The Korean Economic Forum
Fair Society and Sustainable Economic Development: Policy Direction for Korean Economy
Biung-Ghi Ju (Seoul National University)Year 2019Vol. 12No. 2
The outdated economics of equity and growth, emphasizing the efficiency lossof redistributive government intervention and the trade off between equity andgrowth, is inconsistent with the experience of developed economies in recent 30years and the experience of economic development in developing countries.Conventional wisdom of development economists that low inequality, higheducation and human capital accumulation served as the driving force ofeconomic miracles in Japan, Korea, and Taiwan assumes various causalmechanisms among inequality, redistribution and economic growth. Recenttrends in economics of equity and growth emphasize the study of these causalmechanisms. It has provided a deeper insight into the relationship betweendistribution and growth, which classical economics was unable to account for.Inequality can act as a barrier to sustainable development and economic growth,and government redistribution can create greater social benefit than its ownefficiency loss, and thus drive economic growth. Based on these researchachievements, major international organizations have emphasized the importanceof inclusive state systems. The current status of Korean society, exhibiting highinequality and polarization, ever-growing hierarchical disparity and opportunityinequality, high perception of corruption and low social trust, indicates theurgent need for developing an inclusive state system. Strengthening welfaresystem, social safety net, and redistributive role of the state and establishing afair market order is necessary for that purpose. In addition, sufficient stateinvestment in early childhood care, child care, primary, secondary and highereducation has the dual effect of not only reducing inequality of opportunities butalso strengthening the human basis for sustainable economic growth.