The Economic Pillar of Korea’s New Southern Policy: Building on Existing Assets
Diversification is a key tenet of South Korea’s New Southern Policy (NSP). In the economic sphere, however, the need for diversification is apparently less pressing as, unlike what is observed in the diplomatic and security domains, Korea’s economic partnerships are less unbalanced and are not (or not as clearly) polarized on the big Four (China, Japan, the United States, and Russia).
Although Korea’s economic relations with its “South” – Association of Southeast Asian Nations (ASEAN) and India – seem to be relatively strong already, there is still scope for further development. First, heavy Korean economic involvement in ASEAN is heavily skewed towards Vietnam. Secondly, India remains a marginal economic partner for Korea and may be deemed the weak pillar in its economic strategy so far. Thirdly, except through Official Development Assistance (ODA), the role of the government has remained limited so far in supporting the expansion of economic links between Korea and ASEAN, and to a lesser extent India.
The key question is to determine what the added value of the NSP can be beyond existing private sector-based economic relations. Through the NSP the Korean government provides financial support to facilitate the expansion of private companies’ activities in Korea’s “South”, in particular in sectors in which they would not necessarily engage on their own. The diversification objective of the NSP’s economic pillar is thus not only geographical but also sectoral. The focus is placed on infrastructure development projects in ASEAN and India, and more specifically on niche activities such as smart-city projects.
In addition to such financial support, the Korean government has opted for indirect support through the negotiation and implementation of various trading arrangements – Free Trade Agreements (FTAs) or Comprehensive Economic Partnership Agreements (CEPAs) – including the recently concluded Regional Comprehensive Economic Partnership (RCEP).
The chance of success of the NSP can be deemed relatively high as it does not start from scratch and as Korean private companies’ and government’s interests dovetail quite nicely. Moreover, Korea’s focus on infrastructure is aligned with the recipient countries’ interests, in particular ASEAN’s. However, a major weakness of the strategy is the absence of a powerful and convincing narrative to go with it, which makes Korea’s endeavor less attractive for its potential partners. But, of course, this weakness goes beyond the economic dimension of the NSP and would need to be addressed at a more general level.
Download the full analysis
This page contains only a summary of our work. If you would like to have access to all the information from our research on the subject, you can download the full version in PDF format.
The Economic Pillar of Korea’s New Southern Policy: Building on Existing Assets
Related centers and programs
Discover our other research centers and programs
Center for Asian Studies
Asia is a nerve center for multiple global economic, political and security challenges. The Center for Asian Studies provides documented expertise and a platform for discussion on Asian issues to accompany decision makers and explain and contextualize developments in the region for the sake of a larger public dialogue.
The Center's research is organized along two major axes: relations between Asia's major powers and the rest of the world; and internal economic and social dynamics of Asian countries. The Center's research focuses primarily on China, Japan, India, Taiwan and the Indo-Pacific, but also covers Southeast Asia, the Korean peninsula and the Pacific Islands.
The Centre for Asian Studies maintains close institutional links with counterpart research institutes in Europe and Asia, and its researchers regularly carry out fieldwork in the region.
The Center organizes closed-door roundtables, expert-level seminars and a number of public events, including an Annual Conference, that welcome experts from Asia, Europe and the United States. The work of Center’s researchers, as well as that of their partners, is regularly published in the Center’s electronic journal Asie.Visions.
Find out more
Discover all our analyses
India’s Quest for Economic Emancipation from China
In October 2024, the meeting between Chinese President Xi Jinping and Indian Prime Minister Narendra Modi initiated a thaw in relations between the two Asian powers. Has India's high level of economic dependence on China played an important role in bringing about this diplomatic shift?
The Indo-Pacific and Trump II. In Uncle Sam’s brutal embrace
In this collective analysis, the research team of the Center for Asian Studies presents a synthetic and non-exhaustive assessment of the relations taking shape between the United States under the Trump II administration and some of the main players in the Indo-Pacific.
The Case for Enhanced France-Philippines Maritime Cooperation
France and the Philippines, two Indo-Pacific nations, can capitalize on their shared interests, needs, and expertise in maritime security and governance, ultimately fostering strategic rapprochement.
France’s maritime security cooperation in the Pacific
France plays a significant role in Pacific maritime security, particularly through the active participation of its overseas territories and the contribution of its stationed armed forces to regional cooperation initiatives.