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

Laura Alfaro, the chief economist and economic counselor of the Inter-American Development Bank (IDB), urged Korea to leverage the booming AI-driven semiconductor sector instead of restricting its growth due to fears over heavy chip dependence. She emphasized the importance of fostering economic resilience through stabilization funds and increasing structural flexibility.

Alfaro cautioned against jeopardizing the AI sector simply because of its volatility. According to her, it's counterproductive to destroy the "goose that lays the golden egg." She suggested exploring ways to adapt to the situation. Currently, the AI game is dominant, and Korea is experiencing rapid growth compared to other nations.

This surge is attributed to the country's extensive production capabilities and infrastructure development over the years. Alfaro drew parallels between Korea's reliance on semiconductors and the "resource curse" phenomenon observed in Latin America. In Latin American economies, a heavy dependence on natural resources can make them vulnerable to the volatility of commodity prices, similar to the fluctuating prices of semiconductors.

To navigate such cyclical patterns, Alfaro recommended implementing stabilization funds and enhancing economic adaptability.