Premium Supplier” within global value chains. Moreover, we propose that the ROK’s bilateral cooperation strategy should emphasize how its supply chain capabilities can address its trading partners’ critical needs. We also recommend establishing an "Economic Security Conflict Dialogue" to reduce policy uncertainty and foster international cooperation. To implement these recommendations effectively, the ROK government should develop a decentralized network governance system supported by a coordinator program. These government-appointed coordinators would serve as intermediaries, gathering insights from private sector stakeholders and facilitating communication channels to strengthen public-private cooperation.

국문요약

제1장 서론
1. 연구의 배경 및 목적
2. 연구의 구성
3. 선행연구 검토
4. 경제안보 개념과 정책 유형 분류
5. 자국중심주의와 고립주의, 일방적 산업정책

제2장 주요국 산업정책의 부활과 정책 경쟁 딜레마
1. 미국 산업정책: 전략경쟁 속 고립주의 부활의 명암
2. EU 산업정책: 개방된 전략적 자율성의 맥락과 한계
3. 중국 산업정책: 비대칭적 고립주의의 딜레마
4. 요약 및 시사점

제3장 산업정책의 영향: 무역, 투자, 연구협력
1. 무역
2. 투자
3. 연구개발 투자와 협력
4. 요약 및 시사점

제4장 산업정책 경쟁과 산업별 영향
1. 산업정책 경쟁 상황
2. 한국의 산업별 영향: 반도체ㆍ이차전지
3. 정책 경쟁에 따른 시나리오 분석
4. 소결

제5장 한국형 경제안보 프레임워크 구축 방안
1. 주요 연구 결과 요약
2. 한국형 산업정책 프레임워크의 필요성
3. 대응 방향 및 전략 수단 발굴

참고문헌

부록
1. 주요국의 산업정책 비교
2. 주요국 전략산업별 투자 현황

Executive Summary