In the 2010 economic policy plan report, the government stressed that it will shift away from a manufacturing-oriented growth strategy to pursue growth based on high productivity and strong domestic demand. It said the policy shift is being made because the old growth model has reached its limits.
Experts generally hailed the idea of the growth strategy shift, but pointed out that policymakers should come up with more detailed plans about how to reform structural problems of the economy to nurture domestic demand.
"The government did mention the need for a 'growth paradigm shift,' but it didn't say anything about how to shift the focus from conglomerates and exports to SMEs and domestic demand," said Kim Sang-jo, a professor of economics at Hansung University.
"The economic policy plan only focuses on stabilizing the economy and seeking new growth models. It lacks plans as to how it will reform chaebol or the financial system to achieve new growth," he said.
The 2010 economic policy plan mainly deals with labor flexibility and the public sector in terms of reform efforts.
According to the government's report, Korea will enhance labor flexibility through a possible state support for companies who expand the flexible work-hour system for a limited time.
However, the government did not mention what kind of state support it will be.
Sohn Min-joong, research fellow at the Samsung Economic Research Institute, said even if the government offers financial support for the flexible working system, companies will not welcome the support if it is only temporary.
It will not be easy to tackle the labor flexibility issue in a short time, although the issue has been dragging the Korean economy since the 1997-98 Asian financial crisis, he said.
"Korean industries are still awash with bad practices in terms of discrimination against part-time or irregular workers," he said.
Bae Sang-kun, director of the economic research division at the Federation of Korean Industries, said Korea's policy focus on creating jobs and boosting the service industry is timely, adding that the government needs to be more careful in implementing exit strategies.
Although the Finance Ministry said it would keep its expansionary fiscal stance until the first half of next year, it made sure to withdraw some of the emergency measures taken to fight the global financial crisis.
Bae was referring to the government's cancellation of tax credits on the business sector's spending in facility investment from next year, which faced strong opposition from the business sector.
"If a strengthening local currency hurts corporate profitability next year, the business sector's facility investment will be more discouraged by the cancellation of state support," Bae said.
Regarding exit strategies, Kim offered the opposite view to Bae.
Kim said that implementing exit strategies too late will reproduce inflation and asset bubble concerns, exposing the local economy to a bigger risk of a double-dip recession.
"I think the Lee Myung-bak government's economic focus next year is still set on too much growth," Kim said.
The green growth strategy unveiled yesterday was little different from what has been announced before, except that the government will start nurturing maritime wind power and rechargeable batteries industries in earnest and that the economy-related ministries will set an energy saving target.
As for the government's efforts to enhance Korea's global standing through hosting the G20 Summit in November, SERI's senior research fellow Kwon Soon-woo said that the G20 story is somewhat irrelevant to be included in the six economic goals.
"Of course the G20 Summit would be important for the government, but I don't understand why it has to be included in the economic goals," he said.