In South Korea, economic growth has once again become a national agenda following the failed promise of achieving a 7% growth rate during the Lee Myung-bak administration, leading subsequent governments to explore different priorities. While the Park Geun-hye administration focused on happiness and the Moon Jae-in administration promoted 'income-led growth' which was seen more as a redistribution policy, President Lee has consistently advocated for a revival of state-led growth as a significant economic discourse after an 18-year hiatus. However, given the declining potential growth rates and ongoing geopolitical crises, the government's assertion that it can guarantee growth raises concerns about the feasibility of such ambitious goals. The context suggests that navigating the ongoing transformation propelled by artificial intelligence, digital technology, and green initiatives will be critical for success in state-led growth.

The government's current focus involves a comprehensive redesign of Korea's economic structure, aiming to foster new industries while actively influencing their direction and geographical distribution to accelerate changes and maximize efficiency. Historically, such active economic intervention by the state has been referred to as industrial policy, which has typically been seen as a tool for latecomer countries to catch up. Countries like Germany and Japan excelled in this area, and nations within Asia, including South Korea, benefitted substantially. However, the rise of neoliberalism and the establishment of the World Trade Organization (WTO) in 1995 contributed to a taboo around industrial policy, especially after South Korea's experience with the 1997 'Asian Financial Crisis.' During that time, the restructuring that accompanied IMF assistance led to a painful split from the industrial policies that had previously contributed to what was known as the 'Miracle on the Han River.'

As the government looks to innovate, there is a recognition that previous industrial policies were responses to market failures, but since then, a belief has taken hold that government failures—due to information asymmetries and bureaucratic inefficiencies—prevent optimal resource allocation. The struggle to revive effective industrial policies in this new economic climate highlights the complexities faced by the Lee administration. There is an urgent need to reassess the relationship between the state and the economy, and whether a return to such policies can adapt to the current global economic landscape characterized by rapid technological advancements and shifting geopolitical dynamics, ultimately determining the potential trajectory of growth in South Korea.