Threatened by China
China’s high-value-added industry to GDP ratio exceeded that of South Korea amid a lack of progress in the latter’s deregulation and industrial restructuring campaign.
According to the Hyundai Research Institute on September 16, South Korea's added value from such technology-intensive industries as information and communications technology, aerospace and pharmaceuticals totaled US$500 billion in 2014 but fell 1.2% and 0.7% in 2015 and 2016, respectively.
Likewise, the high-value-added industry-to-GDP ratio of South Korea fell from 35.6% in 2015 to 34.6% in 2016 to lag behind that of the United States (38.3%), Japan (36.1%), Germany (35.2%) and China (35.2%). China's ratio was less than 30% until the mid-2000s but is about to catch up with those of Germany and Japan.
South Korea’s innovation potential and external competitiveness are deteriorating as well. For example, its R&D investment growth related to advanced technology-based manufacturing dropped from 10% or so to negative 4.0% from 2014 to 2015 while those of the United States and Germany are on the rise. Under the circumstances, South Korea’s global market share related to high-value-added manufacturing went down from 6.4% to 5.9% between 2014 and 2016.