Promoting IT Industry in Korea

KOREA

Young Nahn BaekKorea IT Industry Promotion AgencyEmail : ynbaek@software.or.krDate : 18th October 2004

Korean IT

: Present & Future

KIPAMIC

Source: Korea National Statistical Office

Global Status of Korean Economy

Population47.9 m

Export194b(US$)

Import179b(US$)

Reserve194b(US$)

GDP194b(US$)

26th 12th11th 13th 4th

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Global Status of Korean Information Society

• Global no. 1 in Broadband Internet Penetration

• Leader in Mobile Communication Penetration

• Leader in e-Government

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Share of IT Consumption in Total Household Consumption

Share of IT Manufacturing in Total Manufacturing

Source : OECD (2002)

Source : OECD (2002)

U.S.A

17th(3.7%)

Korea

1st (6.3%)Germany

21st (3.4%)

Global Status of Korean IT Industry

Ireland

1st (17.1%)Japan

12th(9.8%)

Korea

3rd(12.8%)

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World Market Share of Korean IT Products

World market size

Billion US $

Market share

1112

6734

637284 290

577

1123

1870

386

25%

42%

30%

3.5% 1%2.7%4%4%

18%

Memory LCD M-phone TV Internet Eq PC Non-Memory Game SW

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IT Share of GDP (2003)

IT Share of Total Export (2003)

38 % Contribution to Economic Growth (1998~2002)

15.6 %

30 %

IT Manufacturing: The Engine of Growth Today

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The Engine Getting Old

• Manufacturing-biased – 3rd in IT manufacturing, but 21st in IT Service among OECD

• Capital-intensive – Capital/labor ratio of IT : 155.2 (non-IT: 99.5)

• Large Firm-centered – Value-added share of SMEs in IT : 14.5% (non-IT:58.3%)

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SW : The Engine of Growth Tomorrow ?

• Underdeveloped SW Industry in Korea

– SW 8.9% in IT Production & 0.5% in IT Export (2003)

• But Relatively High Market Share of Domestic Firms

UK France

3.7%

GermanyKorea

4.8%

18.4% 18.3%

“Market Share of Domestic

Firms ranked among Top 15th”

Source: IDC

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Challenges facing the Korean IT Industry

• Changes in IT paradigm― Convergence and Ubiquitous Computing

• Growing Competition ― Newcomers to IT hardware manufacturing

Moving up and Finding New Opportunities

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Converged Services

Balance in HW & SW

Where We Go from Here – Ubiquitous Korea

DataData MediaMediaVoiceVoice

Communication

MovieMovie MusicMusic NewsNews

BroadcastingVODVODGameGame E-ComE-Com E-ComE-Com

Internet

A Trinity of IT Policy Strategies

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A Trinity of Policy Strategies

Informatization Policy

Industry PolicyCompetition Policy

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Informatization Policy : Market Creation

• Advancing the Information Infrastructure – Korea Information Infrastructure (KII)

• Utilizing IT for Change – E-Government

• Bridging the Digital Divide

Creating New Demands for IT

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Competition Policy : Fair Competition

• Liberalizing Markets – Opening the Telecommunication Market

– Privatization of KT

• Monitoring Competition – the Regulation by Korea Communications Commission

Enhancing the Competitiveness of IT Firms

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Industry Policy : Facilitating Market

• Building Infrastructure for R&D & Education

– Supporting cooperation among Industry, Academia and Public

Research Institutes

• Providing Information and directions

• Revising the Law and Regulation

– Transforming the legal system for information society

Promoting Entrepreneurship

Adam Smith for IT Industry

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What Free Trade (ITA) Has Brought to Korea

Source: Korea Customs Service

IT industry

Non-IT industry

17.5 b$

65 b$

172.3 b$

1980 1990 2000

55.8

16.6

9.2

51.1

121.2

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From Hardware to Software

• Expansion of free trade to services and

intellectual properties

• Issues concerning monopolistic market power in

software and communication industry

• Promoting free trade based on fair competition

and equal opportunities

Thank You !!!