DAEJEON — Bank of Korea Governor Shin Hyun-song said raising artificial intelligence's productivity effects requires changing production methods and regional economic structures, not simply adopting the technology. He pointed to the late 19th century, when productivity gains stayed limited after the introduction of the dynamo, an early electric generator, until factory layouts were redesigned. AI infrastructure such as data centers, he said, must also be linked to local industries and supply chains so that investment spreads across regional economies.
Shin made the remarks on the 15th in an opening address to the 2026 BOK Regional Economy Symposium in Daejeon, where he described AI as a general-purpose technology comparable to the steam engine, electricity and the internet.
Research by economic historian Paul David, which Shin cited, found that productivity did not improve immediately after electricity was introduced to factories in the late 19th century. Existing factory layouts and production methods had been built around steam power. Productivity rose in earnest only after factories were redesigned for electricity.
Shin said AI requires the same process. Building AI programs and data centers is not enough, he said, and must be accompanied by complementary innovation tailored to the technology, including improving workers' skills and changing how companies organize their work. "Whether AI becomes a new growth engine for regional economies depends less on how quickly the technology is adopted than on how regional economies are redesigned to maximize productivity using AI," he said.
He placed particular emphasis on tying AI data center investment to local industries. Rather than simply building data centers in a region, he said, they should be connected to infrastructure such as power and telecommunications, to related companies and to local supply chains, so that AI infrastructure investment translates into higher productivity and job creation in regional industries.
The symposium also examined how the spread of AI is changing regional labor markets and how companies are responding. Key agenda items included investment in worker training, strengthening AI skills, and linking local industries with AI infrastructure. Participants also discussed how AI-based search services could lower the constraints of physical distance and open new business opportunities for small business owners in the regions.
