Last Year’s Knowledge Service Trade Deficit Hits $10.2 Billion... “Driven by Increased Overseas R&D”

Surplus in Information and Communication Services Doubles to $5.19 Billion Year-on-Year

Overseas R&D Investment by Manufacturing Sector Rises Along with Improved Industry Conditions

Deficits Widen in Intellectual Property Rights Usage Fees and Professional & Business Services

Last year, South Korea’s knowledge service trade balance recorded a deficit of $10.25 billion, ranking as the fourth largest deficit since statistics began in 2010. Despite surpluses in information and communication, as well as cultural and leisure services, the deficit widened due to larger shortfalls in professional and business services and intellectual property rights usage fees compared to the previous year. The knowledge service trade statistics reflect international transactions based on knowledge and information within the service sector, encompassing the trading and usage of intellectual property rights, derivative services, and related service contracts.

According to the “2025 Knowledge Service Trade Statistics (Provisional),” released by the Bank of Korea on March 19, exports in the knowledge service sector reached $41.46 billion, while imports totaled $51.71 billion last year. This led to a deficit of $10.25 billion, $2.88 billion wider than the previous year. Park Sungkon, head of the International Balance of Payments Team at the Bank of Korea’s Economic Statistics Department, explained, “Exports increased mainly in information provision and platform services, but imports grew even more in areas such as R&D industrial property rights, software copyrights, and R&D service payments.”

Surplus in Information and Communication & Culture Services Driven by Growth in Electronics Manufacturing and K-pop Performances

Yonhap News Agency

By service type, information and communication services posted a surplus of $5.19 billion. This near doubling of the surplus compared to 2024 was attributed to increased exports from the electronics and electrical products manufacturing sector.

Cultural and leisure services also recorded a $980 million surplus. The export of performance and exhibition-related services, which includes revenue from overseas K-pop concerts, increased for the fourth consecutive year, posting a record-high surplus of $440 million, contributing to the overall surplus in cultural and leisure services.

However, as music and video exports declined, the multimedia production sector recorded $500 million, down $150 million from the previous year, resulting in a $40 million reduction in surplus compared to 2024.

Expansion of Overseas R&D by Manufacturing Sector... Widened Deficits in Professional & Business Services and Intellectual Property Rights Usage Fees

Deficits in professional and business services and intellectual property rights usage fees widened by $2.24 billion and $2.92 billion, respectively, compared to the previous year, resulting in deficits of $9.39 billion and $7.03 billion. By industry, information and communication recorded a surplus of $2.43 billion, manufacturing—primarily electronics and electrical products—posted a surplus of $3.4 billion, while digital intermediary platforms recorded a deficit of $5.79 billion.

By type of institution, mid-sized companies posted a surplus of $1.98 billion, but large corporations and digital intermediary platforms posted deficits of $6.72 billion and $5.79 billion, respectively. By region, a surplus of $6.9 billion was recorded in Asia, while deficits of $7.72 billion in North America and $3.69 billion in Europe were reported.

This is attributed to the improved business conditions in key export industries such as electronics and automobiles, as well as the expansion of R&D, which led to a greater increase in imports than exports for R&D-related intellectual property rights usage fees and professional business services such as R&D, legal, accounting, and advertising. The push to adopt advanced technologies in major export sectors—smartphones, home appliances, and automobiles—to enhance competitiveness and added value is cited as a factor impacting the knowledge service trade deficit. Park stated, “The significant increase in the use of overseas industrial property rights and professional and business services is an essential growth process to expand the production and investment of Korean companies and to strengthen their global competitiveness.”

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