Korea to cut budget for national research council amid cronyism controversy

Former Sungkonghoe University professor Jeong Hae-gu, left, and South Korea’s former President Moon Jae-in [Photo by Kim Jae-hoon]

The budget of the National Research Council for Economics, Humanities and Social Sciences (NRC), which is part of the prime minister’s office, is expected to be drastically cut next year after it was mired in a “cronyism” controversy at the end of the previous Moon Jae-in administration.

According to a report by Maeil Business Newspaper on Sunday, the Office for Government Policy Coordination recently submitted to the Ministry of Economy and Finance a budget request for government-funded research organizations for 2024, setting the budget for the institute at 26.8 billion won ($20.4 million), about 30 percent lower than 39.3 billion won this year.

NRC is an organization that oversees 26 government-funded research institutes in the economic, humanities and social fields, including the Korea Development Institute (KDI) and the Korea Institute for Industrial Economies & Trade.

Former Sungkonghoe University professor Jeong Hae-gu, who led the Moon administration’s core economic policy of income-led growth, currently serves as its chairman. As such, observers have speculated that the drastic budget cuts may be a way to pressure Jeong to step down.

In fact, the scale of the budget cuts to the institute is unusual. Other government-funded research organizations, such as KDI and the Korea Institute for International Economic Policy, have submitted budget requests for next year that are either similar to this year‘s or to average of earlier years. For example, the KDI’s budget request for next year was set at 44 billion won, a slight drop from this year‘s 44.5 billion won.

On the other hand, NRC’s budget for next year was drastically cut from one of its core programs, collaborative research. This year’s budget for collaborative research was 6.9 billion won, but next year’s budget request is 1.5 billion won, a decline of nearly 80 percent. Cooperative research refers to research conducted jointly by multiple research institutions under the supervision of NRC.

“Instead of reducing cooperative research led by NRC, we will support more research that utilizes the independence of each research institute,” an official from the government policy coordination office explained.

An official from a research institute analyzed the adjustment, saying, “The budget for collaborative research is eventually distributed to the institutes that conduct the research. It seems that the intention is to distribute it to each institute in the first place.”

It is widely believed that the government’s decision to cut the budget for collaborative research led by NRC, which is at odds with the current government’s policy, is a serious effort to weaken NRC.

Jeong is a progressive academic who served on the National Planning Committee, which served as the transition committee for the Moon Jae-in administration, and then became the chairman of the presidential Policy Planning Committee, providing theoretical support for income-led growth policies. This is why his philosophy has been criticized for being incompatible with the current government‘s emphasis on revitalizing the free market economy.

Jeong was appointed to the chairmanship in March 2021 while President Moon Jae-in was still in office and will serve a three-year term until March 2024. The government has repeatedly expressed its discomfort at having an academic with a different philosophy than Yoon Suk Yeol’s at the helm of state-run research institutions.

In June last year, Prime Minister Han Duck-soo said at a press conference one month after his inauguration that Jeong and Hong Jang-pyo, then the head of the KDI, were “too incompatible with the Yoon administration and should be changed.” In response, Jeong said, “There is nothing in the relevant law that says we should help the regime and we are working for the national research system, not for a particular government. I will fulfill my duties during my term.”

The government, which is facing its worst tax revenue shortfall this year, has been forced to cut unnecessary expenditures at research institutes. The finance ministry recently told government-funded research institutes to “reduce overhead expenses, such as business promotion expenses, by 3 to 5 percent next year,” as it seeks to reduce the budget of public institutions next year.

The finance ministry is currently deliberating on the budgets of public institutions, including government-funded research organizations. The budget for research institutes recently completed the first stage of deliberations, and the government’s plan will be finalized through the second and third stages of deliberations before being submitted to the National Assembly in August. The first stage of the budget deliberation is actually centered on cuts and in the second and third stages, the budget is slightly adjusted upward according to the needs of research institutions, so there is room for change.