Q. It has already been one year since you received the Nobel Prize in Economic Sciences. Please accept our belated congratulations. First, could you give us your perspective on the emerging paradigm in the global economy?

A. People often say that the once-strong norms-based order has completely collapsed in the past nine months. However, I do not see it that way. There have always been conflicting interests behind this norms-based order, and struggle has always accompanied its maintenance. There have, of course, been exceptions. But rather than something entirely new emerging, I believe we are seeing existing tensions manifest in different ways or become more pronounced.

Q. How do you view globalization from an economic perspective?

A. The connection between globalization and economic development is truly remarkable. Looking at the trajectory of global real exports since 1913, it is clear that explosive globalization, particularly since the 1980s, has fueled global economic growth. Research and real-world examples have repeatedly confirmed that globalization, international exchange, and expanded exports have accelerated economic development. Take the World Bank’s 1993 report The East Asian Miracle, for example. After World War II, countries such as Japan, Singapore, Hong Kong, and Taiwan, as well as China after its reform and opening-up in 1978, all grew through close interaction with the global economy. Korea stands out as a prime case of the East Asian miracle, demonstrating a key positive effect of globalization: the raising of national income through expanded international exchange.

Q. Despite the positive role of globalization in driving economic growth, why has there been a recent backlash against it in the United States?

A. While globalization has benefited people on average, many Americans felt that the period of rapid globalization did not provide them with tangible benefits. In the US, high school dropouts, as well as those who graduated but did not attend college, experienced real wage declines over the past 50 years. This outcome has multiple causes, including deindustrialization, structural changes in the labor market, and technological shifts. Although globalization is generally viewed as a “positive development,” it is undeniable that it has also exacerbated inequality in the United States. The benefits of globalization were not evenly distributed, and this dissatisfaction has manifested as political conflict.

Q. Korea was under an authoritarian regime in the 1970s and 1980s. How do you interpret Korea’s economic success before its transition to inclusive politics and economics?

A. To properly understand Korea’s case, we must consider the continuity between authoritarian achievement and democratic transition. Korea’s early growth under an authoritarian regime is particularly interesting. President Chung-hee Park’s singular focus on economic growth and his shift to export-led development are especially noteworthy. This strategy enabled large conglomerates such as Samsung and Hyundai to grow. The question, however, is whether that path was sustainable. Would Korea have continued its economic ascent had the dictatorship persisted? Patent filings surged in the 1990s, indicating that creativity began to flourish in earnest after democratization in 1987. Korea’s current cultural achievements likely would not have been possible under an authoritarian system. In the end, it was the transition to democracy that allowed the accomplishments of the 1970s to continue. This shift enabled citizens’ potential to fully bloom.

Q. What are your views on the future of free trade and the global order?

A. The benefits of free trade and globalization are clear. The problem is that the traditional global order that has been maintained for the past 50 years can no longer coexist with the current U.S. political economy. Moreover, it seems unlikely that the political coalition that once supported globalization at its peak will reemerge in the United States. Some argue that policy-driven compensation for the groups that missed out on the benefits of globalization would suffice. However, the U.S. political culture does not allow for the kinds of policy instruments that might work elsewhere.
We face two options. The first is to rebuild globalization without the United States, which would mean all parties move forward while maintaining balance. The second is to consider how to design a new global order that can coexist with the U.S. political economy. If the United States wants to participate in the system, how should that be achieved? I do not claim to have the answer, but it is an extremely interesting question.
We must ask ourselves: “Can we proceed without the United States? Or is there a different way to involve the United States?” This is the moment for a global reboot.

Q. You mentioned movements to rebuild globalization without the United States. What opportunities and risks do you see in the Asia-Pacific region? What roles can APEC and PECC play?

A. There is still value in engaging the United States. It has reaped immense benefits from trade and will continue to depend on other countries, including APEC member states. Ironically, these countries promoting trade without the U.S. may end up demonstrating to the United States just how necessary they are. It is a strategy to encourage the U.S. to take a longer-term view and reassess globalization.
This is where APEC becomes crucial. Every country has its own interests and naturally pursues them, but those individual interests can sometimes harm the common good. APEC can make the costs of such behavior clear, help mediate issues between nations, and guide them toward better consensus.

Q. How can middle powers like Korea contribute to maintaining a norms-based, open international order?

A. As you know, Korea has gone from an aid recipient to a global innovation leader. Its technological creativity has yielded success in mobile phones, automobiles, and semiconductors, while its cultural creativity has expanded the nation’s influence through K-pop and K-beauty. This is a textbook example of how inclusive institutions lead to innovation and prosperity. In that sense, Korea serves as a very important model. Korea’s creativity itself is both a change and an achievement.

Q. What challenges does the changing global order present to Korea?

A. Since World War II, the world has experienced an extraordinary period of peace, what we might call a time of Cold War and prosperity. This was the result of international collaboration through institutions such as the United Nations, the World Bank, and the IMF.
We must learn from the past and respond to the challenges ahead, including Russia’s invasion of Ukraine, rapid technological advancement, and climate change. While many are preoccupied with the shifts in U.S. economic policy that have been seen over the past six months, I do not consider that the greatest issue. U.S. policy direction can change, but unless the world joins forces for a massive collective effort, climate change will not be resolved. This is not a problem that any single nation can solve on its own, which is why international cooperation and institutions like APEC are so important.

Q. Geopolitical tensions, including the U.S.–China rivalry, trade disputes, and technological supremacy battles, are reshaping the economic order. What must Korean companies maintain or develop to secure competitiveness?

A. Korea has made remarkable innovations across various sectors over the past few decades, but some assessments suggest it has fallen slightly behind in the recent AI race. The same could be said for Europe. I suspect this may be due to limitations in investment infrastructure. Advancing AI requires substantial capital and investment, including both human capital and physical infrastructure such as data centers. In the United States, a robust financial market has played a major role in supporting AI development.
Korea achieved success in the automotive sector by leveraging its deep understanding of markets and producing country-specific models. Similarly, Korea should develop its own AI model. That said, the AI industry will require a new approach. Just as the Korean shipbuilding industry made its leap by attracting foreign capital and technology, I hope that bold investment and collaboration, combined with Korea’s strengths in creativity and innovation, will lead to a successful Korean model in the AI era.

Q. Given AI’s growing impact on national competitiveness, Korean companies will need to leverage strengths or target niche markets. What opportunities do you see?

A. China is currently adopting AI models that can be broadly applied in daily life, allowing many people to naturally encounter AI in everyday settings. In contrast, the United States is focused on developing Artificial General Intelligence (AGI), which has not yet achieved wide practical application. Just as the United States and China are each developing AI in their own way, Korea must consider how it can differentiate itself. It is difficult to make a definitive statement, but I firmly believe Korea must pursue a distinct path from other countries.

Q. You mentioned earlier that adaptability will be key for Korea’s entry into the global AI competition. Korea is now facing major demographic shifts due to population aging and declining birthrates. What implications do these trends have for the labor market and Korea’s growth potential?

A. Much of East Asia is experiencing population decline. According to the UN’s 2100 population forecast, China’s population is expected to shrink to half its current size, and Japan’s population is projected to drop from 124 million to 77 million. Such demographic changes place enormous strain on sustainability, including on pensions and national debt. In Asian cultures where family caregiving is a powerful social norm, these challenges are even more acute.
There are two labor market solutions in this context. First is the integration of robotics and AI. In countries facing labor shortages due to population decline, robots will play a critical role. They could become the foundation for economic sustainability and wealth creation. Korea is highly likely to replace its shrinking workforce with technology and robots. However, the distributive outcomes will depend on who owns those robots, so thoughtful policymaking will be essential. The second solution is to introduce foreign labor. In the 1970s, the UAE had abundant resources but suffered from labor shortages. It began bringing in foreign workers through politically acceptable means. Korea should consider this approach when seeking solutions to productivity challenges. The key is ensuring that the process takes a form Korean society can accept.