New Industrial Policy Needed
The Korea International Trade Association (KITA) recently announced that South Korea slid from 21st to 25th in the world in terms of future industry development capabilities whereas China jumped from 20th to second during the same period.
Various industrial indices are reflecting the trend at this moment. For example, the added value of the major manufacturing sectors of South Korea such as semiconductor and communications equipment decreased by 4.7% on an annual average basis between 2000 and 2014, when the global average increased by 4.2% a year.
Between the period of 2005 to 2009 and the following five years, the trade specialization index (TSI) of South Korea’s advanced manufacturing sectors like IT fell from 0.075 to 0.054. The TSI can be calculated by dividing a certain industrial sector’s next exports by the total trade volume of the country the sector belongs to. A TSI closer to 1 means a higher ratio of exports.
“At present, the traditional manufacturing sector of South Korea is showing little increase in added value in its maturity stage and the productivity of its service sector still remains at a low level while preparation of new growth drivers is still taking time,” the Korea International Trade Association commented.