Chip-driven growth could fuel Dutch disease risks: BOK

While Korea's semiconductor boom is driving the country's economic growth, its benefits may not spread evenly across the broader economy and raise the risk of Dutch disease, the Bank of Korea (BOK) warned Sunday.

Dutch disease is an economic term that originated from the Netherlands' natural gas boom in the 1960s and refers to a phenomenon in which rapid growth in one sector draws capital and labor away from other industries, weakening their competitiveness.

The BOK warned that Korea could face a "semiconductor Dutch disease" if the semiconductor boom persists, as capital and labor become increasingly concentrated in a single industry, potentially widening imbalances across the economy.

"The domestic semiconductor industry still relies on imports for about 60 percent of its manufacturing equipment, while outbound investment has also increased as firms seek to reorganize global supply chains, limiting the spillover effects of investment on the domestic economy," the central bank said in a report on the economic impact of the semiconductor boom.

The BOK added that IT manufacturing’s shar ...