The Green New Deal
The Green New Deal is designed to combine green growth and job creation. In the short term, the Green New Deal will respond to the recent economic downturn and in the mid and long term, it will boost growth momentum to take Korea to the next level of green growth.
The Green New Deal is not just one of several policy choices, but a vital strategy for Korea's economic growth.
The Green New Deal was created in the same vein as the preemptive measures of advanced nations such as the UK, the US, and Japan.
The UK adopted a low-carbon and green economy as its national development strategy and it has recently unveiled its green projects aimed at creating 100,000 jobs in the construction of schools, hospitals, and railroads.
President-Elect Barack Obama has announced his plan to invest US$150 billion in clean energy development over the next 10 years with the aim of creating 5 million jobs.
Japan also has a plan to increase the scale of its environmental business market to 100 trillion yen by 2015 in a bid to create 2.2 million jobs in the market.
In addition, the international community has long recommended green growth strategies. Both Agenda 21, which was revealed in Rio de Janeiro in 1992, and the World Summit on Sustainable Development (2002) in South Africa recommended water, energy, health, agriculture, and biodiversity (WEHAB) as five key sectors needed for sustainable development.
Secretary-General Ban-Ki-moon urged the formation of international leagues for green growth and green economy-driven job creation at the 13th Climate Change Conference.
The Green New Deal has been crafted in line with such global trends, with its focus on the following areas: 1) energy conservation, recycling and clean energy development to build an energy-saving economy, 2) green transportation networks and clean water supplies to upgrade the quality of life and environment, 3) carbon reductions and stable supply of water resources to protect the earth and future
generations, 4) building of industrial and information infrastructures, and technology development to use energy efficiently in preparation for the future.
① Conservation Green cars, Supplies of clean energy, Expansion of recycling
② Higher life quality Creation of green neighborhoods, homes, schools, and offices
③ Protection of the Earth Revitalization of four major rivers, Water resources
securement, Forest biomass
④ Preparations for the future Information infrastructures for a green nation, green transport networks
Two of the Green New Deal projects, revitalizing four rivers to secure clean water and water resources, and growing forests are among the five key projects adopted in the 2002 World Sustainable Development Summit. The two projects are indispensable for raising national competitiveness in the 21st century.
In particular, the Korean government has stepped up efforts to overcome realistic hurdles which previous policies encountered in achieving green growth and natural environment conservation.
Public consensus on the need for environmental conservation was indeed forged in the previous discussions. Actual funding, however, failed to ensue.
Therefore, it was difficult to turn those environmental discussions into actual policy aimed at job creation and economic growth.
The Green New Deal is an upgraded version of previous plans and designed to bring tangible results with the help of its funding sources.
The Green New Deal will not get in the way of pursuing the stimulus plans featuring deregulation, tax cuts, and reformation of public organizations.
Rather, the Green New Deal is closely interwoven with the stimulus plans since its goal is economic recovery, job creation, and institutional reforms.
Moreover, the Green New Deal is based on the rule of "TTT (timely, targeted, temporary) which take into consideration mid- and long-term growth potential and fiscal soundness.
The Green New Deal is not likely to undermine the overall state of Korea’s fiscal soundness.
Various projects that several ministries have implemented in a scattered manner will be consolidated into a package to facilitate policy implementation in a consistent and coordinated manner. The package will consist solely of core projects, helping curb budget spending on non-core projects.
The Korean government’s push for tax cuts and economic liberalization is firm enough to carry out the stimulus plans without delay.
Even before the Lee administration took office, efforts for reforming public organizations had been launched.
While five public organizations are closed down and privatization of 22 public organizations takes place, the remaining 278 public organizations will be required to raise managerial efficiency under the 4-stage Plan for Managerial Efficiency for Public Organizations.
Corporate tax cuts are being made as scheduled.
An income tax cut of 2 % and a rise in the threshold of tax deductions from 1million won to 1.5 million won are in place.
* Corporate tax cuts for large companies:
25% → 22% (‘09) → 20% (’10)
Corporate tax cuts for SMEs:
13%→ 11% (‘09) → 10% (’10)
Regulations on the Seoul metropolitan areas which had long been blamed for dampening corporate activity were slashed and streamlined to a great degree in October of 2008.
Regulations on industrial access to the Seoul metropolitan areas have been lifted, allowing the construction and establishment of factories.
Knowledge and IT industries will be permitted to relocate to the Seoul metropolitan areas as part of efforts to build a small-scale high-tech industrial park. In addition, Incheon will see more foreign investments as the Incheon free economic zone shifts from “overpopulation watch district” to “growth management district”.
The IMF also pointed out that the combination of tax cuts and expansionary fiscal policies will have a bigger economic-boosting effect than when they are implemented separately.
In conclusion, the Green New Deal aims to help Korea weather the global economic crisis and create jobs. At the same time, it will transform crisis into opportunity by equipping Korea with future growth engines.
