The key to AI policy is national absorptive capacity

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The key to AI policy is national absorptive capacity

Published: 13 Feb. 2026, 00:01

Audio report: written by reporters, read by AI

Cho Yoon-je

The author is a special appointment professor at the Graduate School of Economics at Yonsei University.

Rapid technological advances and shifting geopolitical and economic conditions have repeatedly upended forecasts about the future in recent years. The pace of AI development has exceeded expert expectations, while intensifying geopolitical tensions are reshaping the global economic order. The reorganization of supply chains, driven increasingly by security concerns rather than efficiency, has added to the burden facing businesses and policymakers. Technological competitiveness and industrial capacity are now directly linked to national security.

President Lee Jae Myung takes questions from participants during a meeting with Presidential Science Scholarship recipients and members of Korea’s Olympiad teams at the State Guest House of the Blue House on Feb. 5. [JOINT PRESS CORPS]

In a world where uncertainty has become constant and divisions are deepening, the World Economic Forum released a report ahead of this year’s Davos meeting titled “Four Futures of the New Economy: Geoeconomics and Technology to 2030.” Based on a survey of global business leaders, the report found that 72 percent identified advances in AI as the most important force reshaping the global economy over the next five years, while 52 percent pointed to geopolitical fragmentation. It outlined four scenarios for how these forces could transform the global landscape and urged companies to prepare for structural change.

A key insight from the report is that the speed of technological progress does not refer to the development pace of leading technology firms alone. Rather, it reflects how quickly and deeply AI and related technologies spread across economies, organizations and institutions. The economic impact of AI, humanoids and other emerging technologies depends less on innovation itself than on how broadly they are adopted. Ultimately, this is determined by the flexibility of labor markets, employment structures, government systems and corporate organizations.

AI is already approaching the status of a global public good, and the gaps in models and algorithms are narrowing rapidly. In the AI era, differences in national and corporate performance will be shaped less by technological leadership than by institutional capacity to absorb and utilize new technologies.

History offers a clear precedent. Although the Industrial Revolution began in Britain, Germany and the United States later emerged as the primary beneficiaries. Their success reflected their ability to deploy new technologies widely and deeply in production, supported by economic institutions and social structures that could adapt to change.

The AI initiatives being pursued by the Lee Jae Myung administration — including large-scale investment, securing GPUs, training AI talent, strengthening legal frameworks and reinforcing a presidential-level strategy body — are necessary steps. AI infrastructure requires substantial upfront investment and cannot be built by the private sector alone. Computing resources, skilled personnel and data utilization are all strategic assets that must be addressed at the national level. In this sense, the government’s diagnosis of the challenge is appropriate and its policy commitment is encouraging.

Yet a more fundamental task remains overlooked. Korea is unlikely to lead global AI development in the way the United States or China does. The realistic goal should be to become a country that applies AI quickly, widely and effectively.

Koreans are among the fastest adopters of AI tools, but the critical question is whether businesses and institutions can integrate these technologies at the organizational level. Even with ample computing resources and sovereign AI capabilities, economic impact will be limited if new technologies are not embedded rapidly into workflows, production systems and management structures.

The AI era demands more than incremental efficiency gains. It requires redesigning work itself, restructuring organizations and reallocating human resources. In societies where adjustments to employment structures, job definitions, organizational boundaries and compensation systems are constrained, AI will remain confined to individual use or pilot projects rather than driving a productivity revolution.

To translate rapid technological progress into economywide productivity gains, structural reform is as urgent as investment in AI itself. This includes building stronger social safety nets and redesigning fiscal frameworks to support transition.

President Lee Jae Myung looks at a humanoid robot performing a cup-stacking demonstration at Startup Square in Seongnam, Gyeonggi, on Sept. 17, 2025. [JOINT PRESS CORPS]

Labor-management systems must evolve to allow more flexible work force adjustments. Performance evaluation and wage structures also need to be modernized. Without such changes, the use of AI in factories and offices will remain limited despite technological readiness.

Korea’s experience during the early internet era offers an important lesson. Rapid adaptation helped the country build global competitiveness in semiconductors, ICT and cultural industries. Securing a similar advantage in the AI era will require broad structural reform alongside technological investment.

These reforms will not be easy and will carry significant political costs. However, the most important investment is not in AI technology itself but in the national capacity to absorb and utilize it effectively.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.