Bangkok: Asian countries should reduce reliance on government-led industrial growth policies and adopt a risk-sharing approach involving private sector participation to sustain long-term growth, South Korea's central bank chief said Thursday.

According to Yonhap News Agency, Bank of Korea (BOK) Gov. Rhee Chang-yong made the call in his keynote speech at the Asia in 2050 Conference in Bangkok organized by the International Monetary Fund (IMF). Rhee emphasized that while government-led industrial policies were effective in the past for countries like Korea and other East Asian economies to catch up by imitating advanced manufacturing and learning technology, the current circumstances demand a shift in strategy.

Rhee argued that Asian economies must recalibrate their expectations of government roles and diversify the scope of industrial policy beyond manufacturing. He highlighted the importance of sharing risks with private financial institutions through indirect support methods, such as on-lending arrangements. Structural reforms are also necessary for sustained growth, he asserted.

Addressing more industrialized Asian economies, Rhee noted the need to reassess relative efficiency. While nurturing strategic industries like artificial intelligence (AI) is crucial, investing in structural reforms is equally important to tackle challenges such as population aging. This includes promoting labor market flexibility, implementing pension reforms, and expanding economic participation among women and older workers.

Rhee also pointed out major factors challenging Asia's traditional growth model, such as deglobalization, the fragmentation of the global economy into regional blocs, and the reshaping of global supply chains. He warned that Asia's economic success is not guaranteed and called for a complementary approach that balances industrial policy with structural reform efforts.