South Korea Bets on National Fortune Again

Author | Wan Lianshan

Recently, South Korea has fired the first shot in the global "AI public utility" initiative.

According to the "Universal AI" plan announced by the South Korean Ministry of Science and ICT, the government plans to provide free, unlimited generative AI services to its 51 million citizens, clearly promising "no subscription fees and no token usage limits."

Where will the money come from? It will be directly integrated into systems for medical appointments, public housing applications, and tax reporting, with operational costs covered directly by the national budget.

Progress has already moved from slogans to action: on August 28, three consortiums led by SK Telecom, Kakao, and KT were selected; on September 4, the government held a project launch meeting to promote the rollout of services to the entire population by the end of the year.

On the surface, this seems like a government-funded initiative.

However, upon closer examination, it is far more than just a "welfare" program.

AI is a tool, but it will also become a means of production.

By investing money and guiding policies for the public to use AI, the government is essentially distributing future means of production to every individual.

Regardless of whether it succeeds, this is undoubtedly a grand social experiment.

01 Let's first look at the real issues.

South Korea has indeed reaped the hardware benefits of the AI era, but who has heard any news about local large models?

According to data from Wiseapp·Retail: in April 2026, South Korea's ChatGPT had about 23.45 million monthly active users, Gemini around 8.45 million, and Claude about 2.41 million.

What about local models? They are almost unheard of.

AI competition has a clear scale effect. Without users, products cannot improve, and revenues cannot support research and development; if products lag behind, users will be even less willing to come.

This creates a cycle where the startup teams may only be left with the skill of modifying funding proposals.

Thus, the "Universal AI" plan stipulates that at least 50% of the services must use Korean models that meet the standards for autonomous foundational models, and at least 30% must use models developed by other Korean companies; foreign models can be used in limited necessary functions, but those parts will not receive government support.

At the same time, it ties public procurement, industrial support, and technological sovereignty together.

Local companies will receive computational power support and application scenarios, citizens will gain free tools, and the government hopes to retain local research, operation, and service integration capabilities.

The government is investing money to lock 80% of computational power for domestic models, effectively helping local industries overcome the most challenging startup phase.

How much is this?

On September 4, MoneyToday reported based on information obtained from a parliamentary office that the plan for 2027-2030 is to allocate 250 billion Korean won annually.

170 billion won will be used for GPU leasing, 30 billion won for the three consortiums, and 50 billion won for expanding the intelligent agent ecosystem.

Divided among South Korea's approximately 51.61 million population in 2026, this amounts to about 4,800 won per person per year.

This amount is clearly insufficient, even if doubled.

So why can this budget work?

It relies on a mix of different usage intensities and the allocation of computational power for different tasks.

SK's plan announced on August 19 explicitly stated that simple questions would be handled by lightweight models, while complex tasks would be assigned to high-performance models.

Model routing, combined with caching, batch processing, and quantization optimizations, can reduce the cost per task.

The services are also prepared to retain commercial revenue.

According to a report by Financial News on September 7, the government is considering allowing moderate advertising and discussing charging for advanced services after the second half of 2027.

Thus, the financial path should be: first invest in startup computational power, then support services with an annual budget of 250 billion won, and subsequently rely on broader AI research and infrastructure investments.

Of course, the final total cost will also include corporate investments and the expansion brought about by actual usage, which is currently unpredictable.

However, once this path is successfully navigated, South Korean companies will undoubtedly gain an advantage in local government and life services.

Yet, to turn this convenience into economic growth, South Korea must face a challenging issue.

02 According to research data released by the Bank of Korea in June 2026, the average use of AI shortens working hours by 3.8%, equivalent to about 1.5 hours per week, corresponding to about a 1.0% potential productivity improvement.

However, the research found no evidence that saved time universally translates into actual output growth.

The most noticeable effects are seen among self-employed individuals, professionals, and high-intensity AI users.

This reflects the productivity J-curve in the diffusion of general-purpose technologies: tools enter first, followed by training, process reorganization, and organizational adjustments, with benefits gradually materializing.

Universal free access can lower the technical threshold, but to truly unleash output, companies must be willing to adjust work methods, and employees must be motivated to save time.

Otherwise, while the average "AI degree" increases, the average overtime may also likely rise.

Deeper changes will occur in the distribution of benefits.

The government pays for users, and the first to gain certainty in demand are the computational power suppliers, model companies, and platform operators.

For small businesses, public platforms may lower development and customer acquisition costs; for consumers, they may reduce transaction costs.

However, as chat interfaces further control appointments, shopping, and service recommendations, platforms will also gain new distribution rights.

Who gets recommended, who pays commissions, and who can access will all affect the competitive landscape.

This is why fiscal subsidies must consider usage outcomes.

According to a report by Financial News on September 7, GPU support will be allocated based on user and usage performance differences, with the first evaluation potentially occurring in March 2027.

In specific execution, task completion rates, error rates, and the actual time saved must also be included in the evaluation.

The labor market will also adjust accordingly.

AI assistance can help inexperienced individuals complete more tasks, but it may also compress the work originally available for newcomers to practice.

Older workers are more likely to receive services, while whether younger workers can continue to accumulate skills and earn income will also determine how far this reform can go.

After popularizing tools, training, job adjustments, and income distribution must keep pace.

Current assessments suggest that South Korea has the conditions to make universal AI a practical public service and thereby expand the market for local models.

Existing user channels, fiscal support, and local service connections provide a foundation for startup.

Other countries may also see a possibility: through public procurement, transforming AI from a personal subscription product into a universally available social service.

However, achieving widespread productivity dividends will require a longer organizational and institutional transformation.

This is a deeper change.

03 The greatest aspect of this experiment is the attempt to deliver the most important future production tools to every citizen in the form of public services.

The South Korean Ministry of Science and ICT clearly stated in the project announcement that the direction of continuous upgrades is to provide "every citizen with an AI agent," allowing citizens to participate in economic and social activities through their own agents and share in the benefits brought by AI.

Distributing money increases current purchasing power; providing production tools attempts to enhance the ability to create income in the future.

The role of fiscal expenditure thus extends from subsidizing consumption to supporting ordinary people’s participation in production.

For example, if a young person wants to run a small business, they need to do promotions, organize customer needs, analyze orders, and occasionally modify their website.

Even if they can use AI tools, the tokens consumed can still cost a lot.

If public AI can assist in completing part of this, the minimum investment required for their entrepreneurial attempt may decrease.

This not only lowers the entry barrier but also expands the production resources an individual can mobilize.

A person's experience, judgment, and customer relationships, paired with affordable and effective tools, have the potential to support businesses that were previously unfeasible.

This change may also influence workers' bargaining power.

If a person can only rely on the software, equipment, and organizational systems provided by their company to work, their cost of leaving is relatively high.

If they can leverage public AI, they can independently undertake part of the business or more easily learn new skills and switch careers, thus gaining more external options when negotiating with employers.

Having the ability to choose a different path allows them to negotiate better terms.

This also pushes the issue of social distribution forward significantly.

When discussing income distribution, we often think about how the government adjusts wealth through taxes and welfare after it has been created.

Universal AI attempts to intervene at an earlier stage: before wealth creation, it helps more people obtain the tools to participate in wealth creation.

Moreover, it raises the question of how ordinary people participate in growth: merely as consumers purchasing products, or as individuals who can use new tools, provide services, and run businesses.

By covering part of the tool costs, the government reduces the limitations imposed by family background, business scale, and personal income on acquiring production capabilities.

When ordinary people have an additional production tool in hand, they can find another way to make a living and gain more confidence in job choices, ensuring they share in the benefits created by technological progress.

Everything will get better.

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