Innovation Strategies for the Transition to the New Economic Paradigm
Over recent decades, the Korean economy has experienced three economic crises: the IMF crisis, the Global Financial Crisis and the COVID-19 pandemic. Even though those economic crises had different causes, they have had (and continue to have) drastic repercussions in the Korean economy. In the case of the IMF crisis, which occurred in 1997 due to the failure of foreign currency reserves in Korea, industrial restructuring was accelerated across the whole economic system. In comparison, the Global Financial Crisis was caused by a global credit crunch triggered by subprime mortgages in the USA. This crisis also had a large and serious impact on the Korean economy, owing to its high dependency on foreign economies. As indicated in Figure 1, GDP growth rates in 1998 and 2009 were -5.1 percent and 0.8 percent, respectively, which shows the significance of the impacts of those crises on the Korean economy.
Compared with previous economic crises, the SARS-CoV-2 virus that ignited a global pandemic at the end of 2019 has made very serious on social, cultural, political, educational, and national systems. In Korea, from an economic point of view, the pandemic was manifested through a rapid slowdown in the GDP growth rate, to negative one percent in 2020, as shown in Figure 2. At this time, when we are facing a most serious economic crisis, it is necessary to tackle the problem of how to overcome it by learning from how previous economic crises pushed the Korean economy in the right direction.