Contribution of Service Exports Hits Record High Since 2015... Surpasses Goods Exports for the First Time

[Asia Economy Reporter Hwang Yoon-joo] Last year, the contribution of our service exports to economic growth surpassed that of goods (manufacturing) exports.

According to the "International Status and Economic Contribution Effects of Korea's Service Industry" report released on the 23rd by the Korea International Trade Association's International Trade and Commerce Research Institute, among the 2.0% GDP growth rate in 2019, the contribution of service exports was 0.5 percentage points, marking the highest figure since 2014, while the contribution of goods exports was 0.2 percentage points. This is the first time since 2015 that service exports have outpaced goods exports in terms of economic growth contribution.

In particular, service exports showed greater improvement than goods exports in terms of creating quality jobs and added value. The number of jobs directly and indirectly generated by service exports in the domestic economy was 1,707,000 in 2018, accounting for 32.1% of total jobs induced by exports, an increase of 2.7 percentage points from 29.4% in 2015.

During the same period, the proportion of jobs induced by goods exports decreased from 70.2% to 67.4%. The share of regular employees among jobs induced by service exports also rose from 45.7% in 2015 to 48.6% in 2018, indicating qualitative improvements in employment.

Furthermore, the value added generated per 1 won of service exports increased by 0.105 won from 0.707 won in 2010 to 0.812 won in 2018, whereas the value added generated per 1 won of goods exports increased by only 0.053 won from 0.560 won to 0.613 won during the same period.

However, the report stated, "In 2019, Korea's service export amount was 101.5 billion dollars, which is less than one-fifth of the 542.2 billion dollars recorded by goods exports, indicating that the global competitiveness of our service industry still falls short of expectations." It added, "In export rankings, goods ranked 7th worldwide, while services ranked 16th, showing a gap of 9 places. This is the largest gap among the world's top 10 goods exporting countries. To create more added value and quality jobs, service exports must be increased."

Shim Hye-jung, senior researcher at the International Trade and Commerce Research Institute, said, "The expansion of the non-face-to-face economy due to COVID-19, the rise of the national brand through the Korean Wave and K-quarantine, will provide new opportunities for our service industry's overseas expansion." She added, "Various support measures are needed to expand service companies' overseas entry, such as strengthening information provision, improving non-tariff barriers, discovering convergent service models, and supporting digital marketing."

This content was produced with the assistance of AI translation services.