South Korea's ICT Service Export Share at 0.98%... "Lowest Level"

Urgent Need for Policies to Foster Intangible Assets Such as Promoting ICT Technology Use and Future-Oriented Human Capital Investment

[Asia Economy Reporter Park Sun-mi] South Korea's information and communication technology (ICT) service industry exports are at the lowest level among major exporting countries, and the value-added share of the ICT industry is also ranked low among the Organisation for Economic Co-operation and Development (OECD) countries, according to an analysis.

On the 22nd, the Federation of Korean Industries (FKI) analyzed the OECD's 'Country Digital Economy Status Data' and found that South Korea's export share of global ICT service exports (the proportion of a specific country's exports in the world's total exports) was 0.98% in 2017, ranking 21st out of 21 major exporting countries. This figure is lower not only than Ireland (16.41%), the top ICT service exporter, but also Asian competitors such as China (6.32%) and Japan (1.07%).

The economic value creation capability of the ICT service industry was also found to be insufficient. South Korea's ICT industry value-added ratio was 10.3%, the third highest among OECD countries, whereas the value-added ratio of the ICT service industry was 3.8%, ranking 28th out of 38 OECD member countries. This indicates that the ICT service industry, a core competency of the digital economy, is not fulfilling its role amid the accelerating digital transformation.

The FKI pointed out that the lack of competitiveness in South Korea's ICT service industry is due to the low utilization of ICT innovative technologies. According to the OECD, South Korea's cloud service utilization rate was only 22.7%, ranking 32nd out of 35 OECD countries. Except for RFID (Radio Frequency Identification Technology, 42.2%), South Korea's utilization rates of major technologies such as big data (3.2%) and ERP (27.9%) were below the average levels of OECD countries.

Globally, ICT competitiveness is increasingly linked to corporate and national competitiveness, making it urgent for South Korea to strengthen the capabilities of its ICT service industry for a successful digital transformation. According to the OECD report, companies with advanced digital transformation enjoy higher profits, with highly digital-intensive companies earning an average of 55.1% excess profits compared to general companies.

The FKI suggested that, for the development of the domestic ICT service industry, alongside technological innovation, a transition to a workforce structure suitable for the digital economy is necessary. South Korea's share of digitally intensive jobs was 48.8%, below the OECD average of 50.2%. Unlike OECD countries that focus on expanding human capital, social retraining, and on-the-job training (OJT) to enhance the digital work capabilities of society, South Korea is currently concentrating resources on short-term measures such as workforce redistribution and direct job creation.

Kim Bong-man, head of the FKI International Headquarters, said, “With the recent presidential election approaching, all candidates emphasize the ICT industry as a key part of the next government's economic policy,” adding, “To become a true digital economic powerhouse, policies presenting a blueprint that harnesses limited resources as future-oriented growth engines can gain the support of both the industry and the public.”

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