Korea Development Institute (KDI), South Korea‘s leading think tank, will release a report on reforming the country in December.

The report will contain prescriptions for restoring the country’s growth potential by improving productivity through innovation across various sectors of society.

Maeil Business Newspaper has learned on Sunday that KDI plans to publish an extensive 400-page reform report, which it has prepared for a year under the leadership of President Cho Dong-chul.

Other internal and external researchers participated.

“We have been exploring innovative and reform measures since the beginning of the year to enhance productivity in our society,” said a KDI official. “The report will present innovation tasks for different sectors to boost our productivity and growth potential.”

The Korean economy faces challenges as the country is suffering from rapidly progressing low birth rates and aging population, compounded by massive debts held by businesses, households, and the government.

A survey conducted by the Federation of Korean Industries in 2023 revealed that Korea‘s total factor productivity stood at 0.614 relative to the U.S. benchmark of 1.

The figure was below the average of the Group of Five (G5) countries at 0.856 and even trailed Japan at 0.656.

To address these issues, the KDI plans to prioritize a strategy for regulatory innovation, with a focus on labor and corporate regulations.

“A notable corporate regulation is the restriction on private benefits, which penalizes conglomerates for allocating work to affiliated companies,” the official said. “Instead of uniformly enforcing such regulations, we may propose a shift toward a market- and enterprise-driven approach in the long term.”

The report is also expected to call for a fundamental overhaul of government support for businesses.

Despite astronomical budgets directed at small and medium-sized enterprises (SMEs), there has been a lack of standout high-growth or innovative companies.

KDI’s analysis of 15 years of data indicates a decline in the number of high-growth firms.

The report will also include measures to enhance social mobility, a theme that aligns with President Yoon Suk Yeol’s recent call to address polarization.

The Ministry of Economy and Finance plans to release the second phase of its social mobility improvement measures in December.