Six Keywords of Park Geun-Hye Administration's Major Policies (English)

Six Key Words of Park Geun-HyeAdministration’s Major Policies

03 Three-year Economic Innovation Plan

The first strategy for the Three-year Economic Innovation Plan is achieving an economy with strong

fundamentals by correcting abnormal practices. The core priorities for building an economy with strong

fundamentals include reform of the public sector, establishing a principled economy and creating a

wider social safety net.

Public sector reform is the first core task in building an economy with strong fundamentals. It involves

changing the fundamentals of our economy with a thorough overhaul and intensive reform of the public

sector where abnormal practices and low productivity have become entrenched over the years. The

source of such abnormal practices lies in lax management and high debt ratios. To address the problem

of lax management, all information about public institutions will be disclosed except for confidential

management information. Together with such efforts as business restructuring and sales of assets, the

Government will adopt a new system to control the total amount of public and corporate bonds. We will

Public Sector Reform

1. Economy with Strong Fundamentals

wider social safety netpublic sector reform

A

Economy with

Strong Fundamentals

principled market economy

02Six Key Words of Park Geun-Hye Administration’s Major Policies

Though the world economy is slowly recovering stability after the 2008 global economic crisis through

global coordination, we continue to see low growth rate, high unemployment and unbalanced growth.

The Korean society is also facing unprecedented challenges such as low fertility and ageing population,

jobless growth and polarization. Against this backdrop, it is time to create a new development paradigm

to renew and jump-start the Korean economy.

The Park Administration has introduced the Three-year Economic Innovation Plan (2014~2017) as the

most significant national agenda to innovate our economy and take it to the next level. The plan has

three key goals: 1. an economy with strong fundamentals 2. an economy of dynamic innovation 3. an

economy with a balance between domestic demand and exports.

We have identified 59 detailed tasks to realize the Three-year Economic Innovation Plan and are continu-

ously monitoring and managing the progress. (Table 1)

A smooth implementation of the Three-year Economic Innovation Plan will boost the country’s potential

growth rate to the four-percent range, per capital income to US$40,000 and employment rate to 70 per-

cent with a larger number of jobs for young people and women.

The Wall Street Journal carried on February 28, 2014 an editorial titled ‘South Korea’s growth model’

as follows : “President Park Geun-Hye proposed a comprehensive plan for innovation that can be an

example not just in Asia but also in other parts of the world.”

Key economic indicators

Classification Population

GDP(trillion won) Trade volume

(100 millionUS$)

*Source: Korea Customs Service

Government budget

(trillion won)*Source

Ministry of Strategy and

Finance

Employment rate(%)*Source :

Ministry of Employment

and Labor

Foreign exchange reserves

(100 millionUS$)*Source: Bank of

Korea

*Source: Bank of Korea

per capita GDP(10,000 won)

2011 49,779,440 1,332.7 2,677.2 10,796 209.1 63.8 3.064.0

2012 50,004,441 1,377.5 2,754.7 10,675 325.4 64.2 3.269.7

2013 50,219,669 1,428.3 2,844.1 10,752 342.0 64.4 3.464.6

01Six Key Words of Park Geun-Hye Administration’s Major Policies Three-year Economic

Innovation Plan

Principled Market Economy

Stronger Social Safety Net

also expand the application of a separate accounting system that distinguishes the accounts for govern-

ment policy projects from those for public institutions’ projects so that the debt ratio of public institu-

tions can be drastically lowered to 200 percent by 2017. In addition, a mechanism for competition will be

introduced in a bid to boost the productivity of public institutions. Some areas like railroad operations

that serve the public good, but also need to be exposed to competition will be made to compete with

each other through corporate spin-offs or the creation of subsidiaries. Meanwhile, public service sec-

tors, including public rental apartments, will open their doors wider to businesses in the private sector

to encourage their active participation.

Public enterprises’ debt to GDP ratio for OECD members

hind multiple layers of regulations and towering barriers deterring the entry of potential competitors

into the market. Also, outdated systems and practices in the labor market is being updated. Since the

inauguration of the Park Administration in February 2013, more bills than ever have been enacted to

bolster the rights of the economically vulnerable, including subcontractors and franchise store owners,

laying the institutional foundation for fair trade. In order to raise productivity in industrial relations, the

Government is changing confrontational labor-management relations to a relationship of compromise

and dialogue, and boosting the linkage between wage and productivity in order to ease unreasonable

income disparities between regular and non-regular workers. The Government is also making it more

difficult to dismiss non-regular employees to narrow the gap in employment protection between regular

and non-regular workers. We are also putting our heads together with an open mind to resolve issues

such as normal wages, reduction in work hours and the extension of retirement age, which are some of

the pending issues in the labor market affecting both labor and management.

The second core task for strengthening our economic fundamentals is to establish a principled market

economy. The Park Administration is doing its best to rectify unfair trade practices between large and

small companies that distort the economic structure and discourage creative innovation in the private

sector. The Government is also working hard to eliminate the attitude of settling for the status quo be-

The third core task for making economic fundamentals stronger is to widen the social safety net. This

is one of the most important cornerstones to ensure that the Korean economy remains resilient and

balanced in the face of diverse shocks. Until now, shortcomings in the social safety net including blind

spots in social security and one-size-fits-all basic living standards have given rise to social anxieties,

which in turn weakened the impetus for economic innovation. More than half of employed people are

currently not covered by employment insurance, and this abnormal situation calls for urgent rectifica-

tion. Eligibility for employment insurance will be gradually expanded to include self-employed business

owners, artists and day workers as well as workers who do not fit into any category. Unemployment

benefits is also being revamped so that people can understand that having a job is better than depend-

ing on government benefits. Heemangkium Tongjang (Growing Hope Bank Account) makes it possible

for those who earn little to add to their wealth with the financial assistance from the Government that is

provided in proportion to the amount of personal savings; its beneficiaries will be expanded to include

the marginally poor. The earned income tax credit (EITC) will also be increased.

exc. local and financial public enterprises (Source: Korea Institute of Public Finance)

France

Korea

Sweden

Canada

New Zealand

Portugal

Finland

Australia

Japan

Mexico

UK

29.9%27.0%

25.3%14.2%13.7%12.9%

9.7%9.0%

8.1%5.4%

2.0%

B

C

04Six Key Words of Park Geun-Hye Administration’s Major Policies 05 Three-year Economic Innovation Plan

The third strategy for economic innovation is to strike a balance between domestic demand and exports

by boosting domestic demand. The Park Administration shifted its growth paradigm from the existing ex-

port-oriented economic policy to double-ended growth policy where both exports and domestic demand

drive growth at the same time. For the steady and continued growth of our economy, it is necessary to

realize the balanced growth of domestic demand and exports, the manufacturing and service industries,

conglomerates and SMEs, and the capital and local areas. The benefits of such growth have to go to all

equitably. The goal of a balanced economy will

be pursued with focus on the implementation of

the three following tasks: expansion of the base

of domestic demand, expansion of investment

opportunities and improvement in employment

rates for young people and women.

The second strategy for the Thrid-year Economic Innovation Plan is to realize a dynamic and innovative

economy by building a creative economy. In 2013, the Government established a creative economy ac-

tion plan, reinforced an ecosystem conducive to starting venture businesses to turn our economy into

a truly creative economy, and introduced the online Creative Economic Town. In 2014, we are building

creative economic innovation centers in 17 metropolises and provinces in order to bring the online Cre-

ative Economic Town offline. This system allows any Korean with creative ideas to start a business with

a mentor’s support, and helps companies reinforce competitiveness.

In 2014, venture companies, SMEs, large conglomerates and the Government have launched Public-

Private Creative Economy Committee, which is driving the creative economy led by private companies.

To help venture companies and new startups grow into SMEs and strong medium-sized enterprises and

further into global businesses, the Government is providing increased assistance and taking measures

to deregulate the whole process encompassing the establishment, growth, pulling out of investment and

taking on challenges again after failure. A “technology bank” was established to help people use tech-

nologies that are owned by conglomerates but not in active use to start new businesses, and we freed

exemplary founders from joint and several liability as loan cosigners. The Government will additionally

secure up to 760 billion won of angel investment fund and youth employment fund, while creating a

Korean type Yozma Fund worth 200 billion won that will invest in domestic startups in cooperation with

global venture investment companies. On top of this, the Government will inject a budget of 4 trillion

won over the next three years to create an ecosystem conducive to starting venture businesses. Korea

has strength in science and technology, ICT and cultural content, which can be dubbed as the vitamins of

a creative economy. If these are successfully grafted onto manufacturing and other industries, it would

result in innovation in the manufacturing industry and help create new convergence industries involving

the Internet of Everything (IoE), Cloud Computing and Big Data. To this end, the Government plans to

increase the number of creative economy vitamin projects to 120 over the coming three years.

In order to realize a dynamic, innovative economy, the Park Administration will also push ahead with

core task of ‘making investments in preparation for the future’ on top of the creative economy initia-

tive. To strengthen science and technology capabilities, which serve as the foundation for a creative

economy, and make proactive investment in the future, the Government will increase R&D investments

to reach five-percent of the GDP by 2017. The Government is also helping universities greatly boost their

research capabilities by newly instituting the Korea Research Fellowship program, through which our

country can bring in 300 of the top one percent of scientists in the world and encourage young, promis-

ing global researchers to make contributions to domestic growth.

2. Dynamic and Innovative Economy

3. Economy with a Balance between Domestic Demand and Exports

Roman

ia

Greece

Slovak

ia

Poland

Russia

Italia

HungarySpain

Portugal

Norway UK

Irelan

d

Canad

a

Czech

China

Netherla

nds

Estonia

Belgium

France

USA

Slovenia

Austria

Germany

Denmar

k

Taiw

an

Japan

Sweden

FinlandIsr

ael

Korea

1.0

2.0

3.0

4.0

5.0

0.0

Investment in science and technology (R&D investment relative to the economy in 2012) (In %)

Source : OECD, Main Science and Technology Indicators, 2013-2

※ Note : R&D investment to economy, based on the total R&D investment divided by GDP

President in Meeting for Promoting Trade and Investment (Mar. 12, 2014)


0.5 0.7 0.8 0.9 1.

1 1.3

1.3

1.3 1.

5 1.7

1.7

1.7

1.7 1.9 2.0 2.2

2.2

2.2 2.

3

2.8

2.8

2.8 2.9 3.0 3.1 3.

3 3.4 3.5

4.2 4.

4


Facilitate Domestic Consumption

To expand the base of domestic demand, first and foremost, the Park Administration is addressing the

issues of household debt and soaring key-money deposits, which weigh heavily on the shoulders of

many Koreans.

In order to address the problem of household debt without fail, the Government is carrying out continued

reforms so that mortgage loans can be repaid as they are in advanced nations under a plan character-

ized by fixed rate of interest, long-term installment payments and amortized payment of principal and

interest. To this end, the provision of tax breaks and long-term mortgage loans are being expanded. In

order to alleviate the debt burden on low-income families, we are raising the ceiling and easing eligibil-

ity conditions for loans targeting low-income families such as Bakkweodeurim Loan (refinancing loan)

for small-time, self-employed people. Through these moves, the Government aims to lower the ratio

of household debt to disposable income by five percentage points from the 2014 level by 2017, thereby

achieving a substantive cut in household debt for the first time. The rising key money, the main culprit

behind soaring household debt and contractions in consumption, will also be addressed by promoting

home sales and purchases. To this end, we will ease resale restrictions on privately built apartments

on private residential land. On top of this, the Government will adopt subscription merit scheme and

subscription qualifications for privately built houses to improve the housing subscription system and

thus lower the barrier for purchasing newly built houses. In 2013, a number of real estate laws passed

such as abolishment of heavy transfer tax on multi-homeowners, permanent cut to acquisition tax, and

permission of vertical extension, which is bringing about gradual revitalization of housing transactions

in 2014. In consideration of the current housing market, the Government plans to strengthen support

for house financing such as support for first-time home buyers, Didimdol (steppingstone) Loan for non-

homeowners, profit-sharing mortgage at 1%-range interest rates and Housing Choice Voucher Pro-

gram. At the same time, the Government is diversifying suppliers of public rental housings by attracting

private investment such as public rental housing REITs (Real Estate Investment Trust), and supplying

diverse forms of pleasant public rental housings. The Government is expanding the supply of long-term

private rental units by rationalizing the taxation on lease income, and taking necessary measures to

change trends in the rental housing market in line with the rising monthly lease payment. We turned tax

deduction for monthly rent into tax credit, and expanded its beneficiaries to include middle-class rent-

ers, thereby significantly reducing their burden of paying monthly rent.

A Boost Investment

It has become clear that the existing paradigm of exports led by manufacturing industry is insufficient

for creating jobs or revitalizing domestic demand. The Park Administration is aggressively supporting

SMEs so that they can increase investment and contribute to boosting the economy. To facilitate growth

of SMEs and medium-sized enterprises, the Government is addressing their management-related

problems at each growth stage and providing tailored support for each company such as capital and tax

benefits in order to bolster their competitiveness. The Government is also expanding tailored financial

support for construction and plant businesses in order to support their advancement into overseas

construction and plant markets, which are growing seven to eight percent annually. To this end, the

Government introduced a financial assistance program with funds worth US$10 billion and plan to

expand the support for export companies by additionally raising 2.3 trillion won with the capital of export

financing institutions and contributions by 2017.

Furthermore, the Government is fostering strong SMEs into new export leaders in order to further

enhance our export competitiveness which has so far relied on large conglomerates. The potential

for such possibility has already been proven in 2013. The export growth rate of SMEs and medium-

sized companies has outpaced that of conglomerates and their export products are diversifying, which

represent a qualitative improvement in export of smaller businesses. In order to support the overseas

venture of SMEs, the Government is providing them with tailored overseas market information owned

B

President visiting Incheon Namdong Industrial Complex, Aug. 16, 2013


by domestic export institutions in real time and offering a consulting service throughout the entire

export procedure. We are also supporting joint overseas ventures of large conglomerates and their

SME suppliers as well as SMEs’ ventures into unchartered new markets by harnessing information

or networks of large conglomerates. Ultimately, the Park Administration is focused on a creative

convergence of large conglomerates’ rich resources and experiences with SME or startups’ ideas in

order to create a corporate ecosystem of shared growth.

In order to draw on the dynamism in our economy, it is important to advance into other parts of the world

and continuously pioneer new markets. Despite the Korean economy’s high dependence on exports,

only around 86,000 (2.7%) of 323 million SMEs and medium-sized companies are shipping their goods

overseas, which account for a third of the total export volume. We can unleash the endless potential of

Korea’s exports if we transform SMEs that are focused on domestic demand into key exporters. The

future of Korean trade hinges upon such small but strong SMEs and medium-sized enterprises. The

Park Administration is aggressively supporting companies with product competitiveness that have so

far only focused on the domestic market enter overseas markets.

The Park Administration is also breaking away from the existing trade structure focused on manufac

-turing industry and discovering new export industries such as service, convergence system, intermediary

and processing trade. There is a great potential for export in Korean Wave cultural content such as

movies, music, dramas as well as service industries such as fashion and design. Korean Wave content

is well received by audiences around the world, which attests to the competitiveness of Korea’s content

as an export industry. We are reinforcing export financing and on-site marketing in a bid to upgrade such

competitiveness. Convergence systems that combine service and IT such as e-government, intelligent

transportation system, plant operation/repair and digital hospitals are also emerging as the new blue

ocean of Korea’s trade. When we bring together our geographical advantage as the center of North East

Asia, the institutional foundation of FTA, and global production network, we can establish ourselves as

the powerhouse in intermediary and processing trade.

The Park Administration is also helping Internet-based convergence industry take a giant leap forward

by making timely investments in further advancing the network infrastructure, including Giga Internet-a

100-times faster Internet service-and fifth-generation mobile communication. We are also making

proactive preparations to deal with global issues related to the climate, environment and energy in

order to generate new industries and new jobs. To this end, we will expand investments in technological

developments such as clean thermal power generation, environment-friendly automobiles and carbon

capture and storage to support the innovation efforts in the private sector. A pilot project to build an

environment-friendly energy town, which houses unwanted facilities such as incineration plants and

landfill sites is up and running in 2014, and the project will be gradually expanded.

Increase Female and Youth Employment

In stimulating domestic demand, another key task is job creation. The Park Administration is working

hard to improve employment rates for young people and women. To this end, we are fostering five

promising service sectors that are popular among young people including healthcare/medicine,

education, tourism, finance and content. The Government will address the factors limiting youth

employment at every stage and create 500,000 new jobs for young people. To this end, we will build

a society where skills are valued above academic background. In 2014, we are developing National

Competency Standards (NCS) for all of approximately 800 occupations and carrying out a phased

expansion of the performance assessment systems now being implemented at several organizations.

If it becomes possible to find a job with just a high school diploma and continue your studies at a school

of your choice even after you are hired, the youth employment problem will improve dramatically. We

are therefore increasing incentives for companies and schools that participate in programs that alter

-nate work and study and establishing a culture of “employment first, college later.” We are encouraging

the conversion of a number of community colleges into lifelong vocational education and training

institutions so that high school graduates who have opted to find work first will be able to continue their

studies later on. We are also expanding the separate college admissions track for currently employed

applicants and increasing the availability of contract training programs. In addition, we are adapting

educational programs to meet the needs of industries and strengthening tax benefits for businesses

that participate in the vocational education programs at specialized and Meister high schools. We are

building a system of dialogue between schools and businesses in each industry, starting with a pilot

project and then gradually expanding the scope. Also, in order to address job mismatch among young

people, we are increasing the service sector jobs favored by young people and promoting changes to

make the working environment of industrial complexes more youth-friendly. For high school graduates

working in small to medium-sized enterprises, we are also encouraging more young people to work

at SMEs by introducing a Growing Hope Bank Account program for high school graduates working at

SMEs, which is similar to employee asset-building programs of the past.

Another central issue for sustainable growth of the economy is participation of women in the workforce.

If we can solve even just the problem of career break for women, our economy will be able to gain ten

percent more female workers. Therefore, in order to ensure that capable female workers do not suffer

career interruptions due to childbirth or child-rearing, the Government is addressing the key issues

hindering employment for women in each stage of life to create 1.5 million new jobs for women. To this

end, we are expanding flexible daycare programs countrywide beginning in 2015. We are establishing

C


a daycare and childcare support system with services tailored for different working arrangements and

expanding employment insurance so that irregular workers and those in smaller workplaces can take

parental leave more easily. In order to encourage greater use of parental leave and of initiatives to

reduce working hours during the childcare period, we are expanding the substitution pool for alternate

personnel and providing incentives to the participating employers. In order to increase the number of

jobs ideal for women, it is urgent that we renew efforts to expand part-time jobs with flexible working

hours. The Government is working on policies to give full-time workers the right to opt for part-time

working arrangements if working hours need to be reduced for reasons of childcare, pregnancy or other

caretaking responsibilities as well as policies to guarantee a return to full-time arrangements at a later

time when they return to work. In addition, in order to allow part-time workers to switch more easily

to full-time working arrangements if desired, we are considering expanding opportunities for them to

receive priority consideration when applying for newly available full-time positions.

President attending ‘Women Entrepreneurs’ Day’ ceremony, Jul. 10, 2013

President visiting specialized high school, Apr. 14, 2014

13 Three-year Economic Innovation Plan

Remarks by Leading Figures

Facebook COO Sheryl Sandberg, “The fact that a female president was elected in Korea in

itself is very encouraging. The presence of President Park is a great boost to Korea in that it can

change perceptions about female leaders.”

- Jul. 4, 2013, Yonhap News

Strategies Tasks Details

Economy with strong

fundamentals(15 tasks)

Public sector reform(8 tasks)

•Reform public institutions by putting an end to irregularities•Reform subsidies and public sector pensions

Principled market economy (6 tasks)

•�Put an end to unfair practices between conglomerates and SMEs, protect tenant rights to premiums, reform job market, strengthen personal information protection

Stronger safety net(1 task)

•�Strengthen social safety net in order to support those left behind in the process of economic reform

Economy of dynamic innovation(25 tasks)

Creative economy(11 tasks)

•Establish and expand creative economy innovation centers•�Help SMEs and medium-sized enterprises enhance competitiveness, resolve management difficulties when startups grow into SMEs, resolve management difficulties when SMEs grow into medium-sized enterprises•Promote M&As•Foster new industries such as industry convergence

Investment in the future

(7 tasks)

•Increase investment in R&D, attract talent from overseas •�Implement green house gas emissions trading scheme, secure

energy supply, build an environment-friendly energy town

Overseas market development

(7 tasks)

•Maximize the strategic use of FTAs•�Help Korean SMEs become globally competitive hidden champions,

create online overseas markets, add high added values to overseas construction/plant exports

Economy with a balance between domestic

demand and exports

(18 tasks)

Facilitate domestic consumption

(4 tasks)

• Restructure household debt, normalize housing transactions and stabilize rental housing market, ease the burden of high private educational costs

Boost investment(11 tasks)

•Establish regulatory reform system• Promote promising service industries, such as healthcare, education, tourism, finance, software and content industries• Stimulate regional economies

Increase female and youth employment

(3 tasks)• Facilitate employment of young people and women

Preparation for unification (1 task) • Prepare for unification

<Table 1> Detailed Tasks for ‘Three-year Economic Innovation Plan’ (59 tasks)

03 Creative Economy

Creative economy has two major characteristics that distinguishes it from the existing economy.

Firstly, while the existing economy sought economic development by tapping into mineral resources

underground, creative economy peaks economic development by tapping into creativity of individuals.

2. Two Characteristics of Creative Economy

President at World Economic Forum, Jan. 22, 2014

low growth high unemploymentincome imbalance

One Stone Three Birds effectCreative economy is like a stone that can catch three birds at once, namely low growth, high unemployment and income imbalance

Six Key Words of Park Geun-Hye Administration’s Major Policies


Capitalism is facing new challenges in the wake of the global economic crisis. Now, achieving a

sustainable and inclusive growth calls for a complete transformation of the paradigm rather than partial

complementation of the existing paradigm such as macroeconomic policies and labor market policies.

There is a dire need for the momentum to overcome the current limitations, change the existing order

and reshape the world, and the Park Administration looks to a creative economy for such momentum.

This is a time when a single person’s outstanding idea, creativity and new technologies can shape the

entire world and contribute to national development. In this new era, it is the creative divide that will

determine the wealth and happiness of a country and individual, following the material divide after the

Industrial Revolution and the more recent digital divide.

President Park believes that building a creative economy will help us catch three birds with one stone as

the Korean saying goes, as it will address all three problems faced by the global economy at the same

time, namely low growth, high unemployment and income imbalance. In the face of challenges such as

protracted global economic crisis and limited growth of the Korean economy, the Park Administration

is focused on building a creative economy in order to overcome the setbacks and take a leap forward

into the future. Korea stands at a critical crossroads. The past economic strategy of being a fast follower

of other advanced nations has run into structural limitations of jobless growth and aggravating social

disparity. Due to the low growth trend and rising uncertainties of the global economy, the Korean

economy is also experiencing the structural problems of low growth and youth unemployment.

This is why the Korean government is pursing a vision of ‘creative economy’ as a strategy to jump-

start the economy through innovation. It is time for us to fundamentally change our economic growth

paradigm and renew ourselves into a leading economy. The aim of building a creative economy is to

reinforce national competitiveness by developing new growth engines, and to improve people’s lives

by generating more quality jobs. It can be a new model for today’s disoriented capitalism and act as an

exemplary solution for uncertainties in the future of the global economy.

1. Concept of Creative Economy

Creative Economy

02

Unlike minerals, creativity is a resource that never runs out, has no adverse side effects such as

environmental pollution, and is not subject to the law of diminishing returns. Therefore, creative

economy can open up a path to sustainable growth.

Secondly, unlike capital or mineral resources, creativity is universally inherent in all economic actors

and thus can serve as the source for overcoming unbalanced growth. In other words, creativity offers

the possibility of inclusive growth as it is inherent in every human being regardless of generation, social

class, ethnicity or nationality. Until now, poverty eradication efforts in developing countries or support

for the vulnerable class in advanced countries focused on expanding SOC or social safety net. However,

by re-shifting our focus to helping the poor people achieve independence by nurturing their creativity,

we can open a new horizon of inclusive growth.

04Six Key Words of Park Geun-Hye Administration’s Major Policies 05 Creative Economy

ICT Industry based on Convergence of Science & Technology and Broadcasting Communications

A

Against the backdrop of the changing global economic paradigm, creative economy enables the

convergence between science & technology with industry, and between culture and industry. Flowers

of creativity can bloom where the boundaries between the industries are torn down. It goes beyond

simply expanding the existing market; it is about creating new markets and new jobs on the foundation

of convergence. At the core of such creative economy lies science & technology and IT industry. In the

21st century, science and technology is playing a critical role in drastically changing and improving

the quality of each country’s civilization and people’s lives. The Park Administration is fostering ICT

industries as the national growth engine based on convergence between science & technology and

broadcasting communications.

Creative economy is about creating new industries, markets and jobs that did not exist before by

combining individual imagination and creativity of Koreans with science & technology and ICT. Korea is

home to excellent human capital as well as world-class science & technology and ICT competitiveness.

The key pillar in our vision of creative economy is science & technology and ICT. For instance, Korea

achieved the one millionth patent registration in a faster span of time than any other country in the

world, propelling itself into an intellectual property powerhouse with the world’s 4th largest number of

patent applications.

3. Foundation of Creative Economy

Creative Economy

Sustainable Growth

Inclusive Growth


Global Innovation Index 2014 by Bloomberg, US : Korea and Sweden are leading the world in innovation.

Ranking Country Total score

Ranking in R&D

investment

Ranking in manufactu-

ring capability

Ranking in productivi-

ty

Ranking in high-

tech intensity

Ranking in tertiary education efficiency

Ranking in researcher

concentration

Ranking in patent activities

1 Korea 92.10 3 2 33 3 3 6 2

2 Sweden 90.80 4 22 7 5 13 8 26

3 US 90.69 10 24 10 1 37 12 5

4 Japan 90.41 5 6 14 8 30 9 3

5 Germany 88.23 9 3 20 6 25 17 6

6 Denmark 86.97 6 56 6 17 27 3 14

7 Singapore 86.07 17 14 15 14 24 4 34

8 Switzerland 86.02 8 16 3 9 35 22 29

9 Finland 85.88 2 21 12 32 5 2 15

10 Taiwan 83.52 7 N/A 30 2 2 5 1

Science and technology competitiveness (global ranking)

Classification 2009 2013

Total R&D investment 7 7

Total R&D investment to GDP ratio 5 3

Corporate R&D expenditure 7 6

Corporate R&D expenditure to GDP ratio 5 2

Number of researchers in R&D 8 7

Number of patents applied by applicant’s origin - 4

Number of patents applied by applicant’s origin (per 100,000 pop.) - 3

Number of patents granted by applicant’s origin - 4

Number of patents granted by applicant’s origin (per 100,000 pop.) - 2

Source: IMD World Competitiveness Yearbook (2013)

Creative Economy Based on Individual Creativity

We are living in an era of knowledge-based economy where creativity becomes capital and ideas become

assets. For Korea to take a new leap forward in line with such changes, a new economic growth paradigm

is required. The Park Administration looks to creative economy for an answer. At the core of a creative

economy, there are people. This is a time when a single individual can elevate a nation’s value and

revitalize an economy. Creative economy involves generating new markets and new jobs by facilitating

convergence between science & technology and IT, industry and industry, industry and culture based on

creative ideas of economic actors.

Good examples of creative economy include the Korean singer Psy’s “Gangnam Style”, which created

new added value on YouTube where it became the first video in history to gain over one billion hits, or

Cirque Du Soleil that revamped the declining art of circus by converging it with colorful stories, music

and stage settings. K-dramas with diverse motifs based on creative ideas such as My Love from the Star

are another good example.

B

Fair Competition

A creative economy cannot fully flourish if there are no equal opportunities for competition. The

Park Administration is building a principled market economy in order to establish a new economic

ecosystem where conglomerates and SMEs share what they have, and small traders and local mom-

and-pop stores can grow together. We are making a so-called ladder of hope that allows SMEs to

grow into medium-sized enterprises and medium-sized enterprises into global companies. The Park

Administration is striving to usher in an era of virtuous cycle between creative economy and economic

democratization, and an era where national wealth creation leads to people’s happiness.

C


The Park Administration is making multi-faceted efforts in order to expand such online successes to

offline and the entire Korean economy. In January 2014, Public-Private Creative Economy Committee

was inaugurated that brings together SMEs, startups and large conglomerates. The committee is not

led unilaterally by the Government. Rather, the committee aims to trigger joint discussions among

local traders, experts and local universities in order to channel investment into areas that each

community is specialized in by establishing creative economy innovation centers. In order to create

innovative industries, new markets and new jobs, it is important to go beyond simply thinking up ideas

and actually create, experience, give a concrete shape and realize the idea. The Park Administration is

establishing offline creative economy towns as a venue of creation, networking and cooperation so that

it can serve as the forward base of a creative economy.

Online Creative Economy Town and offline creative economy innovation centers inaugurated in 17

metropolises in 2014 are serving as a cradle of community and human resource development. We are

seeing an increasing number of cases where creative ideas turn into business opportunities, and where

such startups become hugely successful. The Park Administration is rallying the public and private

sector, central and local governments to ensure that creative economy innovation centers turn every

community’s creative ideas into good business opportunities and contribute to the vision of building

community-led creative economy.

The Park Administration is committed to laying the foundation for a creative economy by supporting

the creation of an ecosystem conducive to starting venture businesses and facilitating global market

ventures by startups and SMEs as well as software and Internet-based content industries. In

September 2013, the Government launched the “Creative Economy Town” website as a platform for

commercializing Korean people’s ideas to make sure that individuals who, until now, found it difficult to

turn their good ideas into businesses can realize their dream so that their dream can in turn contribute

to the national economy. This is an online Creative Economy Town that allows individuals to turn their

creative ideas into business opportunities with the help of expert mentors. Thousands of ideas have

been posted on the website ranging from ideas that address the small inconveniences in everyday life

to ideas for new products that utilize state-of-the-art science and technology. Around 2,500 mentors

are offering their help to ensure that these ideas can be realized and ultimately contribute to the

vision of a creative economy. We are already witnessing many successful cases such as production

of a prototype after patent application or investor seminars. A young man proposed development

of a mobile application to a global K-startup program. This application allows mobile device users

to translate words on a website and study with the vocabulary list. With the help of a mentor, his

idea turned into a growing venture business when he launched the cloud-based language learning

application that supports twelve different languages, which was downloaded by 400,000 people in just

four months. His idea turned into a growing and promising venture business.

4. Major Projects for Creative Economy

Building Creative Economy TownA

“Creative Economy Town” website www.creativekorea.or.kr

Creative Economy

online Creative Economy Town

offline Creative Economy Innovation Centers

Public-Private Creative Economy Committee


Fostering ventures

Already, venture businesses have made remarkable accomplishments in the Korean economy. There

are as many as 416 venture companies that achieved fast growth based on strong technologies,

posting a revenue of over 100 billion won including five whose revenues exceeded 1 trillion won. Out

of the 143 Korean companies which have products with the world’s largest market share, more than

half or 72 are ventures enterprises.

Venture companies are also source of quality jobs, as demonstrated by the fact that 600,000 out of

4.26 million jobs created over the past decade came from such companies. The Park Administration is

making multi-faceted efforts to create an ecosystem of a creative economy that can help these venture

business grow even stronger. The Government is providing a variety of support to help people realize

their dreams of turning their good ideas and technologies into businesses. Such support includes a

plan to facilitate a virtuous cycle in the ecosystem of funding startups announced in May 2013, and

establishment of Creative Economy Town in September 2013.

The newly created venture investment fund in 2013 increased in size by 99% compared to the previous

year from 772.7 billion won in 2012 to 1,537.4 billion won in 2013. Actual amount invested also jumped

by 12.3% from 1,233.3 billion in 2012 to 1,384.5 billion won. Bills related to facilitation of startups such

as Special Act for Venture Businesses, Capital Markets Act, and Restriction on Special Taxation Act

passed in the National Assembly and are having visible impact from 2014. The Park Administration is

making policy actions to turn initial funding methods for venture companies from the existing loans to

investment, promote established entreprenuers’ re-investment such as angel investment and M&A,

and facilitate mentoring. Also, we are providing policy support for their venture into the global market

by operating a venture investment center and overseas expansion fund.

The Park Administration is implementing bold measures to ease any regulations that hinder conver-

gence of industries, which is a core value of a creative economy. Also, we are expanding financial and

technological support for healthcare, culture, medicine, environment, marine, agriculture and many

other industries to ensure that good ideas can turn into good business opportunities. The Government

allocated 6.5 trillion won as a budget for creative economy projects, which is a 12% rise compared to

2013, in a bid to make sure that new ideas and technologies can translate into the country’s growth

engine.

B New investment in venture capital

Changes in size of fund

(99% rise from 2012, 1,537.4 billion won)

※ Note : Based on Small and Medium Enterprise Establishment Investment Associtiation + Korea Venture Fund

(excludes New Technology Project Investment Cooperative and Private Equity Fund)

Source : Small and Medium Business Administration (2014)

※�Current status of government’s venture investment : Small and Medium Business Administration is

working on establishment of a 2-trillion venture investment fund in 2014 (Overseas expansion fund 150

billion won, First-generation venture fund 100 billion won, Korean type Yozma fund 50 billion won etc.)

amount of fund (100 million won)

(achieved the highest amount in 2013 since 2001, 1,384.5 billion won)

25,000

20,000

15,000

10,000

5,000

02009 2010 2011 2012 2013

new investment (100 million won)20,000

2000 2001 2002 2010 2011 2012 2013

15,000

10,000

5,000

20,211

14,20915,899

22,865

7,727

15,374

8,913

6,177

10,910

12,608 12,333

13,845


Climate change response

The Government set climate change response as one of the core areas of creative economy. This is

because climate change is not a problem of tomorrow but rather a problem of today that calls for

immediate action by the entire global economy.

As promised with the global community, the Government set greenhouse gas emissions reduction

target to 30% of BAU by 2020 and is working to meet the targets by checking the reduction target

of different areas. We are also actively supporting developing countries in their climate change

response as well as the successful settlement and development of the Green Climate Fund (GCF).

We are supporting the provision of appropriate technologies tailored to different local conditions

of developing countries in order to ensure maximum effectiveness with a tight budget. We are also

helping developing countries build climate response capacity as we promised when we hosted the

GCF. The Park Administration is going beyond passive prevention of climate change damages and

proposing an innovative economic growth model that harnesses climate change as an opportunity

to create a new growth engine. When we proactively rise to the challenge of climate change, it can

turn into an opportunity for new values, new markets and new jobs. We can also overcome climate

change in a more efficient and environment-friendly manner by using advanced science and tech-

nology. The Park Administration is expanding investment in technological development for climate

change response such as Energy Management System (EMS), renewable energy, carbon capture and

storage (CCS), and accelerating development of relevant industries and markets.

For instance, the Government introduced Environment-friendly Energy Town as a new policy attempt

to address climate change. This project is a new approach to addressing the issue that provides actual

benefits to residents in communities with unwanted facilities such as incinerators and landfills by

generating power using clean technologies such as biomass combined heat and power generation or

energy storage system.

C Sharing Creative Economy Experience

Creative economy is an innovative paradigm that can bring growth not just to Korea but every single

country in the world by opening up and cooperating with each other. Korea is working toward creative

economy and at the same time, it is sharing this experience with the rest of the world and actively

supporting developing countries build their capacity for creative economy, thereby contributing to

resilience and growth of the entire global economy. We are transferring our innovation and development

models to developing nations based on their demand for creative economy and moving closer toward

shared growth of the region. Korea is also contributing to spreading a virtuous cycle of growth and

environment in the global community by sharing our experiences of harnessing the creative economy

model in climate change.

D

President at the inaugural ceremony for GCF Secretariat, Dec. 4, 2013


Overseas evaluation of creative economy

• Microsoft co-founder Bill Gates, “Creative economy is a smart initiative to further leverage

creativity for the success of Korea...You have to nurture entrepreneurship and encourage research

and venture capital to build a creative economy” (Apr. 23, 2013, MBC)

• Facebook CEO Mark Zuckerberg, “I empathize with President Park’s strategies, policies and

endeavors for creative economy” (Jul. 2, 2013, Dong-A Ilbo)

• Templeton Emerging Market Chair Mark Mobius, “President Park’s objective (creative economy)

is a very good one, and if it succeeds, it will take Korea to the next level” (May 31, 2013, Bloomberg

Markets Magazine)

• Howkins Association Chair and author of “The Creative Economy” John Howkins,; “Korean-style

creative economy is about ICT and science & technology...The meeting between President Park

and DreamWorks CEO Jeffrey Katzenberg is a good example that shows the potential for success

in the Korean-style creative economic model” (Oct. 18, 2013, Aju Business Daily)

• IMF Managing Director Christine Lagarde : “Creative economy is an excellent policy…It will

greatly help Korea and the world not just in terms of boosting education, R&D, innovation, and

commercial/economic application of innovations but also in its emphasis on art and culture

which were largely neglected by economists” (Dec. 4, 2013, News 1)

03 Regulatory Reform

2. Park Administration’s Regulatory Reform Process

Recognizing the importance of regulatory reform, President Park Geun-Hye is addressing the regu-

lations that act as obstacles in each sector in ‘Ministerial Meeting on Regulatory Reform’ directly

chaired by the President. On March 20, 2014, the President presided over the ministerial and private-

public meetings on regulatory reform in the manner of a ‘final discussion’ and she is pushing forward

regulatory reform by encouraging openness, communication and participation.

The Park Administration’s regulatory reform is meaningful in that it is an endeavor actively pursued by

the President, but what makes it all the more meaningful is that it engages both the private and public

sector and that the entire process is open for all Koreans to see and communicate in a transparent

manner. This shows that regulatory reform clearly reflects President Park Geun-Hye’s governance

philosophy of openness, sharing, communication, and cooperation in Government 3.0.

Openness, Communication and ParticipationA

President presiding over the first Ministerial Meeting on Regulatory Reform, Mar. 20, 2014



The Park Administration set out 59 detailed tasks in three areas for the Three-year Economic

Innovation Plan, and regulatory reform is the most important task that is relevant to all detailed tasks

in all areas. Boosting investment through regulatory reform is a prerequisite for ‘an economy with a

balance between domestic demand and exports.’ If a government is passive in reforming regulations

that hinder investment while asking businesses to ramp up investment, no business will trust the

government enough to step up its investment. The same goes for building ‘an economy of dynamic

innovation through creative economy.’ Since the core foundation of a creative economy is convergence,

a creative economy cannot flourish in an environment where outworn regulations get in the way of

convergence or application of new technologies.

The Park Administration is so focused on regulatory reform because it leads directly to job

creation. Until now, regulations have hampered investment in the Korean economy, undermining our

economic vitality and will to invest. Regulatory reform is the only key to ‘innovate and jump-start our

economy’ without costing too much moneyAt the same time, it serves as the foundation for creating

an environment that encourages all economic actors from all levels of society to take up challenges

freely.

1. Need for Regulatory Reform

Regulatory Reform

03

Sweeping Reform of Regulatory System

The Park Administration is establishing an institutional foundation for systematic regulatory reform

that unties the knots of interweaved regulations instead of carrying out piecemeal improvements

of regulations one by one. We introduced new measures such as One-in, One-out Regime, negative

list system, and Regulatory Sunset Program, while ensuring that all these systems that deter new

regulations mesh together smoothly like a cogwheel. We have implemented One-in, One-out Regime

where establishment or reinforcement of a regulation must be accompanied by abolition or easing

of an existing regulation in order to prevent any increase in regulations. Also, we are reviewing all

regulations from square one in order to scrap any unnecessary regulations while turning the remaining

regulations into negative-list regulations. For those regulations that cannot be turned into a negative

list, we introduced a system where the regulation loses effect automatically as soon as it reaches the

termination date. Meanwhile, the Government is providing detailed information about all the regulations

as well as the government’s regulatory reform efforts at the ‘Regulatory Reform Portal Site’ so that

people can supervise and contribute to the reform process in real time.

B

04Six Key Words of Park Geun-Hye Administration’s Major Policies 05 Regulatory Reform

Maintaining Balance between Strengthening and Easing Regulations

C

Because regulations have two faces, the Park Administration is pursuing a balance between strength-

ening and easing of regulations in the reform process. Regulations that hamper job creation and

investment are like tumors, but there are also regulations that are necessary such as those on welfare,

environment, and personal information protection. For instance, there are regulations that must be

reinforced such as fair trade regulations that limit monopoly in the market, regulations that protect the

socially vulnerable such as the three major labor acts or Consumer Protection Act, and environmental

protection regulations such as a ban on excessive use of single-use goods. Therefore, the Park

Administration is carrying out a balanced and targeted reform by clearly distinguishing unnecessary

and necessary regulations. The Government is streamlining regulations by improving good regulations

while uprooting bad regulations instead of a blanket and monolithic reform that makes all agencies cut

down on all of their regulations.

Chan

ge to

neg

ative

-lis

t reg

ulat

ions

Regulatory Sunset Program

Regulatory Reform

One-in/One-out Regime

‘Regulatory Reform Portal Site’


Regulatory Reform to Boost Investment at Home and Abroad

1. Regulatory Reform Initiated by the Administration

The Park Administration is taking the initiative in the reform by reducing regulations and bringing down

obstacles in the public sector first. With the recognition that creative and innovative ideas must not be

rendered useless because of unrealistic regulations, the Park Administration is drastically reducing

regulations and renovating laws and institutions so that any individual or business with a creative idea

can turn it into new products and services and thus make a quick venture into the market.

To this end, the Park Administration is building an infrastructure that enables convergence between

industry and industry, culture and industry, and IT and manufacturing sector. We are also taking deci-

sive steps to remove silos between government agencies to create a system of creative collaboration

in order to provide one-stop administrative services that meet the needs of the companies. We are

rectifying a situation where a company has to travel around the central government, local government

and different government agencies for one permission.

2. Regulatory Reform for World-Class Business Environment and Creative Economy

The Park Administration is implementing a sweeping regulatory reform at home to facilitate

investment—critical for domestic demand—, while externally, it is stepping up efforts to create a

business environment that is more favorable to companies than any other country in the world. The

Foreign Investment Promotion Act endorsed by the Government passed in February 2014 and is

expected to generate approximately 2.3 trillion won of investment and 14,000 new jobs. Meanwhile,

Tourism Promotion Act is expected to create approximately 2 trillion won of investment and 47,000

new jobs.

D

The Park Administration is currently focusing on building a creative economy, which holds great

promise, yet there remain significant obstacles to reach that goal. The Park Administration is working

to overcome these obstacles through regulatory reforms at home and abroad.

The first obstacle is one of regulations. Existing regulatory systems are based around partitions of

industries, with different sets of regulations for each industry. They employ a positive-list regulatory

system of “prohibited in principle, exceptions allowed.” Such an outdated regulatory framework stifles

convergence and the emergence of new technologies and industries, which are the core of creative

economy. In order to overcome this obstacle, the Park Administration is transitioning towards

a negative-list system of “allowed in principle, no exceptions” in a bold attempt to dismantle any

regulations that stifle convergence and the creation of new industries.

The second obstacle is one of finance. Creative economy businesses are built upon a foundation of the

Triple New’s: new ideas, new technologies, and new industries. Startups and ventures lead the busi-

ness sector under this model. However creative businesses are hard to assess in terms of economic

US economic news media <Bloomberg>, designated Korea as #1 Innovative Country, #2 Best Emerging Market, #13 Best Country for Business

• #1 in Most Innovative Countries Ranking

Korea was ranked No. 1 with a total score of 92.10 in ▲R&D investment (No. 3) ▲Productivity (No. 3)

▲High-tech intensity (No. 3) ▲Researcher concentration (No. 6) ▲Manufacturing capability (No. 2)

▲Tertiary education efficiency (No. 3) and ▲Patent activity (No. 7).

• #2 in Best Emerging Markets Ranking

Korea was ranked No. 2 with a total score of 68.44 in ▲average GDP growth (3.53) ▲average inflation

rate (2.55) ▲average government debt as % of GDP (34.89) ▲PP change in government debt as % of

GDP (-1.18) and ▲average total investment as % of GDP (27.14)

• #13 in Best Countries for Business Ranking

Korea was ranked No. 13 with a total score of 75.31 in ▲the degree of economic integration (78.7)

▲cost of setting up a business (75.9) ▲cost of labor and materials (69.1) ▲cost of moving goods

(81.9) ▲less tangible costs (78.2) and ▲health of consumer base (64.3).

<Articles on Jan. 22~23, 2014>

value and entail a considerable amount of risk. Therefore, they severely lack in financial accessibility

compared to traditional businesses. In the case of developing countries without a developed financial

sector, startups and ventures that succeed in developing new technologies using new ideas may col-

lapse due to lack of proper funding, and thus fail to commercialize their products. Such a phenomenon

can hinder creative economy considerably. The Park Administration is pursuing a set of policies that

will accelerate virtuous cycles in the financial ecosystem of ventures and startups by improving upon

the financing paradigm by transitioning from loans to investment, stimulating M&As, and applying

tailored financial policies according to the growth stages of each business.

The third obstacle is one of education. The existing educational system is divided into different

fields. It is designed to produce standardized human capital with standardized knowledge, through

a standardized curriculum. Such education has limitations in fostering human capital with the

capacity for convergence and creativity who can innovate through the creative destruction of stan-

dards and norms. For the purpose of innovating educational systems, the Government is nurturing

convergence-minded human capital by lowering barriers between different majors and disciplines,

and strengthening startup education for youths. Furthermore, it has implemented a trans-resume

hiring system that selects people for their diverse talents and passions, not for their adherence to

a specific set of requirements.

The fourth is one of national borders. A closed economy does allow for the development of a creative

economy. A creative economy can flourish only by pursuing open innovation and continuously engaging

in technological, financial, and people-to-people exchange within the world economy. The systemic and

cultural barriers that hinder international economic exchange may therefore pose the greatest obstacle

to the creative economy. The Government continues to sign FTAs with different nations in the interest

of open innovation.

Creative Economy

Regulation

Finance

Education

National Borders


3. A Comprehensive Review of the 5 Promising Service Industries

(Healthcare/Medicine, Education, Finance, Tourism, Software)

In order to achieve a balanced economy through stimulation of domestic demand, we must secure

an appropriate environment for investment. To boost investment in the service sector and to create

quality jobs, the Government is building a foundation to expand fiscal, R&D, and financial support

activities traditionally focused on the manufacturing sector into the service sector, which will lead to

accelerated development of the service sector. In particular, regulations in the 5 promising service

industries of healthcare/medicine, education, finance, tourism, and software, which are favored by the

younger generation and have a high demand for investment, are undergoing an extensive review by a

joint public and private task force; and the Government is providing one-stop service by streamlining

the process from licensing to actual investment. For example, in the field of healthcare and medicine,

the Government is streamlining regulations for open investment hospitals within free economic zones

and stimulating tele-medicine alongside comprehensive service provision in the interest of accelerating

overseas expansion for medical facilities.

4. Creating Ventures through Regulatory Transition

Through a transition from positive to negative-list regulatory system, the Park Administration seeks

to guarantee as much freedom and autonomy as possible. We are focusing our policy capacities on

creating a virtuous cycle of startup and investment, and a venture ecosystem that allows for second

chances. For the creative economy to succeed, new ideas must easily translate to startups, and

successful businesses must be able to make profits early on to allow capital to flow to new startups. The

Government is therefore revising tax laws in order to boost 1st generation venture re-investment and

overseas investment in Korean ventures. We are also creating a robust circulation of investment capital

by stimulating M&As and creating new *KONEX markets. The Government is strengthening institutional

protection mechanisms to ensure that technologies that took considerable time and effort to develop

are not stolen, and actively supporting international patent acquisition for companies that have acquired

patents in Korea.

* The Korea New Exchange (KONEX) market was inaugurated in 2013 as part of the government’s “creative

economy” vision to foster the growth of business start-ups and venture firms in the financial sector.


5. Regulatory Reform for Stronger Regional Investment

In addition, in order to revive the stagnant regional investment, the Park Administration will remove

any obstacles to regional investment without hesitation. We will first undertake decisive deregulation

concerning land use in arable and mountainous areas and policies pertaining to industries that are

closely connected to regional economies, including construction, distribution and tourism. Creation of

high-tech and other specialized industrial complexes as well as remodeling of old industrial sites will

also begin in earnest. The Government will not only expand regional funding and financial support but

also incentives related to human resources and R&D for businesses located in these regions.

6. Creating a Civil Service Culture Conducive to Reform

The active participation of civil servants is paramount for the success of regulatory reform. Success

reform depends on the attitude, will, and principles of the civil servants working at each govern-

mental department. The Park Administration is creating a culture in civil service that is conducive to

regulatory reform. No matter how many times the government and the President step up, such re-

forms are doomed to fail without the will of civil servants who hold the key to the executive branch.

Diagram for Regulatory Reform

President

Prime Minister

Joint Regulatory Reform Bureau

Office for Regulation Coordination under the Office for Government Policy Coordination

Relevant departments (revision of ordinances, performance of tasks), local governments + front-line organizations (on-site execution, improvement of local

governance laws)

Engage businesses, consumers, and citizens for demand-oriented regulatory reform

Discussion between Ministers and Vice-Minister

Regulatory Reform Committee

11 Regulatory Reform

The website for regulatory reform allows citizens to voice their

opinions on everything from issues relating to regulatory reform,

civil servants who have contributed positively to reform to less

successful aspects of reform. Any opinions that citizens submit

are automatically transferred to the regulatory information portal

of the Office of Government Policy Coordination and processed

quickly. Any recommendations for improving regulatory systems

receive replies within 14 days from the relevant government

organizations concerning their applicability.

Blue House “Regulatory Reform Sinmungo” Banner, installed in April 2014

the atmosphere within the region remains tense. With the Korean Peninsula remaining divided for

70 years, North Korea continues with its nuclear program, contributing to the tension. There is a

rising potential for differences in opinion on past history leading to mistrust, while territorial disputes

are leading to tension and conflict. The possibility of an armed conflict is a looming possibility. This

is, truly, an Asian paradox. It is time to overcome this situation of latent crises and achieve peace

and cooperation within Northeast Asia.

The new order of Asia in the future will be determined by how we manage this Asian paradox, where

political and security cooperation falls behind even as national economic interdependence increases.

The Park Administration is pushing ahead with the Northeast Asia Peace and Cooperation Initiative with

the vision of overcoming such challenges. Now it is time to start with dialogue and cooperation on the

softer issues such as the environment, disaster response, nuclear security, energy security, and cyber

cooperation in order to build trust, and expand the scope of cooperation into other fields as part of the

process of Northeast Asian multilateral dialogue. If Northeast Asia can start with mutually beneficial

issues, larger issues and disputes can be solved with mutual interest in mind as well.

President Park proposed the Eurasian Initiative for the purpose of mutual prosperity on the Eurasian

continent. Eurasia is a place where Korea may reach for a new future and thus it is important to make

it a unified continent, a creative continent, and a peaceful continent. The Eurasian continent covers 12

time zones from east to west, and it is the world’s largest single continent that is home to 4.6 billion

people living in approximately 90 nations. The reason President Park proposed this Eurasian Initiative

is because it is extremely important to create a second Silk Road on the Eurasian continent, which

has become divided by the trials of history, and renew the continent as a place of communication and

openness, of creativity and convergence.

2. Eurasian Initiative

03 Global Cooperation for Co-prosperity

After the new administration took office on 25 February 2013, President Park proposed the Northeast

Asian Peace and Cooperation Initiative as a means to achieve trust and cooperation in Northeast Asia.

The Northeast Asian Peace and Cooperation Initiative seeks to begin with small but meaningful acts

of cooperation among the countries in the region in order to build a foundation of mutual trust. This

foundation will expand to become a multilateral mechanism that alleviates mistrust and tension. The

intention is to start with dialogue and cooperation on the softer issues such as nuclear security, climate

change, disaster response, cyber cooperation, and energy security and to expand from there.

The world order is changing rapidly, and thus the peace and stability of Northeast Asia is more

important than ever. From the perspective of diplomacy and security, the Korean Peninsula considered

as a place facing the most difficult geopolitical challenges in the world. However, if Korea can take

advantage of these geopolitical challenges in creating a new future, they may help us achieve peace

and prosperity. This is because the Korean Peninsula is a strategic point located at the intersection

of the Eurasian continent and the Asia-Pacific region. Already, Korea has overcome the division of the

peninsula and its geopolitical disadvantages to become the world’s 8th largest trade powerhouse,

with an annual trade volume of over 1 trillion dollars. Northeast Asia, which Korea belongs to, has

surged from war and poverty in the late 19th century and early 20th century, transforming into the

world’s dynamic region and a leader of world growth. If Northeast Asia can form a common market

economy like the EU, it will present remarkable opportunities.

Despite this incredible potential, the reality of politics and security in Northeast Asia has served to

hinder, rather than support, regional integration. To this day, Northeast Asia has not been able to

capitalize on the potential for cooperation. Countries in the region are growing rapidly in both eco-

nomic capacity and interdependence, yet tensions surrounding past history are rising. Even now,



1. The Asian Paradox and the Northeast Asian Peace and Cooperation Initiative

Global Cooperation for Co-prosperity

04

04Six Key Words of Park Geun-Hye Administration’s Major Policies 05 Global Cooperation for Co-prosperity

Remarks by Leading Figures

• Bronislaw Komorowski, President of Poland : “I wholeheartedly support President Park’s Trust-

building Process on the Korean Peninsula and Northeast Asia Peace and Cooperation Initiative”

(Oct. 22, 2013, Yonhap News)

• John Hamre, President of CSIS : “Korea is suited to be the arbitrator of Eurasian economic

cooperation … President Park’s Korean Peninsula Trust-building Process is impressive. Standing

ground when needed and providing a clear roadmap for cooperation, the process conveys what

South Korea wishes from North Korea. The Park administration is balancing multiple aspects

well.” (Oct. 21, 2013, The Korea Economic Daily)

President Park has described the Korea-US alliance as the most comprehensive and close-knit alli-

ance in the past 60 years, serving as the linchpin of stability and prosperity in the Asia-Pacific. Based on

the Joint Statement in Commemoration of the Alliance between the Republic of Korea and the United

States of America, adopted alongside President Obama during her visit to the United States in March

2013, the President has been adding depth to the comprehensive Korea-US strategic alliance with the

goal of establishing of a foundation for the unification of the peninsula, a system of peaceful cooperation

in Northeast Asia, and a global partnership that contributes to peace and prosperity around the world.

The Korea-US Alliance has contributed greatly to the peace and stability on the Korean Peninsula. At

present, the security alliance based on the Mutual Defense Treaty (signed on October 1, 1953) and the

economic alliance based on the KORUS FTA (effective March 15, 2012) serve as the two pillars of the

ever-developing comprehensive strategic alliance.

On June 2013, President Park announced the Joint Declaration for the Future Vision of Korea and

China along with President Xi Jinping. Since the establishment of diplomatic ties in 1992, economic

cooperation has led the development of relations between Korea and China. Trade rose by 36 times

from just under 6.3 billion dollars when diplomatic ties were established to 228.9 billion dollars in 2013.

China has become Korea’s largest trade partner, and Korea is China’s third largest trade partner.

President Park and President Xi Jinping held a summit meeting on March 2014, reaffirming mutual

interest in the denuclearization of North Korea. In addition, they voiced favorable opinions on the bila

-teral strategic dialogue on issues surrounding the Korean Peninsula, and agreed to further strengthen

dialogue and cooperation on peace and stability on the Korean Peninsula and make meaningful

progress on the denuclearization of North Korea.

Japan is an important neighbor in the process of achieving peace and prosperity in Northeast Asia.

Both Koreans and Japanese hope that Korea and Japan will work together towards peace and prosperity

in Northeast Asia.

There is a broad, pre-existing foundation of trust between the peoples of the two nations. The younger

generation of both Korea and Japan, and indeed many people, share in the Korean Wave and each

other’s cultures, coming closer in the process. Now both Korea and Japan must work towards becoming

Korea-US RelationsA

Korea-China Strategic PartnershipB

Korea-Japan RelationsC

Ever since it took office, the Park Administration has strengthened relations with the United States,

China, Japan, Russia, Asian countries, and Oceanic countries in order to alleviate tension and disputes

in Asia and to strengthen peace and cooperation. Furthermore, the Government is leading the way in

spreading universal human values such as freedom and human rights beyond the Korean Peninsula,

and it is also contributing to world peace and happiness by actively participating in the resolution of

global issues such as terrorism, poverty, and nuclear security.

3. Cooperation with Key Nations

genuine partners in cooperation, as desired by their respective citizenry. In the context of sharing a

proper perception of history, both nations must work to heal the scars of the past and strive for change

and responsible action in the interest of mutual future prosperity.

Not only do Korea and Russia both rely on each other as important economic partners, they closely

cooperate on the process of achieving peace, stability, and mutual prosperity in Northeast Asia. Both

countries are utilizing their potential to the fullest in achieving concrete, mutually beneficial coope

-ration. Furthermore, the two countries are working together towards a new future for the Eurasian

continent. The two countries are picking up the pace on projects that can be pursued right away such

as the Najin-Hasan Project. Concrete plans are being developed for new cooperative projects such as

shipbuilding and the North Pole Route. Bilateral financial cooperation involving the installation of a

funding platform for financing and investment for the development of East Siberia, and general indus

-trial cooperation including the agricultural and maritime sector, are also being pursued for mutual

benefit.

Since establishment of diplomatic ties between Korea and the EU in 1963, bilateral trade volume

has increased to 100 billion over 5 decades. Bilateral relations have advanced considerably as Korea

became the first Asian strategic partner of the EU in 2010. Now the relation has matured as Korea

and EU pursue a future of coexistence and co-prosperity. In November 2013, both parties adopted the

50th anniversary joint declaration. The Joint Declaration in Commemoration of the 50th Anniversary

of Diplomatic Relations between the Republic of Korea and the European Union covers strengthening

cooperation, sharing visions, and strengthening regional security and multilateral cooperation in the

interest of a more prosperous future, based on the strategic partnership.

Korea-Russia RelationsD

Korea-EU RelationsE

Summit with the US, China, Japan, Russia, and the EU


Social Infrastructure and Services

Economic Infrastructure and Services

Manufacturing (Industrial) Sector

Environmental Reports

Multi-sector

Supply Support/Basic Program Aid

Debt-related Support

Humanitarian Support

Administrative Support

Miscellaneous (includes undistributed resources)

45%

27.3%

9.1%

2.1%6.7%

2.4%5%

2%

0.3%0.1%

International Cooperation

Korea has sent a large number of volunteers, just behind the United States, to 50 countries around

the world through World Friends Korea. In addition, Korea is making an effort towards sustainable

development and poverty reduction in developing countries through international development pro-

jects. Korea will continue to work towards freedom, human rights, democracy, environment, and other

universal human rights.

Korea has increased its ODA consistently to aid the growth of developing countries. The total amount is

1,743.64 million dollars (tentative) as of 2013. In particular, with the accession into OECD/DAC, Korea

has become a recipient-turned-donor and the government is striving to achieve an ODA/GNI ratio of

0.25% as recommended by the UN.

F


“Knowledge Sharing Program (KSP)” Partners

Trade liberalization is a policy direction that is both effective and efficient. It does not add financial

pressure, while allowing for the achievement of economic stimulation, employment opportunities, and

consumer welfare.

As of now, Korea has nine effective FTAs with countries including the United States and the European

Union, and three FTAs with Colombia, Australia and Canada are in the final stage of conclusion.

By concluding FTAs with Vietnam and New Zealand as early as possible, the Park Administration will

increase the markets covered by FTAs to make the combined GDP of such markets reach more than 70

percent of the global GDP.

The Park Administration is making inroads into the Chinese market through the Korea-China FTA and

actively working on mega FTAs such as the Trilateral FTA, TPP, RCEP, and TTIP. We are also working to

establish an international trade order by coordinating bilateral FTAs, mega FTAs, and multilateral trade

liberalization.

4. FTA Outcomes and Prospects

ODA ratios for each field from 2008 to 2012

Partner Conutries Since 2004


The KORUS FTA, which took effect in 2012, has allowed for more trade, more jobs, and more invest

-ment. At present, the United States is Korea’s largest trade partner, with Korean investment in the

US exceeding US investment in Korea. The KORUS FTA is also important for the US. The KORUS FTA

serves as a bridge between the US and East Asia, providing an important opportunity to link the Asia-

Pacific as a single market, and serving as a critical axis of the US pivot to Asia.

Korea and China have achieved remarkable accomplishments for the past two decades following

establishment of diplomatic ties in 1992. The two countries have set forth a vision for new economic

cooperation and are now at the stage where they must go beyond quantitative growth towards qualitative

growth. Based on the cooperative relation built over time, the two countries must expand the scope

of economic cooperation, developing a mutually beneficial trade structure through additional bilateral

trade liberalization. The FTA between the first and third largest economies in East Asia will go beyond

the establishment of a bilateral free trade system and serve as an opportunity to establish a stepping

stone towards economic integration. To this end, Korea and China must sign an agreement that improves

upon the work done in the KORUS FTA, and reflect discourse on a cooperative system conducive to

healthier bilateral relations.

Status of Korean FTA (As of May, 2014)

Order of Effect Trade Volume (As of 2013, Unit: 100 Million USD)

9 in Effect (47 Countries) 3 Settlements Reached (3 Countries) 8 in Negotiation (16 Countries) 6 Cases of Preparation for Negotiations and Joint Research (14 Countries)

Economic Unions

(28 Countries)

(10 Countries)

(4 Countries)

(5 Countries)

(5 Countries) (6 Countries)

Signed on Apr. 8, 2014.

2. Strengthening Joint International Effort towards Denuclearization of North Korea

03 Unification Bonanza

In order to bring about lasting peace and next great leap forward for Korea, it is necessary to prepare

for unification to usher in a new era for the Korean Peninsula. Germany, which achieved unification first,

made preparations step by step for a successful unification.

A key obstacle to unification is the issue of North Korean nuclear weapons. North Korea’s nuclear tests

are a challenge to the survival and future of the Korean people. North Korea’s development of nuclear

weapons is a critical issue that not only hinders unification, but also threatens world peace.

Currently, North Korea is developing nuclear weapons and bolstering its nuclear arsenal in violation

of the NPT and UN Security Council Resolutions. If North Korean nuclear materials fall into the

hands of terrorists, it will pose a huge threat to world peace. No country will be free from the threat

of nuclear terrorism, and a single instance will result in pan-global disaster. A recent report from an

international research institute shows that safety issues in North Korean nuclear facilities are a cause

for great concern. At present, a number of nuclear facilities are concentrated in Yeongbyeon, North

Korea, and a fire in any one building has the potential to lead to a nuclear disaster far worse than the

meltdown in Chernobyl. The North Korean nuclear program is a cause for concern in all aspects, from

nonproliferation, nuclear security, and nuclear safety. As such, it must be dismantled for the sake of

world peace and safety.

During the Nuclear Security Summit on 24 March 2014, President Park issued a 4-point proposal for

the development of an international nuclear security regime in order to respond to the threat of nuclear

terrorism. The 4-point proposal is as follows: first, a comprehensive approach is necessary to ensure

synergy between nuclear security, nuclear arms reduction, and nonproliferation; second, nuclear

security measures remain limited to the national level, requiring the active development of a regional

discussion mechanism on nuclear security; third, the gap in capability between countries involved in

nuclear security must be closed; and fourth, a response measure must be developed to combat the

emerging threat of cyber terrorism against nuclear reactors.

The Park Administration is considering a number of options to cooperate with neighboring countries to

limit North Korea’s sophistication of its nuclear capacities and to achieve complete denuclearization.

If North Korea takes meaningful steps towards denuclearization, the two Koreas and the international

community may accomplish meaningful advancement towards building lasting peace as well as mutual

prosperity in Northeast Asia. North Korea should abandon its nuclear ambition and walk the path of



The year 2015 marks 70 years since

the division. The war stopped 60

years ago, but Korea remains the

only divided nation in the world as it

maintains an uneasy peace. For Ko-

rea to take the next step in globaliza-

tion, it must overcome the division

between North and South, the threat

of war, and the threat of nuclear at-

tack to achieve unification. Prepa-

rations must be made towards this

end. The Korean people have suf-

fered the pain and anguish of divi-

sion for far too long. The security of

the Korean Peninsula is at a critical

state. North Korea is pushing forth

with nuclear tests and ballistic mis-

sile development. It is threatening to

renege on the Armistice Agreement.

Territorial disputes and arms races

among Northeast Asian countries

are intensifying.

1. The Geopolitical Situation over 70 Years of Division

Unification Bonanza

05

Japan

China

Russia

the East Sea

Ulleungdo

Dokdo

DMZ

Pyongyang

Seoul

04Six Key Words of Park Geun-Hye Administration’s Major Policies 05 Unification Bonanza

peace and mutual development. It must recognize that the North Korea will be the greatest victim of its

nuclear program. The Park Administration hopes that North Korea will no longer turn its back to the

world, isolating itself, or consume precious resources while developing nuclear weapons and ballistic

missiles and instead work towards mutual development as a responsible member of the international

community.

President delivering keynote speech during the Nuclear Security Summit, Mar. 24, 2014

In order to achieve true peace and cooperation in Northeast Asia, the most important task is to create

a New Korean Peninsula. A New Korean Peninsula is a place of permanent peace, a place where

South Koreans and North Koreans exchange freely, and a place that contributes to a more stable

and prosperous Asia. Although the South and North remain locked in a vicious cycle of mistrust and

confrontation, it is more than possible to build a better relation, a New Korean Peninsula. For this to

happen, it is imperative to resolve the issue of North Korean nuclear weapons, which threaten peace

on the Korean Peninsula and Northeast Asia, and for North Korea to become a responsible member

of the international community. North Korea must listen to the voice of the international community,

that its possession of nuclear weapons is unacceptable. In order to revitalize its economy, North Korea

must engage the world and receive international investment. Recently, North Korea has shown great

interest in creating a special economic zone, but if it continues on its current path of nuclear weapons

development no country in the world, much less the Republic of Korea, will consider investing in North

Korea. If the North Korean regime is genuinely concerned about its citizens, then it must abandon

its futile ambition of dual economy-military defense. Instead, it should adopt international standards

and become a trusted partner capable of engaging its neighbors by acting more responsibly. If North

Korea abandons its nuclear ambition, if it chooses to change by becoming a responsible member of

the international community, the Republic of Korea will eagerly help North Korea, and the whole of

Northeast Asia will be able to coexist.

3. The Park Administration’s Vision for Diplomacy and Unification

A New Korean PeninsulaA

3 Diplomacy-Unification InitiativesB

President Park proposed the Korean Peninsula Trust-building Process, Northeast Asia Peace and

Cooperation Initiative, and Eurasia Initiative as her vision for diplomacy and unification. The synergy

created by the virtuous cycle of these three initiatives will contribute greatly towards the peaceful

unification of the Korean Peninsula, peace and mutual growth in Northeast Asia, and eventually towards

world peace.

The Korean Peninsula Trust-building Process is designed to overcome appeasement policies that relied

on the goodwill of North Korea and the hardline policies that relied solely on applying pressure. Based

on strong deterrence, the Process will create lasting peace on the Korean Peninsula by forcing North

Korea to pay for any wrongdoing and providing concrete opportunities and strong support if it decides

to be a responsible member of the international community. In short, the Trust-building Process is

designed to create a foundation for the development of North and South relations and a foundation for

peaceful unification based on the accumulation of trust. The Park Administration will use the Process

not only to achieve peace and stability on the peninsula but, as progress is made on the issue of North

Korean nuclear weapons, also to pursue cooperation within East Russia; the three northeastern

(Korean Peninsula Trust-building Process, Northeast Asia Peace and Cooperation Initiative, Eurasia Initiative)

02

03

Korean Peninsula Trust-building Process- Trust-building between the South and North

- Development of Inter-Korean relations- Establishment of foundation for peaceful unification

Northeast Asia Peace and Cooperation Initiative- Overcoming the Asian Paradox (tension and disputes in Northeast Asia)

- Dialogue and cooperation on “soft” issues- Multilateral mechanism for trust and peace in Northeast Asia

Eurasia Initiative- World’s largest single continent (Approx. 90 countries, 4.6 billion population)

- Transformation to a place of creativity and convergence through exchange and liberalization- Virtuous cycle between peaceful unification of the Korean Peninsula and co-prosperity in

neighboring regions

01

provinces in China; and trilateral cooperation between South Korea, North Korea, and Russia and South

Korea, North Korea, and China.

The Park Adminstration is also working on the Northeast Asia Peace and Cooperation Initiative, which

will alleviate tension and disputes within Northeast Asia, and the Eurasia Initiative, which will unify

Eurasia as a single continent through exchange and liberalization. Thus, we are working to achieve

a virtuous cycle through the unification of the Korean Peninsula and the mutual development of

neighboring regions.

The Northeast Asia Peace and Cooperation Initiative seeks to build a foundation of dialogue and

cooperation starting from issues such as climate change, disaster response, nuclear safety, and cyber

cooperation, expanding in scope as progress is made.

Given that making North Korea a member of the international community is an important aspect of

Korea’s foreign policy, the Eurasia Initiative seeks to unify the Eurasian Continent by linking the broken

network on the peninsula and removing any barriers to exchange. This will be coordinated with peaceful

cooperation in Northeast Asia. For the Eurasia Initiative to be a success, the walls of mistrust on the

Korean Peninsula, the gateway connecting Eurasia with the Pacific, must be removed.

Working under the premise that trust-building is the prerequisite of cooperation, the Park Administration

has set the responsible fulfillment of agreements and adherence to international standards as its

guiding principles for its work on the three initiatives.

The armistice that has been in effect for 6 decades has served to halt the war and preserve peace on the

Korean Peninsula. Section 1 of Article 1 of the Armistice Agreement defines the DMZ as a zone meant

to preserve the minimum level of peace. Contrary to what people might expect considering the name,

however, the DMZ has become the most militarized area in the world. President Park suggested the DMZ

World Peace Park in order to turn the DMZ into a place of peace and trust, removing weapons from this

heavily militarized strip of land. If the two countries, which had once brandished weapons at each other,

can work together to build the Park in adherence to international rules, processes, and agreements, it

will become square one for peace and unification of the peninsula. Furthermore, if the World Peace Park

is created in the DMZ, a legacy of division and conflict, it will turn the DMZ into a place of peace. This

will remove the memory of war in our minds and threat of provocation, and will allow for a new start in

transforming the Korean Peninsula into a place of trust, harmony and cooperation. Now the DMZ must

become a genuine demilitarized zone. The international community must be able to gather in this place

of peace, not just Koreans divided by the military borders. The DMZ World Peace Park can be a starting

point towards that goal. If continental and maritime nations can join the two Koreas in building trust and

cooperation, starting from the DMZ that divides the peninsula, the Korean Peninsula can change from

a hindrance to peace in Northeast Asia into a stepping stone for regional peace. The World Peace Park

must be built to dismantle the walls of mistrust and disputes for the sake of unification. If the Eurasian

railroad can be linked as a pathway of trust and peace on the Korean Peninsula, it will hasten the advent

of unification.

Building the DMZ World Peace ParkC


Three Major Initiatives for Peaceful Unification of the Korean Peninsula


KBS Survey on Unification Sentiment KBS Survey on Opinions on Unification, March 2014

Goldman Sachs Report (2009)A United Korea : Reassessing North Korea Risks

• 7 out of 10 Koreans believe unification is necessary• 48.4% believes it will remove the threat to security and

of war

• 7 out of 10 Koreans believe unification is necessary. 32.9% believed that it is “very necessary,” 40.1% “mostly neces-sary,” for a total of 73% who responded that unification is necessary. 22.4% responded that it is not necessary.

• For age groups, over 80% of respondents in their 50s and 40s considered unification is necessary while only 57.1% of respondents, the lowest percentage, in their 20s considered it necessary.

• Of the reasons given for why unification is necessary, security and removal of threat of war constituted the majority at 48.4%. Other reasons included the unity of Korean people and economic prosperity, in that order.

• If the Korean Peninsula is united, considering North Korea’s potential, its GDP measured in dollars will rival, possibly exceed the GDP of G7 nations with the exception of the United States in 30 to 40 years.

• The combination of the Republic of Korea’s technology and capital and North Korea’s natural resources and human capital will have a powerful synergistic effect.

Von Weizsacker, first president of Germany after unification“An unprepared unification is a disaster, a prepared one a blessing.”

Warren Buffett“If North and South Korea unite, I will stake all my money on the Korean Peninsula. It is quite worth it.”

GDP Power Index

Republic of Korea Republic of KoreaUnited Korea United Korea

1.21world ranking 14th

1.71world ranking 10th473 billion

656 billion

What do Koreans

think about unification?

32.9%

40.1%

22.4%

Very Necessary

Mostly Necessary

Not Necessary

4. Unification Bonanza and Preparations for a Unified Korean Peninsula

Unification is a national goal that, if achieved, will end 70 years of division and bring happiness to the

peninsula. It is the hope of all Koreans, too. Unification is, in fact, the fundamental goal of making

normal what is abnormal. The unification that Koreans seek must be a peaceful unification where every

Korean can contribute to human dignity, enjoy freedom and rights, and share the benefits of economic

development and cultural enrichment of the Korean peoples. It cannot be just about the South and

North becoming one. It must be the first step on the grand journey towards building a Korean Peninsula

that can contribute to world peace and happiness for humanity.

There are those Koreans who believe that unification will be too costly or that unification is not

necessary. However, to speak plainly, the unification will be a bonanza. A world-renowned investment

expert once said, “if South and North Korea unite, I will stake all money on the Korean Peninsula.

It is quite worth it.” The Korean Peninsula will make great strides following unification. The South

Korean economy will grow considerably. North Korea too will develop rapidly. A unified Korea, free

from the fear of war and nuclear weapons, will be able to contribute more to global issues such

as the preservation of world peace, non-proliferation, environment and energy, and development.

In addition, as a new logistical hub connecting the Pacific and Eurasia, it will contribute to world

economic development.

Unification policies must be pursued under the consensus of the people. It can succeed only with the

trust and support of Koreans. As the history of division grows longer, more and more people become

skeptical about unification. In particular, it is the reality that the younger generation lacks interest in

unification. This phenomenon must not be accepted as simply the result of changes in our time, but

rather we must propose a realistic vision for unification while raising awareness. The Park Geun-hye

Administration seeks to gain the trust of the Korean people by bolstering government transparency.

While some information cannot be disclosed considering the sensitive nature of South and North

relations, the government is informing Koreans about the process of policy implementation and boosting

the efficiency of North Korean policies using a foundation of strong public support.

Context for Unification BonanzaA


Launch the Committee for Unification Preparation Directly under President

B

The Park Administration is doing its best to achieve the unification of the Korean Peninsula. As part

of this effort, the Government will launch the Committee for Unification Preparation, which will report

directly to the President, in order to pursue unification in a structured and constructive manner. The

Committee for Unification Preparation prepares for the unification of the Korean Peninsula and is

working to expand the scope of dialogue and civilian exchange between the South and North. Civilian

experts and civic groups in the fields of diplomacy, security, economy, society, and culture form

a national consensus on unification and develop a blueprint for a unified Korea. It is important to

prepare for unification so that we do not miss out on the historic opportunity for unification when it

comes. Realistically, it will not be easy to dismantle the wall of division. However, it is our mandate

as people who dream of and prepare for a better future. In order to achieve the dream of peaceful

unification, we must prepare step by step. The first president of a unified Germany, von Weizsacker,

once said that “an unprepared unification is a disaster, a prepared one a blessing.”

President Park made three suggestions to the North for the peaceful unification of the Korean

Peninsula. (Dresden Declaration, 28 Mar. 2014)

First, she suggested that we must take up the agenda for humanity–the concerns of every people.

Humanitarian issues of the South and North must be resolved and the suffering of the families torn

apart by the division must be eased.

Second, she suggested that we must pursue together an agenda for co-prosperity through the building

of infrastructure that supports the livelihood of people. South and North Korea should collaborate to

set up multi-farming complexes that support agriculture, livestock and forestry in areas in the North

suffering from backward production and deforestation.

Third, she suggested that we must advance an agenda for integration between the people of South and

North Korea. As the state of division persists year after year, the language, culture and living habits of

the two sides continue to diverge. If there is to be real connection and integration between the South and

the North, we must narrow the distance between our values and our thinking. To achieve this, those from

the South and the North must be afforded the chance to interact routinely. We will encourage exchanges

in historical research and preservation, culture and the arts, and sports – all of which could promote

genuine people-to-people contact - rather than seek politically-motivated projects or promotional

events. Should North Korea so desire, we would be happy to partner with the international community to

share our experience in economic management and developing special economic zones, and to provide

systematic education and training opportunities relating to finance, tax administration and statistics.

We could also look at jointly developing educational programs to teach future generations and cultivate

talent, for it is in them that the long-term engines to propel a unified Korean Peninsula forward will be

found. President Park proposed the establishment of an ‘inter-Korean exchange and cooperation office’

that would be tasked to realize these ideas.

From a long-term perspective, it can lead to the development of an economic community that will allow

the free exchange of people and capital across the border as well as a cultural community where the

people of the two sides share culture and unite as one. By realizing small-scale unification wherein

the people of the two sides are united as one economically and culturally, we will be able to live much

more peacefully and happily. With steady development in small-scale unification, we will be able to take

gradual steps toward large-scale unification, specifically political and institutional integration.

Proposal to the North for Peaceful UnificationC

President Park visited Brandenburg Gate on Mar. 26, 2014 and made speech at Dresden University of Technology on Mar. 28, 2014


Concrete Measures to Build a Foundation for Unification (3 Points)

D

President Park elaborated on concrete measures concerning the 3 points for building a foundation for

unification.

First, she stressed the important of peace on the peninsula. Security posture must be airtight in order

to ensure Koreans can live without fear. In particular, as long as the threat of North Korean nuclear

weapons exists, there can be no proper economic cooperation or exchange between the South and

North. There can be no mutual development for the South and North, no mutual development for the

region. As such, if the North abandons its nuclear ambition and becomes a responsible member of the

international community, the Republic of Korea will work with the international community to provide

aid. President Park is strengthening international cooperation to ensure progress towards this path,

and is considering a variety of solutions in the process.

Second, the Government is strengthening humanitarian support to the North. It is part of the effort

to close the identity gap between the South and North. This is important because the South and the

North, having existed under different systems for so long, have diverged considerably in their mindsets

and lifestyles. In particular, many North Koreans suffer from extremely poor living conditions, making

it imperative to continue increasing humanitarian aid and expanding healthy civilian exchange in

order to expand the scope of mutual understanding between the South and North. For example, if the

experienced European NGOs and the Korean NGOs pool their strengths and support the agricultural

and livestock industry of North Korea, it will not only help the residents of North Korea in practical

terms, but will also build trust and bring the two Koreas closer.

Third, it is important to strengthen international cooperation in order to expand a consensus for the

unification of the Korean Peninsula. Unification cannot be achieved by the two Koreas alone. The

consensus, support, and cooperation of the international community are necessary for success.

President Park took the opportunity to engage in sincere dialogue about unification through summit

meetings with key nations such as the United States, China, and Russia in 2013 and 2014 and succeeded

in building a consensus on unification.

President in the Korean Wave fan event in France, Nov. 3, 2013

03 K-POP and Cultural Enrichment

Korea is notable for being an ethnically homogeneous country over 5,000 years of history. 5,000 years

of history have created a Korean culture that is both beautiful and unique. Furthermore, it has the

power to move people. Korean culture incorporates global aesthetic values into the Korean spirit to

create new works of art.

『International Status of the Korean Wave』

| CURRENT Status

| Growth of Korean Wave Clubs (2012 to 2013)

| Regional Korean Wave Clubs

AsiaOceania

Americas Europe AfricaMiddle East

464

228

234

377

142213

36

76

2012 2012 2012 20122013 2013 2013 2013

234(6.8 million)

464(1.25 million)

76(60,000)

213(1.17 million)

Asia, Oceania

Europe

Americas

Africa, Middle East

Source : “The International Status of the Korean Wave I, II,” released by the Korea Foundation on December 2013.

As study of 96 countries shows that a total of 987 Korean Wave clubs exist in 78 countries, with a mem-

bership of 9 million. (As of July 2013)

In the 21st century, cultural influence translates into national strength, and individual imagination

translates into content. In other words, we live in a time where cultural imagination and creativity

correlate to national development. The government is working to create an era of cultural enrichment

where domestically, the renewal of the Korean spirit and soul allows all Koreans to enjoy cultural

prosperity in their daily lives, and internationally, culture brings Koreans and people around the world

together. The Park Administration is transcending differences in ethnicity, language, ideology, and

tradition to create a cultural age of a harmonious world, one that contributes to peace and prosperity

for all humanity. This is because culture is of paramount importance in the 21st century: cultural

enrichment enhances national prestige and personal quality of life, and culture is the ideal medium for

global sharing and exchange.

Korea’s K-POP artists and culture reach beyond the barriers of language and nationality, providing

entertainment to people around the world. The Korean Wave has gained international popularity, and

it is a source of pride for Koreans. Such a success was built upon the foundation of 5,000 years of tan-

gible and intangible Korean cultural heritages and spiritual culture.



1. Beginning of the Era of Cultural Enrichment

2. Context for K-POP (Korean Wave) and Global Popularity

K-POP and Cultural Enrichment

06

04Six Key Words of Park Geun-Hye Administration’s Major Policies 05 K-POP and Cultural Enrichment

The French newspaper, Le Figaro, carried an article titled 'Korean Wave Sweeping across the World'

on December 29 through 30, 2013 as follows : "The rise of K-POP star Psy heralds a new era for the

Korean Wave. Recording over 1 billion hits, Psy has exceeded all expectations and is spearheading

Korea’s transformation to an exporter of movies and TV dramas. The Korean Wave has been popular in

Asia since the 90s, and it is now expanding into European and American markets: a fact reflected by

the number of people wanting to learn the Korean language."

Upon taking office on February 25, 2013, President Park adopted cultural enrichment as one of the

four major government agendas. In 2013, the first year, the Park Administration established the legal

and institutional foundations for cultural enrichment. It has since pursued diverse cultural enrichment

policies to allow Koreans to enjoy culturally-enriched lives, with tangible benefits for the people and

artists.

In 2013, the Park Administration launched the Presidential Committee for Cultural Enrichment and

announced eight major tasks including the advancement of humanities and spiritual culture and

bolstering the resilience of regional culture. In the interest of building a legal foundation for cultural

enrichment, the government has passed 4 key laws, which the culture and arts industry has long

desired, including the Framework Act on Culture, Regional Culture Promotion Act, and Welfare Law

for Artists.

The Presidential Committee for Cultural Enrichment has toured the entire country, including Busan

and Gwangju, in 2013 and 2014, for the purpose of regional cultural development and popularization. It

organized discussions on regional culture policies, visited cultural sites and culturally neglected areas

to gather the diverse opinions of regional artists and residents on regional cultural enrichment. Based

on these efforts, the government passed the Regional Culture Promotion Act. In 2014 it drew up a basic

plan for regional cultural enrichment, expanding support for regional culture and arts enrichment

and support for regional art organizations to ensure that regional organizations become the agents of

culture and arts enrichment. This will help build regional brands based on culture; allow them to be

used as resources for cultural tourism, stimulating regional economies; and help create jobs in the

regional economy.

3. Cultural Enrichment Policies

Asia & Oceania America Europe Africa & Middle East

Nepal 0 Guatemala 38 Greece 1 Nigeria 0

New Zealand 1 Nicaragua 6 Netherlands 3 Republic of South Africa 0

Taiwan 7 Dominican Republic 9 Norway 3 Lebanon 0

Laos 0 Mexico 70 Germany 16 Libya 1

Malaysia 6 United States of America 26 Denmark 0 Morocco 7

Mongolia 5Bolivarian

Republic of Venezuela

66 Russia 22 Bahrain 0

Republic of the Union of

Myanmar1 Brazil 36 Romania 17 Saudi Arabia 1

Vietnam 9 Argentina 20 Belgium 3 Senegal 0

Brunei 5 Ecuador 6 Belarus 7 United Arab Emirates 12

Sri Lanka 0 El Salvador 16 Bulgaria 5 Algeria 2

Singapore 6 Honduras 6 Serbia 1 Ethiopia 0

Afghanistan 0 Uruguay 8 Sweden 3 Oman 0

India 2 Jamaica 3 Switzerland 1 Jordan 1

Indonesia 13 Chile 7 Spain 10 Uganda 0

Japan 51 Canada 17 Slovakia 4 Iraq 1

China 52 Costa Rica 14 Ireland 2 Iran 0

Cambodia 0 Colombia 20 Azerbaijan 1 Israel 6

Thailand 47 Trinidad and Tobago 1 United Kingdom 15 Egypt 17

Pakistan 0 Panama 34 Austria 1 Qatar 0

Fiji 0 Paraguay 6 Uzbekistan 5 Kenya 2

Philippines 11 Peru 55 Ukraine 4 Kuwait 1

Australia 18 Italy 5 Tunisia 25

Czech 1

Kazakhstan 2

Croatia 1

Turkey 7

Portugal 4

Poland 5

France 30

Finland 1

Hungary 33

234 464 213 76

Current Status of Korean Wave Clubs According to Region


As part of the cultural enrichment policies, the Park Administration has designated the last Wednesday

of each month, starting January 2014, as a day for culture in recognition of the importance of integrating

culture into daily life. It is providing support citizens so they may watch performances or visit exhibitions

at a discount or for free.

The Park Administration is expanding support for creative endeavors to ensure that artists can focus

on creative work, and it is working on building a creative safety net. In order to improve the creative

environment for artists, it is securing spaces for creative work, strengthening support policies for

creative activities, and improving welfare for artists. To achieve this, the government increased cultural

budget in 2014 to 5.3 trillion won, 1.5% of total government expenditure.

Of the various facets of industry, culture is best suited to realize a creative economy. The Park

Administration is supporting creative work in diverse genres, leading the creative economy by nur-

turing cultural content industries that converge culture and cutting edge technologies, and creating

new jobs. A large amount of Korean Wave content has gained success overseas, proving the export

competitiveness of Korea’s content industry. In order to continuously improve said competitiveness,

the government is also bolstering support for export financing and local marketing. K-POP, movies,

and the cultural content industry have the potential to become high value-added industries. Therefore,

the government is increasing investment and financing support for cultural content, and it is creating

facilities to support creative work where content-creators can commercialize ideas across genres:

the Content Korea Lab. It is providing the necessary support for balanced development of creation,

distribution, and enjoyment. The government is making an effort to nurture creative talent in the field of

art to ensure the globalized advancement of Korean art.

The Five Tasks of the Content Industry Development Strategy

1_Building a foundation for Creative Commercialization: In order to provide a one-stop content support

system, the Government created “Content Korea Labs” (26 planned for construction by 2017, support

for over 400 prospective startups by 2017). It has created a one-stop content information portal that

provides all information relating to the content industry, from cultural prototypes, story DBs, and foreign

market information.

2_Expansion of tailored financial support: In order to expand financial support tailored to the

characteristics of the content industry, the government has created the Planning and Development

07 K-POP and Cultural Enrichment

Fund (20 billion won), which invests from the planning phase; the 10-10-10 fund (over 50 billion won

from 2015 to 2017). It is a fund designed to provide support to 90% of the companies (less than 1 billion

won in capital, less than 1 billion won in sales, less than 10 employees) in the content industry, which

is difficult to break into, which supports small content creators; and the Korea-China Joint Global Fund

(200 billion won in 2015), joint support and creation by Korea and China to help the expansion of

creative content in the Chinese market. Joint creations are considered Chinese content, and thus can

be distributed throughout China without being limited by the import quota. The government has created

an evaluation system to determine the monetary value of intangible content. (2015)

3_Nurturing creative talent: The government will establish creative Meister Schools. (Planned to open

in 2016). Priority given to gaming content Meister Schools, given the maturity and human capital in that

field It will also open convergent creative content academies. (2015) Current plans involve the dramatic

expansion of creative human capital mentoring systems which allow aspiring creators to learn from the

finest mentors of each field, much like apprenticeships.

4_Global Expansion of the Korean Wave: The government plans to enact the Narrative Industry

Promotion Law. (2014) It is working to commercialize narrative works including the establishment

of story exchange platforms. (Story Labs built in three regions in 2014. Story Creation Clusters to be

established from 2015-2017. Story exchange platforms to be created in 2015) New markets for the

Korean Wave are being looked at, including Latin America. A Korean Wave map is being worked on

which provides tailored information to export companies based on collection and analysis of big data

relating to the Korean Wave.

5_Creation of a fair trade environment for the content industry: Cases of violation of fair trade occurring

in the process of film making, distribution, and screening are being worked on. Legal protection

mechanisms are being created to safeguard the right of likeness of celebrities and artists. Through the

establishment of an organization to discuss improvement of broadcast subcontracting systems, the use

of standard contract forms is being reviewed and violations of fair trade in the broadcasting industry

are being fixed. Regulations on animated advertisements are being worked on. A healthier copyright

ecosystem is being created through the strengthening of copyright laws both at home and abroad.

Six Keywords of Park Geun-Hye Administration's Major Policies (English)

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