Promoting IT Industry in Korea

1. KOREA Promoting IT Industry in Korea Young Nahn Baek Korea IT Industry Promotion Agency Email : ynbaek@software.or.kr Date : 18th October 2004

2. Korean IT : Present & Future

3. 12th 4th 11th 13th 26th GDP 194b(US$) Population 47.9 m Export 194b(US$) Import 179b(US$) Reserve 194b(US$) Global Status of Korean Economy Source: Korea National Statistical Office

4. Global Status of Korean Information Society • Global no. 1 in Broadband Internet Penetration • Leader in Mobile Communication Penetration • Leader in e-Government

5. Global Status of Korean IT Industry Share of IT Consumption in Total Household Consumption Korea 1st (6.3%) Germany 21st (3.4%) U.S.A 17th(3.7%) Source : OECD (2002) Share of IT Manufacturing in Total Manufacturing Ireland 1st (17.1%) Korea 3rd(12.8%) Japan 12th(9.8%) Source : OECD (2002)

6. 6734 42% 30% 1870 25% 18% 1123 1112 637 577 386 4% 4% 3.5% 290 2.7% 1% 284 World Market Share of Korean IT Products World market size Billion US $ Market share Memory LCD M-phone TV Internet Eq PC Non-Memory Game SW

7. IT Share of GDP (2003) 15.6% 30 % IT Share of Total Export (2003) Contribution to Economic Growth (1998~2002) 38 % IT Manufacturing: The Engine of Growth Today

8. 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%)

9. 18.4% 18.3% 4.8% 3.7% UK France Korea Germany 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 “Market Share of Domestic Firms ranked among Top 15th” Source: IDC

10. 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

11. Movie Music News Game VOD E-Com Voice Data Media Broadcasting Communication Internet Where We Go from Here – Ubiquitous Korea Converged Services Balance in HW & SW

12. A Trinity of IT Policy Strategies

13. Informatization Policy Industry Policy Competition Policy A Trinity of Policy Strategies

14. 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

15. 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

16. 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

17. Adam Smith for IT Industry

18. 172.3 b$ 51.1 IT industry Non-IT industry 65 b$ 121.2 9.2 17.5 b$ 55.8 16.6 1980 1990 2000 What Free Trade (ITA) Has Brought to Korea Growing Share of IT Export ! Source: Korea Customs Service

19. 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

20. Thank You !!!