Korea should not sacrifice AI boom over chip dependence fears: IDB economist

Korea should embrace the artificial intelligence (AI)-driven semiconductor boom instead of slowing down progress due to worries about its heavy dependence on chips, according to Laura Alfaro, the chief economist of the Inter-American Development Bank (IDB). She emphasized that it's not wise to jeopardize AI growth simply because it's unpredictable, and suggested finding ways to adapt. "The game is AI, and Korea is outpacing other countries," Alfaro stated during a press conference.

She drew parallels between Korea's reliance on semiconductors and the "resource curse" prevalent in Latin America, where economies heavily dependent on natural resources are susceptible to fluctuations in commodity prices. Similar to how minerals and oil prices can vary significantly, so too can the prices of semiconductors. To navigate such cycles, Alfaro recommended implementing stabilization funds and enhancing structural flexibility to bolster economic resilience.