Industrial Transformation:
The Starting Point for the
Next Thirty Years of Growth
Sung Wook Moon, Co-Chair, New K-Industry Forum

Q. As former Minister of Trade, Industry and Energy, you oversaw the country's industrial policy, and before that, you spent 30 years witnessing changes in Korean industry across regional affairs and the energy and mid-sized business sectors. Of the success factors that underpinned Korea's industrial growth, which do you believe remain effective today, and which are no longer effective?

A. I began working in government in the early 1990s, when we were focused on the Uruguay Round negotiations while also preparing for the new order that the WTO era would soon bring. Until then, the foundation of our industrial policy had been to devise industry-specific development strategies modeled on the development paths of advanced countries and to provide appropriate subsidies. In response to security threats, we had pursued the rapid development of heavy and chemical industries, directing resources toward strategic areas designated by the government. Under the WTO system, however, such subsidy policies became substantially constrained. As we lowered tariffs and revised laws concerning subsidies, we came to realize that the only way for us to survive in global markets under the new order was to develop technological capabilities that surpassed those of advanced countries. At the time, we were not certain that we would succeed, but we subsequently achieved technological competitiveness that allowed us to gain leadership in industries that had previously been dominated by advanced countries, such as semiconductors and automobiles. Even now, as free trade loses ground and economic security rises in importance, our survival strategy must ultimately be to secure the world’s most advanced technologies. By contrast, approaches such as imitating foreign technologies or simply providing funding to establish factories, as we did in the past, will no longer be effective.

Q. You have emphasized the need to secure at least two “killer technologies” comparable to semiconductors. At the same time, New K-Industry is about transforming existing industries as a whole rather than seeking out new promising industries. How should the development of new strategic industries be linked to innovation in existing manufacturing industries? If there are examples of “killer technologies” that you believe are needed within the New K-Industry vision, please explain.

A. Professor Jeong-dong Lee, who is participating in our forum, wrote the influential book named ‘Time of Accumulation’ with fellow professors at Seoul National University’s College of Engineering more than a decade ago. In the book, Professor Lee emphasized that manufacturing competitiveness is not created overnight, but rather requires the accumulation of countless experiences and lessons from trial and error. He argued that efforts to scale up based on that accumulation will determine our future competitiveness.
We currently possess world-class technologies in various manufacturing sectors, and our production capacity in particular is among the highest in the world. Few countries have a manufacturing base as diverse and advanced as ours. If we can integrate parts of this manufacturing base with AI and green tech and scale them into world-class solutions, they will become our new killer technologies. Our New K-Industry strategy seeks to maximize our capacity to create new killer technologies by combining this kind of scale-up with AI, energy and manufacturing-related services.
Of course, such efforts alone will not be enough to secure the killer technologies needed to sustain our future growth. Last August, the government announced the “Seven SEED” project, which was designed with private sector input to develop seven future growth engines. The seven areas are small modular reactors (SMRs), nuclear fusion, renewable energy, quantum technology, aerospace, advanced biotechnology, and advanced supply chains. Countries around the world, including Korea, are working to gain an early lead in these fields, but I believe there will be many opportunities for us to move ahead based on our manufacturing capabilities. These are potential areas for killer technologies that will sustain the continued growth of the Korean economy.

Q. New K-Industry proposes a “3+1” system combining AI Transformation (AX), Green Transformation (GX), and Service Transformation (SX) with Infrastructure Transformation (IX) to support them. Which areas do you think can realistically produce results within the next five to 10 years, or need to be addressed most urgently?

A. Despite disadvantages in terms of its land area, population size, and natural resources, Korea has established itself as a manufacturing powerhouse. This was largely made possible by our outstanding talent and commitment to the education needed to support it. As I mentioned earlier, we already have the foundation to make major advances in AX, GX, and SX. Realizing this potential in industry, however, depends above all on securing outstanding engineering talent. The problem is that, unlike in the past, we now face a low total fertility rate in the 0.8 range as well as a declining interest in the study of engineering. Compared with Korea in the past and with competitors such as China today, we face a shortage of the talent in science, technology and engineering needed to prepare for the future. I believe this is the most urgent challenge.
We also need to start preparing now by putting government frameworks in place and building social acceptance to support pioneering applications of future technologies in the market. We must reform capital markets so they can provide investment capital to future-oriented fields with a long-term perspective. We must also build the infrastructure future technologies will need, including electricity and energy supplies, suitable sites and water. This is why our forum has brought these challenges together as foundational tasks under IX.

Q. AI data centers, for example, have recently faced growing conflicts worldwide over securing electricity and water supplies and obtaining permits. What are the most common bottlenecks that actually delay or derail large-scale industrial projects on the ground? If you have experience resolving such challenges, could you tell us about it?

A. Every policy creates winners and losers. We should not—and cannot—force a minority to make sacrifices simply because a majority benefits. Those who fear losing their jobs due to AI transformation will inevitably have serious concerns. The same applies to worries about electricity and water supply for AI data centers, since concerns will naturally arise among the communities and industries that have traditionally relied on these resources. When preparing for new industrial development, therefore, communication with those affected must be accompanied by measures to address any concerns.
One example that comes to mind is the conflict the Ministry of Trade, Industry and Energy faced over the siting of the low- and intermediate-level radioactive waste disposal facility, although I was not directly responsible for the matter. Such facilities are essential to nuclear power plant operations, but local residents were in opposition, leaving the project stalled for several years. The government offered various incentives to regions willing to host it, and several candidates were selected after their local governments accepted the offer. However, applications by local governments alone failed to secure acceptance among residents, and site selection ultimately fell through. Referendums were later introduced into the site selection process for the first time. Measures were proposed to reflect residents’ views as fully as possible, and a subsequent residents’ vote in favor eventually enabled the Gyeongju project to be completed.
The various “X”s that make up New K-Industry, including AX and GX, signify “transformation.” These changes can affect a much broader range of industries, workforce groups, and regions than the siting of a radioactive waste disposal facility. Alongside strategies for successfully implementing each transformation, measures to support those who will bear the costs must also be implemented so a “just transition” can take place. These challenges will be difficult to resolve through government measures or support alone. A sustainable New K-Industry transformation will only be possible when those in new growth areas prepare for and participate in the transition with an open mind and a willingness to share opportunities.

Q. You have said that you want to make this forum a bridge between the private sector and national strategy. For that connection to work in practice, businesses will also need to make preparations. What do you believe companies should do to create synergies with government policy? Please also tell us about the role the forum can play.

A. In the early stages of industrialization, the capabilities of the private sector were still limited, making government-led industrial policy inevitable. Today, however, the private sector has developed world-class competitiveness. I therefore believe industrial policy needs to change so that companies’ creativity and capabilities may lead the way, while the government works in an enabling role. The New K-Industry strategy needs to follow the same approach: companies should first clarify what they aim to achieve in concrete terms, and the direction of government policy should then be set out in relation to those aims.
Among FKI’s member firms are many top Korean companies which are already engaged in discussions about the future through various committees. I believe it is important for this forum to complement such discussions and connect them with government policy so that they lead to tangible results. I hope the forum will bring together private firms’ strategies and investment plans for AI and green energy transformation, while also identifying the role government needs to play. We must also discuss efforts that the private sector needs to undertake, such as developing talent and creating demand for new technologies, so that those plans can ultimately be realized.

Q. The New K-Industry Forum plans to propose a mid- to long-term roadmap and key policy priorities. As Co-Chair of the forum, what outcomes do you most want to deliver, and what plans do you have going forward?

A. As I mentioned earlier, this forum is run directly by FKI, a business-led organization. This can give it the capacity to put industrial strategy into practice, distinguishing its work from strategies developed by the government or research institutes. In other words, rather than adding yet another industrial policy report to the many reports already available on AX and GX, we want to create a mid- to long-term industrial transformation roadmap that can actually be implemented.
Just as the government’s long-term R&D strategies - such as the G7 Project established in the early 1990s in preparation for the transition to the WTO era - laid the foundation for today’s AI, semiconductor, and manufacturing competitiveness, I believe the outcomes of this forum’s discussions should also form a foundation for future industrial competitiveness. That is why I hope we will discuss not only measures that can produce immediate results, but also those necessary to foster the technologies, talent, and industrial foundations needed 10 and 20 years from now.
From the perspective of businesses, we can develop a concrete vision for the future of Korean industry by focusing on AX, GX, and SX—as well as the IX that will support these transformations. At the same time, the forum should focus on practical matters such as the specific actions businesses need to take and the policy conditions required in each area. Throughout the discussions, we will also share our findings with the relevant government ministries in a timely fashion, so that they can serve as a reference.
Ultimately, I hope the forum's priorities will lead to concrete corporate investments and government policies that create new sources of industrial competitiveness.