Dualistic nature of the 4IR: Investigating the economy-wide impacts of the 4IR with a focus on Korean economy using a CGE analysis

Abstract

This study quantitatively assesses and projects the socioeconomic impacts of the Fourth Industrial Revolution (4IR) with a focus on the South Korean economy. We have developed a policy simulation framework using a computable general equilibrium (CGE) model to capture the intricate interplay between 4IR-driven technological advances and various economic sectors. The CGE analysis endeavors to quantify the widespread implications of 4IR technological changes in terms of GDP, industrial production, labor market dynamics, and income distribution. The study constructs various policy scenarios predicated on the diffusion of 4IR technologies and the conditions within the labor market. From the CGE analysis, it is evident that the 4IR exerts a dualistic impact on the economic system, where it offers opportunities for economic growth and efficiency while concurrently risking an exacerbation of labor market polarization and income inequality. However, the simulation results imply that strategic workforce development, synchronized with the adoption of 4IR technologies through lifelong learning and skill enhancement, is essential to soften the adverse effects of swift technological advancements and to ensure the benefits of the 4IR are equitably distributed across the economy. Our study advocates for a balanced approach that recognizes the unique potential and challenges of each sector and aims to support the workforce across all levels of skill and income.