2019 ict industry outlook - kisdi · the 2019 ict industry outlook for korea is the 18th of its...
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2019 ICT Industry Outlook of Korea
2018 IC
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2019 ICT Industry Outlook of Korea
Copyright Ⓒ 2019 Korea Information Society Development Institute
All rights reserved. No part of this book may be reproduced or transmitted in any form of by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the authors.
All requests for permission to reproduce or translate all or part of this book should be made to:18, Jeongtong-ro, Deoksan-myeon, Jincheon-gun, Chungcheongbuk-do, 27872 Rep. of KOREAPhone : +82-43-531-4383Fax : +82-43-531-4099
Message from the President
After recent indications of overall growth, the world economy has been faltering under the pressure of prolonged trade disputes between the US and China, the soft landing of the Chinese economy, and fast-rising interest rates in the US. As for the Korean economy, both Korean and overseas institutions are forecasting that it will take a downturn as its exports are expected to slow down due to weaker global chip prices and the impacts of US-China trade conflicts.
The ICT industry of Korea is also faced with new challenges. As uncertainty increases with changes in the macro-environment, prices of individual ICT items are fluctuating more and more wildly. World trade volumes are also contracting because of spreading protectionist stances, causing changes in the supply chain and consequently transforming the competitive landscape of each market. Furthermore, with innovations enabled by intelligent information technology driving the Fourth Industrial Revolution, technological advances are taking place rapidly, mostly in ICT industries including AI and big data. These developments demand changes in the structure of the Korean ICT sector, which relies heavily on ICT goods exports. It is necessary, therefore, to perform research on the Korean ICT sector, including its current state, outlook and competitiveness, in order to help the government develop ICT-related policies to ensure continued growth for the sector, based on a structural understanding of the environment surrounding the ICT sector and Korean ICT industries.
This study aims to assess the performance of the Korean ICT sector in 2018 and provide forecasts on production, exports, and subscriptions for each ICT industry in 2019, taking into account various issues within the sector. It also analyzes the global competitiveness of Korea’s ICT sector based on major global competitiveness indexes and examines new growth engines for the purpose of drawing policy implications to be considered in planning future strategies for the sector.
This report describes the current state of Korea’s ICT sector and its issues in three parts. Part I outlines trends and outlook for the Korean ICT sector in five categories: communications services, broadcasting services, information services, ICT equipment, and software. Part II compares Korea’s ICT competitiveness with other countries to understand where it stands and where improvements need to be made. Lastly, part III looks into “data economy,” an economic system in which the importance of data is emphasized across all industries. In a data economy, data is used as a core resource to create new value-added in traditional industries, forming the foundation of all economic activities.
The 2019 ICT Industry Outlook for Korea is the 18th of its kind published annually by the Korea Information Society Development Institute (KISDI). This year, we have put in a lot of efforts to provide more comprehensive and better-structured information on the Korean ICT sector. We hope that our readers will make full use of the report in their decision-making processes for diverse purposes including the formulation of government policy and corporate strategy. We also look forward to your honest and candid opinion about how this report can be improved.
Thank you.
Kim, Dae-HeePresident
Korea Information Society Development Institute
5
Contents
MESSAGE FROM THE PRESIDENT ······························································· 3
INTRODUCTION ························································································· 9
PART I CURRENT STATUS AND OUTLOOK FOR KOREA’S ICT SECTOR ··········· 11
1. ICT Sector in General ·················································································· 132. Current State and Outlook by Industry ···························································· 15
PART II INTERNATIONAL COMPARISONS OF COMPETITIVENESS IN THE ICT SECTOR ························································································· 37
1. Achievements and Export Competitiveness of the ICT Sector ································ 412. Investments in Technology Development and Innovation Levels ····························· 453. Human Resources Environment ····································································· 514. Financial and Entrepreneurial Environment ····················································· 555. Levels of ICT Infrastructure and Its Utilization ················································· 596. Industry-Friendly Policies and ICT Legislation ·················································· 61
PART III CURRENT STATES OF KOREAN AND FOREIGN DATA ECONOMIES AND POLICY RESPONSES ································································ 65
1. Concept of Data Economy ············································································ 672. Current States of Domestic and Foreign Data Economies ····································· 693. Policy Trends on Data Economy in and out of Korea ··········································· 83
CONCLUSION ····························································································· 91
REFERENCES ····························································································· 93
6
List of Tables
Table 1-1 Production in the ICT Sector ················································································14
Table 1-2 Export and Import Forecasts for ICT Equipment ·························································14
Table 1-3 Communications Services Revenue Forecasts ····························································15
Table 1-4 Broadcasting Services Revenue Forecasts ·································································20
Table 1-5 Overall Advertising Market Trends ·········································································21
Table 1-6 Itemized IPTV Broadcasting Services Revenue Trends ·················································23
Table 1-7 Information Services Revenue Forecasts ··································································24
Table 1-8 Communications and Broadcasting Equipment Production and Exports ······························25
Table 1-9 Mobile Handset Production and Exports (including Components) ····································26
Table 1-10 Video and Audio Equipment Production and Exports ···················································27
Table 1-11 Digital TV Production and Exports ·········································································28
Table 1-12 Computers and Peripherals Production and Exports ·····················································29
Table 1-13 Electronic Component Production and Exports ···························································30
Table 1-14 Semiconductor Production and Exports ····································································31
Table 1-15 Display Panel Production and Exports ·····································································33
Table 1-16 Software Production and Exports–Current Status and Outlook ·······································34
Table 2-1 Korea’s Global Rankings in terms of ICT Adoption ·····················································59
Table 2-2 Korea’s Rankings on the UN E-Government Development Index ·····································61
Table 3-1 Sizes of the Korean Data Industry ··········································································70
Table 3-2 EU Data Market and Data Economy Forecasts ···························································73
Table 3-3 Number and Share of EU Data Suppliers ··································································74
Table 3-4 Data Suppliers by Company Size in the EU ·······························································76
Table 3-5 Values of the US Data Market and Data Economy (2016–2017) ·······································77
Table 3-6 Value of the US Data Broker Market in 2012 ·····························································78
Table 3-7 Values of the Japanese Data Market and Economy (2016–2017) ······································79
Table 3-8 Comparison of the Values of Japanese and US Data Markets and Economies (2017) ··············79
Table 3-9 Korean Policies Related to the Data Industry ·····························································83
7
Figure 1-1 Trends of Fixed Telephony Service Subscribers ·························································16
Figure 1-2 Subscriptions and Penetration Rates for Broadband Network Services ·······························17
Figure 1-3 Subscriptions and Penetration Rates for Broadband Network Services by Technology ·············18
Figure 1-4 Trends of Subscriptions for Mobile Phone Services ·····················································19
Figure 1-5 Traffic Trends in the Mobile Communications Service Industry ·······································19
Figure 1-6 Pay Channel Subscribers ·····················································································23
Figure 2-1 Total ICT Goods Exports, 2015 and 2016 ·································································41
Figure 2-2 ICT Goods Exports (% of Total Goods Exports), 2015 and 2016 ······································42
Figure 2-3 ICT Service Exports, 2016 and 2017 ·······································································43
Figure 2-4 ICT Service Exports (% of Service Exports), 2016 and 2017···········································43
Figure 2-5 R&D Expenditure by ICT Equipment and Information Services Industries, 2015 ··················45
Figure 2-6 Patents in ICT-Related Technologies, 2012-15 ···························································46
Figure 2-7 Patents in ICT-Related Technologies and Major Players, 2012-15 ·····································47
Figure 2-8 Innovative Capacity of Firms ················································································48
Figure 2-9 Technological Cooperation between Companies, 2018 ··················································49
Figure 2-10 Knowledge Transfer between Companies and Universities, 2018 ·····································49
Figure 2-11 Public and Private Sector Ventures, 2018 ··································································50
Figure 2-12 Availability of Skilled Labor, 2018 ·········································································51
Figure 2-13 Availability of Qualified Engineers, 2018 ·································································52
Figure 2-14 Digital/Technological Skills, 2018 ··········································································52
Figure 2-15 Brain Drain, 2018 ·····························································································53
Figure 2-16 Venture Capital, 2018 ·························································································55
Figure 2-17 Credit, 2018 ····································································································56
Figure 2-18 Number of Days to Start a Business, 2017 ································································56
Figure 2-19 Start-up Procedures, 2017 ····················································································57
Figure 2-20 Use of Big Data and Analytics, 2018 ·······································································60
Figure 2-21 Internet Retailing, 2017 ······················································································60
Figure 2-22 Development and Application of Technology, 2018 ·····················································62
Figure 2-23 Scientific Research Legislation, 2018 ······································································62
Figure 2-24 Ease of Doing Business, 2018 ···············································································63
Figure 2-25 Intellectual Property Rights, 2018 ··········································································63
List of Figures
8
Figure 3-1 Direct Effects, Backward Linkage Effects and Forward Linkage Effects of the Data Industry ····68
Figure 3-2 Shares of Korean Data Industry Segments ································································70
Figure 3-3 Direct Revenues of the Korean Data Industry ····························································71
Figure 3-4 Workforce Composition of the Korean Data Industry ···················································72
Figure 3-5 Workforce Composition of the Korean Data Industry, by Job Classifications ························72
Figure 3-6 Share of Data Suppliers in the EU28 Countries (%) ·····················································75
Figure 3-7 China’s Big Data Market Size ···············································································80
Figure 3-8 Composition of the Chinese Big Data Industry in 2020 ·················································80
Figure 3-9 China’s Big Data Exchange Market Size and Growth Rates (2014–2020)····························81
List of Figures
9
This report consists of three parts. Part I classifies the ICT sector into communications services, broadcasting services, information services, ICT equipment and software and outlines each of the five sub-sectors with a focus on their current status and outlook. Taking a closer look at each sub-sector, communications services are classified further into fixed telephony services, broadband network services, and mobile communications services. Industry-wise revenue projections are also offered. Broadcasting services are classified into terrestrial broadcasting, paid broadcasting, program provider services, and program production and other broadcasting service, and subscriber and revenue estimates are provided for each segment. For information services we will look into the market situation and offer market size projections, focusing on online content, Internet gaming and web advertising services. For ICT equipment, production and export forecasts are presented for major product categories: mobile handsets, digital TVs, computers, peripherals, semiconductors and display panels. This part is concluded with production and export forecasts for software.
Part II provides comparisons between Korea and other leading countries in various areas considered closely related to ICT competitiveness, including export, technology development, human resource environment, financial environment, ICT infrastructure, infrastructure utilization, and applicable laws and regulations, in order to figure out Korea’s competitive standing in the ICT sector. Strengths and weaknesses in Korea’s ICT industries commonly identified in objective evaluations by various international institutions are also highlighted to seek improvement opportunities.
Part III looks into digital economy that has been drawing a lot of attention in and out of Korea. This part describes prevailing concepts of digital economy and the background against which it has emerged. It also assesses the current state, outlook and trends of the domestic and global markets to propose implications to revitalize its ICT industry and secure new growth engines for our economy by facilitating advances into the data economy.
Introduction
Current Status and Outlook for Korea’s ICT Sector¹)
Part I
13
1. ICT Sector in General
Production in the ICT sector in 2019 is estimated at 508.7 trillion won, 1.7% up from the previous year. Looking specifically by industry, the information, communications and broadcasting equipment industry is expected to experience a significant drop in growth as the domestic growth of the ICT equipment industry has slowed down, due to sluggish growth in memory semiconductors and falling global demand for ICT equipment. On the other hand, the information, communications and broadcasting services industry is expected to post a slight increase in growth thanks to the expansion of high-quality communications services, such as 5G and Giga Internet, as well as the stable growth of the digital content market. Meanwhile, the software market is forecast to suffer a slight fall in growth, despite the growth of packaged software such as mobile game and security software, as decreases in new IT project launches will likely slow the growth of IT services.
Exports in the ICT sector in 2019 are expected to edge up by 1.7% year on year to reach USD 225.3 billion. The electronic components market is forecast to slow in growth considerably due to falling memory prices−despite growing needs for technologies such as AI and IoT−the slowdown of the display panels segment, and the growth of Chinese competitors. The slowing growth of display panels is attributable to stagnating demand from smartphones and digital TVs, despite Koreaʼs stronger competitiveness in OLED panels. The communications and broadcasting equipment market will likely continue negative growth due to stagnating demand for smartphones and increasing global shares of Chinese companies, but rising demand for foldable phones and 5G phones is expected to slow down the downward trend. The decline of the video and audio equipment market is expected to slow as recent price drops in digital TV are boosting demand, especially for OLED and high-definition premium-grade TVs.
1) This part is based on a summary of a paper published by Dong-Whan Ko, et al. (2018).
14
1. ICT Sector in General
Table 1-1 Production in the ICT Sector(In trillion won)
2017 2018 2019 Percentage Change 2017–2018
Percentage Change 2018–2019
Grand total 468.6 500.3 508.7 6.8% 1.7%Information, communications and broadcasting equipment 341.3 369.9 374.9 8.4% 1.3%
Electronic components 214.1 241.5 245.3 12.8% 1.6%
Computers and peripherals 11.9 14 15.8 17.7% 12.5%Communications and
broadcasting equipment 46.5 42.8 40.1 △7.9% △6.3%
Video and audio equipment 10.8 9.7 9.7 △9.9% △0.8%Information and communications
application and infrastructure equipment
58.0 61.9 64 6.7% 3.5%
Information, communications and broadcasting services 74.7 75.6 77 1.2% 1.8%
Communications services 38.3 37.7 37.8 △1.4% 0.1%
Broadcasting services 17.4 17.8 18.2 2.4% 2.3%Information services 19.1 20.1 21.1 5.3% 4.8%
Software 52.6 54.7 56.8 4.0% 3.7%
Source: Korea Association of Information and Telecommunication (KAIT) data, except for the 2017 figures for broadcasting services (where data from the Ministry of Science and ICT (MSIT) and Korea Communications Commission (KCC) was used for terrestrial broadcasting, paid broadcasting and PP services, while program production and other broadcasting services are based on KAIT data), KISDI projections for 2018 and beyond.
Table 1-2 Export and Import Forecasts for ICT Equipment(In USD 100 millions)
2017 2018 2019 Percentage Change 2017–2018
Percentage Change 2018–2019
ICT TotalExports 1,976 2,216 2,253 12.2% 1.7%
Imports 1,021 1,071 1,070 5.0% △0.1%
Electronic ComponentsExports 1,403 1,672 1,707 19.2% 2.1%
Imports 544 586 575 7.7% △1.9%
Computers and PeripheralsExports 96 112 126 16.2% 13.3%Imports 119 129 138 8.4% 7.5%
Communications and Broadcasting Equipment
Exports 226 177 157 △21.8% △11.0%Imports 158 139 131 △11.6% △6.2%
Video and Audio EquipmentExports 38 31 30 △18.8% △2.5%Imports 29 30 30 5.1% 0.1%
Information and CommunicationsApplication and Infrastructure Equipment
Exports 212 225 232 5.8% 3.1%Imports 172 188 196 9.3% 4.5%
Source: Institute for Information and Communications Technology Promotion (IITP) data, and KISDI projections for 2018 and beyond.
15
2.1. Communications Services
Table 1-3 Communications Services Revenue Forecasts(In trillion won, %)
2017 2018 2019 Percentage Change 2017-2018
Percentage Change 2018-2019
Fixed communication service 10.3 10.2 10.1 △1.0 △0.9
Wireless communication service 25.7 25.4 25.5 △1.5 0.5
Resale and brokerage 2.2 2.2 2.2 △1.3 0.1Total 38.3 37.7 37.8 △1.4 0.1
Source: Ministry of Science and ICT (MSIT), Korea Association of Information and Telecommunication (KAIT) and Korean Electronics Association (KEA). KISDI projections for 2018 and beyond.
Communication services revenue in 2018 is estimated to have nudged down by 1.4% from the year before to 37.7 trillion won. Total communication services revenue continued to grow to a small extent every year as the growth of wireless communications revenue offset the reduction in fixed communications revenue. In 2018, however, the overall industry is projected to record negative growth due to decreases in wireless (mobile) communications revenue. The reduced revenue for mobile communications in 2018 can be attributed to the increased discount rate for mobile communication services under the Optional Contract Discount system, which took effect in September 2017, as well as lower price plans launched in the first half of 2018.
Communications services revenue in 2019 is projected to nudge up by 0.1% year over year to 37.8 trillion won. Fixed telephony revenue is likely to continue its downward movement, but the wireless communication services market is expected to break away from its negative growth trend, which was caused by rate cuts in 2018, as an increasing number of mobile service users replace their handsets and churn to other service providers. As a result, the total revenue of overall communication services is likely to rebound by a small margin.
2. Current State and Outlook by Industry
16
2. Current State and Outlook by Industry
◼ Fixed Telephony
The fixed telephony services market is expected to continue on the trajectory of negative growth not only because the subscriber base continues to shrink due to the accelerating substitution of mobile calls for fixed-line calls but also because call volumes continue to diminish on account of the expansion of unlimited price plans (on/off-net voice call plans for mobile phones and the invigoration of data-oriented price plans). Up until 2013, the total number of fixed telephony subscribers continued to increase slightly due to growth in Internet phone subscriptions despite decreases in local line subscribers. From 2014 onwards, however, Internet phone subscriptions have also taken a downturn, setting the total number of fixed telephony subscribers on the downward path. Fixed call volumes also continue to be on the decrease in the aftermath of the invigoration of data-oriented price plans.
(In 10 thousand subscribers)
Source: Ministry of Science and ICT (MSIT), Wired Communications Services Statistics, yearly issues
Figure 1-1 Trends of Fixed Telephony Service Subscribers
Internet linesLocal lines
1,174
1,826
1,262
1,762
1,245
1,694
1,246
1,634
1,222
1,575
1,174
1,504
1,168
1,469
2012 2013 2014 2015 2016 2017 June 2018
3,000 3,024 2,939 2,880 2,796 2,677 2,638
17
2.1. Communications Services
◼ Broadband Network Services
The number of subscribers to broadband network services has been stagnating, with the penetration approaching 100%, but revenue is likely to increase slightly thanks to increasing subscriptions to Giga Internet services. This segment is faced with stagnating growth, with its penetration rate as of the end of 2017 recording 98.0% (against the number of households), which is close to saturation. Nevertheless, broadband network service subscriptions continue to stay on a slight upward path owing to the invigoration of Internet-based services such as IPTV as well as the expansion of Giga Internet services. Revenue from broadband network services, which had fluctuated around 4,200 billion won since 2012, nudged up by 1.3% year over year to about 4,350.5 billion won in 2017.
(In 10 thousand subscribers, %)
Source: KISDI (2018), Communications Market Competition Assessment (2018)
Figure 1-2 Subscriptions and Penetration Rates for Broadband Network Services
1,825 1,874 1,9202,002
2,0562,120 2,131
Total Penetration rates against households
2,200
2,100
2,000
1,900
1,800
1,700
1,600
1009080706050403020100
2012 2013 2014 2015 2016 2017 June 2018
90.3 91.6 92.6 95.3 96.5 98.0 97.7
18
2. Current State and Outlook by Industry
Wireless Communications Services
Although the higher tariff discount rate under the Optional Contract Discount system may have worked as a revenue-reducing factor, revenue in this segment is estimated to have grown by a small margin on account of increases in subscriptions and usages as well as the rising share of LTE service subscribers with a relatively high ARPU. Growth in mobile communication service subscriptions is slowing down as the penetration has exceeded 100%. Nevertheless, the number of subscribers is on a slight upward path, driven by invigorated IoT services. In terms of traffic, both voice calls and mobile data traffic are also on the increase thanks to the invigoration of on- and off-net unlimited price plans and increasing usage of services generating large volumes of traffic.
Figure 1-3 Subscriptions and Penetration Rates for Broadband Network Services by Technology
(In 10 thousand subscribers)
<Subscriptions by Network Technology> <Penetration Rates by Network Technology>
2012 2013 2014 2015 2016 2017 Jun. 2018 2012 2013 2014 2015 2016 2017 Jun. 2018
1,117
709
1,210
663
1,305
615
1,428
575
1,526
530
1,628
492
1,664
468
LAN+FTTHxDSL+HFC LAN+FTTHxDSL+HFC
61.2% 64.6% 68.0% 71.3% 74.2% 76.8% 78.1%
38.8% 35.4% 32.0% 28.7% 25.8% 23.2% 21.9%
Source: MSIT, “Wireless Data Traffic Statistics,” yearly issues
19
2.1. Communications Services
<Total Number of Mobile Subscribers> <Net Increases in Mobile Subscriptions>
(In 10 thousand subscribers)
(In 100 million minutes/year, PB/year)
Note: Net increases in mobile lines are estimated by deducting the number of lines in the previous month from the number of lines for this month.Source: MSIT, Wired Communications Services Statistics, yearly issues
Source: 1. (Outbound call volume) KISDI (2018), Communications Market Competition Assessment (2018). 2. (Data traffic) MSIT, Wireless Data Traffic Statistics, yearly issues.
Figure 1-4 Trends of Subscriptions for Mobile Phone Services
Figure 1-5 Traffic Trends in the Mobile Communications Service Industry
1,581 2,845 3,609 4,169 4,631 5,044 5,299
3,7812,623 2,120 1,725 1,499 1,322 1,231
2012 2013 2014 2015 2016 2017 Jun. 2018 Jun. 2015
Dec. 2015
Jun. 2016
Dec. 2016
Jun. 2017
Dec. 2017
Jun. 2018
5,362 5,468 5,729 5,894 6,130 6,366 6,530 19.8
16.2
21.8
16.7 17.6
6.0
24.0
LTE Subscribers2G/3G Subscribers IoTMobile phones
25.0
20.0
15.0
10.0
5.0
0.0
7.96.3
11.2
9.2 9.1
7.0
15.0
11.9 9.9 10.6 7.5 8.5 9.0
-1.0
994 1,026 1,077 1,085 1,057 1,1091,253
1,374
1,5571,646
Outbound call volume Data traffic
5,000
4,000
3,000
2,000
1,000
0
1,800
1,500
1,200
900
600
300
02008 2009 2010 2011 2012 2013 2014 2015 2016 2017
415744
1,123
1,691
2,503
3,419
20
2. Current State and Outlook by Industry
2.2. Broadcasting Services
Table 1-4 Broadcasting Services Revenue Forecasts(In trillion won, %)
Broadcasting Services 2017 2018 2019Percentage
Change 2017-2018
Percentage Change
2018-2019
Terrestrial Broadcasting 3.7 3.5 3.5 △4.1 △2.7Pay Channels 5.6 6 6.4 7.3 5.5
Program Providers 6.6 6.9 7.1 4.1 3
Program Production and Other Broadcasting Services 1.4 1.3 1.3 △7.9 △2.9
Total 17.4 17.8 18.2 2.4 2.3
Note: 1. Pay channels include cable broadcasting, satellite broadcasting, IPTV services and relay cable. 2. IPTV content providers are excluded to avoid duplication with program producers in the Broadcasting Industry Survey Report for
2018 published by the MSIT and the KCC. Source: The figures for 2017 are based on the Broadcasting Industry Survey Report for 2018 published by the MSIT and KCC, except for
program production and other broadcasting services for which KAIT data was used. KISDI projections for 2018 and beyond.
Revenue from broadcasting services in 2018 is estimated to have grown 2.4% from a year earlier to 17,796.1 billion won. In the terrestrial broadcasting segment, the downward trend of 2017 is expected to have continued in 2018 due to sluggish annualized ad sales, in spite of major events in the first half of 2018, including the PyeongChang 2018 Olympics in Korea and 2018 FIFA World Cup in Russia. Cable broadcasting has continued to suffer from declining revenue since 2014 due to intensifying competition among paid broadcasting media. On the contrary, IPTV has continued its revenue growth trend as the releases of UHD IPTV and AI-enabled services boost subscriptions and subscriber quality. As for program providers (PPs), they are anticipated to show an upward trend, backed up by rising viewer ratings for pay channels and the rapid growth of data home shopping channels.
Revenue from broadcasting services in 2019 is projected to reach 18,201.4 billion won, recording a year-on-year growth rate of 2.3%. The revenue of terrestrial broadcasting services is expected to continue to fall as the declining appeal of terrestrial content pushes down viewer ratings and fiercer competition with other media including the Internet, mobile services and pay channels weaken competitiveness in the advertising market. As for cable broadcasting, it will have difficulty retaining subscribers because of competition with IPTV, while license fee income will continue to drop due to increasing subscriptions to 8VSB and other lower-priced
21
2.2. Broadcasting Services
digital products. On the other hand, IPTV will continue its growing tendency in revenue as the video content services offered through partnerships with OTT service providers, differentiated content enabled by AI, virtual reality (VR) and augmented reality (AR), and VOD services including program replays will bring in more license fees and the expanding subscriber base of home shopping channels will push up transmission fee income. For program providers, rising viewer ratings for pay channels will continue to increase ad revenue, while the invigoration of online platform services such as OTT is forecast to increase program sales revenue.
◼ Terrestrial Broadcasting Services
Revenue from terrestrial broadcasting services in 2018 is estimated to have dropped by 4.1% from the previous year to 3,545.4 billion won. The downward trend of 2017 is expected to have continued in 2018 due to sluggish annualized ad sales, despite many major events that took place in the first half of 2018, including the PyeongChang 2018 Olympics in Korea and 2018 FIFA World Cup in Russia.
Revenue from terrestrial broadcasting services in 2019 is forecast to decrease to 3,450.4 billion won, a 2.7% drop compared with the previous year. Revenue will likely continue to fall as the declining appeal of terrestrial content pushes down viewer ratings and fiercer competition with other media including the Internet, mobile services and pay channels weaken competitiveness in the advertising market.
Table 1-5 Overall Advertising Market Trends(In KRW 100 millions)
Category 2014 2015 2016 2017 CAGR 2014-2017
Broadcasting
Terrestrial 19,013 19,147 16,256 14,144 △9.4%Program providers 12,258 13,520 13,488 14,657 6.1%
Pay channels 1,629 2,068 2,480 2,849 20.5%
Subtotal 32,899 34,736 32,225 31,650 △1.3%Printing (newspapers, magazines) 20,517 20,354 19,799 20,125 △0.6%
Internet 21,410 20,534 21,731 21,715 0.5%Mobile 9,099 13,744 19,816 22,498 35.2%Others 14,370 14,507 13,675 13,370 △2.4%
Source: KCC (2018), Status Report on the Financial Information Declared by Broadcasting Companies for 2017. Korean Broadcast Advertising Corporation (KOBACO), Korea Advertising Expenditure Research for 2017 for printing, Internet, mobile and other advertisements.
22
2. Current State and Outlook by Industry
◼ Paid Broadcasting Services
Revenue from paid broadcasting services in 2018 is estimated to have grown to 6,046.7 billion won at a year-on-year growth rate of 7.3%. Cable broadcasting services are projected to post a negative growth rate as revenue has continued to dwindle since 2014 due to increasing competition with IPTV and other pay channels. Satellite broadcasting revenue is also expected to record negative growth due to the stagnating subscriber base. The IPTV segment is anticipated to achieve a high growth rate as increasing subscribers opting for fixed-mobile bundled products as well as the launches of UHD IPTV services and set-top boxes with AI features expanded the subscriber base and enhanced subscriber quality.
Revenue from paid broadcasting services in 2019 is predicted to increase to 6,378.8 billion won, up by 5.5% from the previous year. Cable broadcasting will have difficulty retaining subscribers because of competition with IPTV, while increasing subscriptions to 8VSB and other lower-priced digital products will continue to cut down on its license fee income. Cable broadcasting has maintained positive revenues, backed up by home shopping transmission fees, but it is not reasonable to expect high growth to continue in the home shopping market, considering fierce competition with wired and wireless Internet services and social commerce. Besides this, cable broadcasting companies face competition with IPTV and other media in negotiations for home shopping fees. Under these circumstances, a drop in gross revenue is considered inevitable. Satellite broadcasting is also expected to record insignificant revenue growth because of shrinking subscriptions to OTS bundled service offerings. As for the IPTV services segment, it is anticipated to continue its growing tendency in revenue as the video content services offered through partnerships with OTT service providers, differentiated content enabled by AI, VR and AR, and VOD services including program replays will bring in more license fees and the expanding subscriber base of home shopping channels will push up transmission fee income.
23
2.2. Broadcasting Services
Table 1-6 Itemized IPTV Broadcasting Services Revenue Trends(In KRW 100 millions)
2014 2015 2016 2017Percentage
Change 2016-2017
IPTV Broadcasting Services Revenue – Total 14,872 19,088 24,277 29,251 20.5%
Broadcasting License Fees 12,013 15,018 17,209 19,916 15.7%Advertising 147 436 846 994 17.5%Home Shopping Transmission Fees 1,754 2,404 3,368 4,890 45.2%Subscriptions and Installations 15 50 384 905 135.6%Terminal Device Loans (Sales) 506 842 1,637 1,701 3.9%Other Broadcasting Businesses 437 339 832 845 1.5%
Figure 1-6 Pay Channel Subscribers
(In 10 thousand subscribers)
1,600
1,400
1,200
1,000
800
600
400
200
-
2014 2015 2016 2017 June 2018
1,461
967
1,136
1,2891,433
1,502
326325318309309
1,373 1,389 1,404 1,394
Cable TV IPTV Satellite TV
Source: MSIT and KCC (2018), Broadcasting Industry Survey Report for 2018. The figures for June 2018 are from the MSIT (November 21, 2018), “Announcement of Pay Channel Subscribers and Market Shares for the First Half of 2017.”
Source: MSIT and KCC (2018), Broadcasting Industry Survey Report for 2018.
24
2. Current State and Outlook by Industry
◼ Program Providers (PPs)
Program Providers’ revenue in 2018 is estimated at 6,912 billion won, a 4.1% increase on the previous year. Program providers are expected to show an upward trend, driven by rising viewer ratings for general programming cable TV channels and pay channels as well as the rapid growth of data home shopping channels. In 2015, eight data home shopping channels were launched, creating an interactive broadcasting environment for home shopping services.
Revenue from PP services in 2019 is forecast to climb by 3.0% year on year to 7,117.6 billion won. Rising viewer ratings for pay channels is likely to continue to raise ad revenue, while the invigoration of online platform services such as OTT will increase program sales revenue. PPs are expected to enhance competitiveness in the broadcasting market by offering high-quality content, which will be led mostly by general programming cable TV channels and multiple system providers (MSPs) such as CJ, and subsequent viewer rating improvements. Rising viewer ratings will lead to higher advertising prices and increased ad sales, which will serve as a revenue-boosting factor for PPs.
2.3. Information Services Table 1-7 Information Services Revenue Forecasts
(In trillion won, %)
2017 2018 2019 Percentage Change 2017-2018
Percentage Change 2018-2019
Information services 19.1 20.1 21.1 5.3 4.8
Information services revenue in 2018 is estimated at 20.1 trillion won, indicating a growth of 5.3% on a year-on-year basis. Content provision services such as digital music and movies have continued to expand, while such content as publications and animations are likely to slow down in growth. When it comes to advertising revenue by Internet portals such as NHN and Kakao, the mobile advertising market has been growing. Yet the
Note: Information services are divided into information infrastructure services, information media services (web search portals), and information provision services.
Source: MSIT, KAIT and KEA. KISDI projections for 2018 and beyond
25
2.4. ICT Equipment
Internet advertising market as a whole has been witnessing slowing growth due to the economic slowdown.
Information services revenue in 2019 is projected at 21.1 trillion won, a year-on-year growth of 4.8%. Digital music and mobile-based video services will continue stable growth, whereas the publication service and education markets will achieve only slight growth. As for advertising services, the mobile ad market is expected to expand continuously, but the overall market is likely to slow down in growth slightly, as is the case with the wired ad market.
2.4. ICT Equipment
2.4.1. Communications and Broadcasting Equipment
Table 1-8 Communications and Broadcasting Equipment Production and Exports(Production in KRW 100 millions, exports/imports in USD millions, %)
2017 2018 2019 Percentage Change2017-2018
Percentage Change2018-2019
Production 464,703 428,002 401,069 △7.9 △6.3Exports 22,617 17,678 15,737 △21.8 △10.9Imports 15,759 13,929 13,062 △11.6 △6.2
Source: MSIT, KAIT and KEA data for production, MSIT and IITP data for exports and imports, and KISDI projections for 2018 and beyond.
Communications and broadcasting equipment production in 2018 is estimated at 42,800.2 billion won, down by 7.9% from the previous year. Increased facility investments by network operators to support the commercialization of 5G services boosted production of communications equipment manufacturers, but overall communications equipment production is expected to have declined due to the expansion of overseas production in the mobile phone segment.
Communications and broadcasting equipment exports in 2018 are estimated at USD 17.7 billion, a 21.8% plunge from the previous year. Global 5G network investments have been pushing up overall communications equipment investments, which has fueled the
26
2. Current State and Outlook by Industry
growth of network equipment exports. However, in the mobile handsets segment that accounts for about 90% of communications equipment exports, competition has been intensifying, while overseas production of not only finished products but also components has been increasing. These factors will likely work to reduce overall communications equipment exports.
Production in 2019 is forecast to decline by 6.3% year on year to 40,106.9 billion won. Communications equipment production will go up as network carriers increase investments to enable the commercialization of 5G services, but the domestic production of communication devices is expected to decrease slightly because of intensifying competition among leading companies amid the continued stagnation of demand for smartphones.
Exports in 2019 are projected to drop 10.9% year on year to USD 15.7 billion. Continued overseas production and intensifying competition are likely to reduce exports, despite improving demand for network equipment in the wake of network carriers’ earnest investments in 5G services as well as the downward stabilization of growth in the global smartphone market.
◼ Mobile Handsets
Table 1-9 Mobile Handset Production and Exports (including Components) (Production in KRW 100 millions, exports/imports in USD millions, %)
2017 2018 2019 Percentage Change2017-2018
Percentage Change2018-2019
Production 344,157 312,441 289,572 △9.2 △7.3Exports 19,036 14,691 12,904 △22.8 △12.2Imports 12,158 10,084 8,904 △17.1 △11.7
Mobile handsets production in 2018 is estimated to have dwindled by 9.2% from the year before to 31,244.1 billion won. Despite sluggish performance in the Chinese market, the global smartphone market is likely to have grown on the strength of increasing demand, fueled by the expansion of 4G services in emerging Asian and Pacific markets including India. Domestic production, however, is likely to have decreased as Korean companies increased overseas production even for components in order to cope with intensifying competition.
Source: MSIT, KAIT and KEA data for production, MSIT and IITP data for exports and imports, and KISDI projections for 2018 and beyond.
27
2.4. ICT Equipment
Mobile handsets production in 2019 is projected to drop by 7.3% year on year to 28,957.2 billion won. Although the smartphone segment will see its worldwide growth rate to climb up mostly in emerging markets, the slowing growth of mobile device production is expected to continue as Korean companies increase overseas production to secure price competitiveness to meet rising demand for mid-/low-priced phones and achieve localization.
Exports of mobile handsets in 2018 are estimated to have plummeted by 22.8% year on year to USD 14.7 billion. The global smartphone market has been growing, driven by emerging markets, but Korean manufacturers are likely to report a sluggish performance due to the rapid growth of Chinese competitors, such as Huawei in premium-grade smartphones and Xiaomi in mid-/low-cost smartphones. Also, overseas production has increased even for the components of mobile phones. Consequently, exports to the regions that have been turned into production bases, such as Vietnam, India and Brazil have been reduced, which is expected to keep overall mobile phone exports on the downward path.
Exports of mobile handsets in 2019 are projected at USD 12.9 billion, recording a 12.2% year-on-year drop. Overseas production is expected to continue to increase, while competition with Chinese companies will become fiercer as they have been sharpening their competitive edge for both mid-/low-priced and premium-grade models. Nevertheless, sluggish exports are expected to be mitigated thanks to demand for new products such as foldable smartphones and 5G smartphones.
2.4.2. Video and Audio Equipment Table 1-10 Video and Audio Equipment Production and Exports
(Production in KRW 100 millions, exports/imports in USD millions, %)
2017 2018 2019 Percentage Change2017-2018
Percentage Change2018-2019
Production 107,917 97,254 96,516 △9.9 △0.8Exports 3,791 3,080 3,003 △18.8 △2.5Imports 2,871 3,018 3,020 5.1 0.1
Source: MSIT, KAIT and KEA data for production, MSIT and IITP data for exports and imports, and KISDI projections for 2018 and beyond.
28
2. Current State and Outlook by Industry
Video and audio equipment production in 2018 is estimated to have contracted by 9.9% from the previous year to 9,725.4 billion won. This segment was hit hard by the structural stagnation of demand for digital TV, which accounts for about 50% of broad-casting equipment production. Set-top box production surged by 13.5% year on year, but the production of digital video and audio devices edged down by 1.0% and 1.8%, respec-tively, resulting in negative growth for the year.
Video and audio equipment exports in 2018 are estimated to have plunged 18.8% year on year to USD 3.08 billion. The growth rate of exports in this segment is expected to decline as exports of digital TV, which accounts for about 55% of total exports, are falling rapidly and exports of components for digital TV are also on a steep downward trajectory since 2016.
Video and audio equipment production in 2019 is forecast to nudge down by 0.8% year on year to 9,651.6 billion won. It is considered that this segment will not be able to achieve the level of growth sufficient to overcome the structural stagnation of demand, unless replacement demand kicks in earnestly. However, the degree of export contraction is expected to be moderated by the base effect from the previous year and the growth trends of audio and digital video devices.
Video and audio equipment exports in 2019 are predicted to fall 2.5% on the previous year to USD 3 billion. Negative growth relative to the previous year is expected to continue in 2019 as audio equipment exports, which account for about 30%, have started to slow down and the structural decline of digital TV exports is reflected in the overall growth rate.
◼ Digital TV
Table 1-11 Digital TV Production and Exports(Production in KRW 100 millions, exports/imports in USD millions, %)
2017 2018 2019 Percentage Change2017-2018
Percentage Change2018-2019
Production 55,364 44,812 43,904 △19.1 △2.0Exports 2,264 1,646 1,580 △27.3 △4.0Imports 778 938 980 20.6 4.5
Source: MSIT, KAIT and KEA data for production, MSIT and IITP data for exports and imports, and KISDI projections for 2018 and beyond.
29
2.4. ICT Equipment
Digital TV production in 2018 is estimated to have shrunk by 19.1% from a year earlier to 4,481.2 billion won. Despite its good performance in the global TV market in terms of the number of units sold, this segment is expected to post negative growth due to the high share of overseas production in finished TV sets as well as falling prices for TV sets.
Digital TV exports in 2018 are estimated to have tumbled by 27.3% year over year to USD 1.65 billion. Exports decreased about 30.6% compared with the same period of the previous year, with the growth rate of TV components in particular reaching as low as -36.7%.
Digital TV production in 2019 is forecast to edge down by 2.0% to 4,390.4 billion won. Korean digital TV manufacturers are expected to maintain their market shares especially for premium-grade product groups, but there is not much of room left for growth in the mature market, as intensifying competition with Chinese and Japanese products will push down prices.
Digital TV exports in 2019 are projected to fall 4.0% from the previous year to USD 1.58 billion. In 2019, demand for digital TV is expected to grow in terms of units sold, but exports are forecast to continue to decline because overseas production has an absolute share of total production.
2.4.3. Computers and Peripherals
Table 1-12 Computers and Peripherals Production and Exports(Production in KRW 100 millions, exports/imports in USD millions, %)
2017 2018 2019 Percentage Change2017-2018
Percentage Change2018-2019
Production 119,414 140,491 158,080 17.7 12.5Exports 9,602 11,156 12,636 16.2 13.3Imports 11,879 12,872 13,834 8.4 7.5
Production of computers and peripherals in 2018 is estimated at 14,049.1 billion won, recording a surge of 17.7% compared with the previous year. Demand for auxiliary memory devices, which determines total production, has been growing. Production of
Source: MSIT, KAIT and KEA data for production, MSIT and IITP data for exports and imports, and KISDI projections for 2018 and beyond.
30
2. Current State and Outlook by Industry
desktop PCs has been on the decline, but demand for laptops and high-performance computers has been picking up to some extent.
Exports of computers and peripherals in 2018 are estimated to have jumped to USD 11.2 billion, a growth of 16.2% on the previous year. Demand for peripherals including auxiliary memory devices (SSDs) has been increasing, with demand for gaming PCs, large-screen monitors, and components for high-performance computers rising continuously. Backed up by such rising demand, the industry is anticipated to record a two-digit growth rate.
Production in 2019 is forecast at 15,808 billion won, jumping by 12.5% year over year. Production of auxiliary memory devices is projected to maintain a high growth trend on the strength of rising demand, while computer production is also expected to continue a moderate growth trend thanks to demand for laptops, high-performance computers such as gaming PCs, and graphic cards and sound-related components.
Exports in 2019 are projected to grow by 13.3% year on year to USD 12.6 billion. The spread of solid state drives (SSDs), which can process a large volume of unstructured data, will continue for the time being, with demand for storage devices growing, fueled by the expansion of cloud computing. On the other hand, worldwide PC sales are on the decrease, although the rate of decrease has been falling, and Korean PC exports are likely to continue to stagnate.
2.4.4. Electronic Components
Table 1-13 Electronic Component Production and Exports
(Production in KRW trillions, exports/imports in USD millions, %)
2017 2018 2019 Percentage Change 2017-2018
Percentage Change 2018-2019
Production 214.1 241.5 245.3 12.8 1.6Exports 1,403 1,672 1,707 19.2 2.1Imports 544 586 575 7.7 △1.9
Source: MSIT, KAIT and KEA data for production, MSIT and IITP data for exports and imports, and KISDI projections for 2018 and beyond
31
2.4. ICT Equipment
Electronic component production in 2018 is estimated to have increased to 241.5 trillion won, up by 12.8% from the previous year. This segment has been maintaining a high growth rate as demand for memory semiconductors has persisted thanks to the commercialization of enabling technologies for the Fourth Industrial Revolution including IoT and AI coupled with increasing memory capacities in individual devices.The year-on-year growth rate for electronic components is expected to have slowed as the production of display panels has slowed because of the stagnating growth of the global ICT industry.
Electronic component exports in 2018 are estimated to have soared by 19.2% year on year to USD 167.2 billion. The favorable momentum for DRAM prices has continued since 2017, but the growth rate of DRAMs will slow slightly from the fourth quarter onwards. With regard to display panels, LCD exports have continued to be on the decrease, while OLED exports, which used to record high growth rates, are also expected to report sluggish growth in 2018.
Production in 2019 is forecast at 245.3 trillion won, recording a year-on-year growth rate of 1.6%. Despite continued demand for memory semiconductors and increasing demand for OLED panels, overall production is predicted to grow only by a small margin compared with the previous year due to falling semiconductor prices and declining LCD panel production.
Exports in 2019 are forecast to rise by 2.1% from the previous year to USD 170.7 billion. The year-on-year growth of component exports is expected to slow significantly as DRAM price drops will slow down semiconductor exports Besides this, OLED panel exports will also slow down, and Korean companies’ global market share of LCD panels is expected to fall in spite of increasing OLED panel exports.
◼ Semiconductors
Table 1-14 Semiconductor Production and Exports(Production in KRW 100 millions, exports/imports in USD millions, %)
2017 2018 2019 Percentage Change 2017-2018
Percentage Change 2018-2019
Production 1,114,949 1,435,674 1,507,985 28.8 5Exports 99,673 129,311 134,018 29.7 3.6Imports 41,422 44,843 43,361 8.3 △3.3
Source: MSIT, KAIT and KEA data for production, MSIT and IITP data for exports and imports, and KISDI projections for 2018 and beyond.
32
2. Current State and Outlook by Industry
Semiconductor production in 2018 is estimated to have surged by 28.8% to 143,567.4 billion won. Semiconductor is expected to have exceeded the 140-trillion-won mark in production value, the highest in Korean history among single production items. The commercialization of enabling technologies for the Fourth Industrial Revolution including IoT, big data analytics, AI and robotics has been boosting demand for semiconductors including servers and edge devices as well as memory capacities of individual devices.
Semiconductor exports in 2018 are estimated to have soared by 29.7% year on year to USD 129.3 billion. Semiconductor is expected to break through the 100-billion-dollars-in-exports mark as a single item, backed up by stabilizing memory prices and increasing foundry exports.
Semiconductor production in 2019 is expected to climb up by 5.0% from the previous year to 150,798.5 billion won. In 2019, demand for DRAMs and NAND flashes, among memory semiconductors, is forecast to grow continuously thanks to advances in IoT, big data analytics, AI and robotics, but growth rates are likely to slow down due to falling prices. It is believed that Korean memory semiconductor manufacturers will maintain their strong competitiveness, but with the global semiconductor market slowing down, domestic semiconductor production is also expected to drop to a single-digit growth rate.
Semiconductor exports in 2019 are projected to go up by 3.6% from the previous year to USD 134 billion. Semiconductors are expected to continue quantitative growth as the memory capacities of ICT devices continue to increase, but the downward trend of memory prices will likely continue, slowing the growth of semiconductor exports. Korean companies are expected to maintain their competitive edge in microfabrication technologies, but prices are likely to fall due to increasing supply as manufacturers including Samsung Electronics and SK Hynix start operating new production facilities, which they have constructed to increase production capacities.
33
2.4. ICT Equipment
◼ Display Panels
Table 1-15 Display Panel Production and Exports(Production in KRW 100 millions, exports/imports in USD millions, %)
2017 2018 2019 Percentage Change 2017-2018
Percentage Change 2018-2019
Production 709,939 651,944 616,087 △8.2 △5.5Exports 30,291 27,668 26,368 △8.7 △4.7Imports 6,128 6,787 7,110 10.8 4.8
Display panel production in 2018 is estimated at 65,194.4 billion won, dropping by 8.2% year on year. It has been analyzed that demand for panels has slowed on account of decreasing demand for smartphones, although worldwide demand for TV has grown slightly. As for LCD panels, panel sizes have grown larger as demand for 65-inch and larger high-definition TVs increased. Yet negative production growth is expected for LDC panels, due to the declining production of 40-inch TV panels and intensifying global competition.
Display panel exports in 2018 are estimated to have contracted by 8.7% year on year to USD 27.7 billion. Exports are likely to post negative growth due to the slowing growth of the global ICT equipment industry as well as slipping panel prices. The prices of LCD panels for TV showed a rapid downward movement up until the first half, but they stayed flat from the second half onwards.
Production in 2019 is projected to decline by 5.5% year on year to 61,608.7 billion won. LCD panels, which take up a large share of the display panel market, are expected to remain on a negative growth path due to declining panel prices and falling market shares of Korean companies. On the other hand, demand for OLED panels will grow rapidly, fueled mostly by big-size OLED TV, but the overall growth rate is predicted to slow down due to the slowing growth of smartphones.
Exports in 2019 are predicted to drop 4.7% to USD 26.4 billion. Prices of large-size panels are forecast to drop due to the increasing production of 10.5-generation LCD panels in China. Price drops, coupled with the declining market shares of Korean companies, are likely to result in negative growth for LCD panel exports. In the meantime, exports of OLED panels for TV will grow whereas those for mobile devices are expected to slow in growth.
Source: MSIT, KAIT and KEA data for production, MSIT and IITP data for exports and imports, and KISDI projections for 2018 and beyond.
34
2. Current State and Outlook by Industry
2.5. Software
Table 1-16 Software Production and Exports–Current Status and Outlook
(Production in KRW 100 millions, exports/imports in USD millions, %)
Category 2017 2018 2019 Percentage Change2017-2018
Percentage Change2018-2019
Software Packages 79,127 82,134 85,994 3.8 4.7Game Software 107,782 117,590 126,526 9.1 7.6
IT Services 339,318 347,461 355,106 2.4 2.2SW Production Total 526,226 547,185 567,626 4.0 3.7
SW Exports Total 10,663 11,068 11,609 3.8 4.9
Software production in 2018 is estimated at 54,718.5 billion won, with the year-to-year growth rate of 4.0%. The packaged software segment is estimated to have achieved a growth rate of 3.8% due to the declining growth of general-purpose industrial software, despite the stable growth of the system software market. Game software production is estimated to have grown by 9.1% on the previous year thanks to the expanding growth of the mobile game market. As for IT services, production is expected to post a year-on-year growth rate of 2.4%, which can be attributed to reductions in new system integration (SI) projects due to economic downturn.
Software exports in 2018 are estimated at USD 11.1 billion, with a year-on-year growth rate of 3.8%. While software package exports decreased, game software exports took a favorable turn, contributing to the overall growth. The software package segment is likely to record a significant reduction in growth as its exports to the Southeast Asian region and Japan–regions to which it has been expanding its export markets–slowed down. On the contrary, the game industry is expected to report significant growth as its export markets have been expanded, largely by large-scale mobile games, to North American and Southeast Asian regions. On the front of IT services, exports increased in the fields of new industries, such as transportation, energy, e-government, logistics, and ICT convergence, but overall growth is expected to report reduced growth because of decreases in new system integration projects.
Software production in 2019 is forecast to grow 3.7% year on year to 56,762.6 billion won. Software packages are expected to grow by 4.7% compared with a year earlier
Source: MSIT, KAIT and KEA. KISDI projections for 2018 and beyond.
35
2.5. Software
thanks to rising demand for system software and in the public sector. Game software is projected to grow at a year-on-year growth rate of 7.6% thanks to the increasing growth of mobile MMORPG games, in spite of the slowing growth of social and casual games. For IT services, the economic slowdown will continue to reduce new projects. As a result, the industry is forecast to achieve a mere 2.2% growth, despite the expansion of the convergence market.
Software exports are forecast to reach USD 11.6 billion at a year-on-year rate of 4.9% in 2019. And the software industry is expected to expand its export markets, mostly to emerging markets, focusing on cloud-based business and security software as well as communications software to support conversion to 5G. In the game market, the growth of traditional online PC games will slow down slightly, but exports are expected to continue to grow thanks to increasing launches of mobile-oriented MMORPG games and diversifying game platforms including VR games. In the case of IT services, aside from the traditional e-government market, the ICT convergence market for Smart Factory, cloud computing, big data analytics and AI is expected to expand further.
International Comparisons of Competitiveness in the ICT Sector
Part II
39
This part measures Korea’s competitiveness in the ICT sector through comparisons with other advanced countries in the following six areas: achievements and export competitiveness in the ICT market, investments in technology development and innovation levels, human resources environment, financial/entrepreneurial environment, ICT infrastructure levels, and industry-friendly policies and laws.
41
Korea’s export competitiveness in the field of ICT goods exports is the second highest, right behind the US, among 35 OECD countries (the Czech Republic excluded). Its ICT goods exports in 2016 fell 3.6% year on year to reach 110.331 billion dollars. This accounts for 78.7% of the ICT goods exports of the United States, which topped the list, but is still about six times higher than the OECD average. Although Korea’s performance is high among the OECD countries, it turns out that it falls far behind China, which exports ICT goods across the world. China’s ICT goods exports in 2016 amounted to 555.824 billion dollars, about five times bigger than those of Korea.
Korea’s dependence on ICT goods exports expressed as the percentage of total goods exports turns out to be the highest among the 36 OECD countries. The ratio of ICT goods exports to total goods exports in 2016 is 22.3%, up by 0.6%p from 2015. Korea is followed by Slovakia, Mexico, Czech Republic, Estonia, Israel, Hungary, and Netherlands on this list. In the case of the US and China, which posted bigger ICT goods exports in value than Korea, their ratios of ICT goods to total goods exports in 2016 were 9.7% and
1. Achievements and Export Competitiveness of the ICT Sector
Figure 2-1 Total ICT Goods Exports, 2015 and 2016
(In USD millions)
Source: Author’s calculations based on UNCTAD, Information Economy (database), https://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx (accessed December 2018)
Unite
d St
ates
Kore
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20162015
42
1. Achievements and Export Competitiveness of the ICT Sector
26.5%, respectively. These figures show that the extent of Korea’s and China’s reliance on ICT goods exports is similar whereas the US’s reliance is much lower.
(In %)
Source: Author’s calculations based on World Bank, World Development Indicators (database), https://databank.worldbank.org/data/source/world-development-indicators (accessed December 2018)
Figure 2-2 ICT Goods Exports (% of Total Goods Exports), 2015 and 2016
2016201525.0
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It turns out that Korea’s export competitiveness for ICT services remains lower than its product competitiveness. In 2017, Korea was in the middle ranks, coming in 15th place among the 36 OECD countries surveyed in terms of ICT service exports, posting USD 25,253 million at a year-on-year growth rate of 3.0%. This export value falls short even for the OECD average, accounting only for 13.1% of that of the United States, which topped the list.
The percentage of Korea’s ICT services in its total service exports also turns out to be low compared with other OECD members. The ratio of ICT service exports to total service exports in 2017 nudged up 1.0%p from the previous year to record 4.9%, which ranked 26th among the 36 OECD countries. Israel headed the list with its share of ICT service exports at as high as 44.9%, followed by Ireland, which posted 43.8%.
43
(In USD millions)
(In %)
Source: Author’s calculations based on World Bank, World Development Indicators (database), https://databank.worldbank.org/data/source/world-development-indicators (accessed December 2018)
Figure 2-3 ICT Service Exports, 2016 and 2017
Figure 2-4 ICT Service Exports (% of Service Exports), 2016 and 2017
Source: Author’s calculations based on World Bank, World Development Indicators (database), https://databank.worldbank.org/data/source/world-development-indicators (accessed December 2018)
20172016200,000
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45
Korea’s R&D investments in the ICT sector turn out to be the second highest among the 32 OECD countries surveyed. In 2015, the share of Korea’s R&D expenditure on ICT in its total private R&D expenditure was only 1.1% lower than Israel, which took first place with 54.5%. R&D activities in Korean ICT industries are characterized by the absolute significance of R&D on ICT equipment. A look at the breakdown of R&D expenditure in ICT industries shows that R&D expenditure on ICT equipment accounts for 50.1%, indicating that most of the R&D expenditure in the ICT sector goes to ICT equipment. This is the highest among the 32 countries. On the other hand, the share of information services is a mere 4.1%, which is so low as to be ranked 31st among the 32 countries surveyed.
2. Investments in Technology Development and Innovation Levels
2. Investments in Technology Development and Innovation Levels
Figure 2-5 R&D Expenditure by ICT Equipment and Information Services Industries, 2015
(In %)
Note: As a percentage of business enterprise expenditure on R&DSource: OECD (2017)
Information servicesICT equipment60
45
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ICT equipment and information services, 2005
46
2. Investments in Technology Development and Innovation Levels
Korea’s ICT R&D achievements measured by patents turn out to be high. The number of Korea’s ICT-related patents between 2012 and 2015 is 60,630, which is the third largest among the 35 OECD countries surveyed after Japan and the US. This figure corresponds to 17.6% percent of the world’s ICT-related patents (344,818) for the same period.
The OECD looked into top five players’ shares of patents, with top five in each ICT field selected from China, Taiwan and OECD countries. Korea took the top place in one out of the 12 fields (human interface, 23.8%) and came second to Japan in the field of large capacity and high-speed storage (25.8%).
Figure 2-6 Patents in ICT-Related Technologies, 2012-15
Source: OECD (2017)
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47
Despite heavy ICT investments by the private sector, the innovative capacity of Korean firms was assessed to be low. In a survey on the levels of innovative capacity to generate new products, processes and/or services, Korea ranked 24th among the 36 OECD countries.
Figure 2-7 Patents in ICT-Related Technologies and Major Players, 2012-15
(In %)
Note: Share of the top five players in the fieldSource: OECD (2017)
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2. Investments in Technology Development and Innovation Levels
Next, it turns out that strong cooperation among R&D players has not been developed to a large extent in Korea. In a 2018 survey on technological cooperation between companies, Korea came only in 28th place among the 36 OECD countries. In terms of industry-university technology transfers, Korea ranked 21st among the same countries surveyed, which is among the low-ranking group. Also, on the indicator of how actively public and private sector ventures are supporting technological development, Korea came in 24th place. This shows that the country has failed to fully create an open environment for technological development and commercialization through cooperation among R&D organizations.
Figure 2-8 Innovative Capacity of Firms
Note: IMD WCY Executive Opinion Survey based on an index from 0 to 10 (Innovative capacity of firms (to generate new products, processes and/or services) is high in your economy)
Source: Author’s calculations based on IMD, World Competitiveness Online (database), https://www.imd.org/wcc/products/eshop-world- competitiveness-online/ (accessed November 2018)
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Figure 2-9 Technological Cooperation between Companies, 2018
Note: IMD WCY Executive Opinion Survey based on an index from 0 to 10 (technological cooperation between companies is developed)Source: Author’s calculations based on IMD, World Competitiveness Online (database), https://www.imd.org/wcc/products/eshop-world-
competitiveness-online/ (accessed November 2018)
Figure 2-10 Knowledge Transfer between Companies and Universities, 2018
Note: IMD WCY Executive Opinion Survey based on an index from 0 to 10 (knowledge transfer is highly developed between companies and universities)
Source: Author’s calculations based on IMD, World Competitiveness Online (database), https://www.imd.org/wcc/products/eshop-world-competitiveness-online/ (accessed November 2018)
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2. Investments in Technology Development and Innovation Levels
Figure 2-11 Public and Private Sector Ventures, 2018
Note: IMD WCY Executive Opinion Survey based on an index from 0 to 10 (public and private sector ventures are supporting technological development)
Source: Author’s calculations based on IMD, World Competitiveness Online (database), https://www.imd.org/wcc/products/eshop-world- competitiveness-online/ (accessed November 2018)
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According to a survey conducted by IMD, the Korean human resource environment is in the middle ranks of OECD countries. On the questions regarding how sufficient resources are in terms of the availability of skilled labor, qualified engineers and digital technology skills, Korea ranked 23th, 22nd and 19th, respectively, among the 36 OECD members surveyed in 2018. It should be particularly noted that the country is highly likely to experience brain drain and consequently face a shortage of highly skilled labor. The IMD international survey ranked Korea in 28th place on the brain drain indicator, forcing the country to join the low-ranking group among the countries surveyed.
3. Human Resources Environment
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Figure 2-12 Availability of Skilled Labor, 2018
Note: IMD WCY Executive Opinion Survey based on an index from 0 to 10 (skilled labor is readily available)Source: Author’s calculations based on IMD, World Competitiveness Online (database), https://www.imd.org/wcc/products/eshop-world-
competitiveness-online/ (accessed November 2018)
52
3. Human Resources Environment
Figure 2-13 Availability of Qualified Engineers, 2018
Note: IMD WCY Executive Opinion Survey based on a 0-to-10 index (qualified engineers are available in your labor market)Source: Author’s calculations based on IMD, World Competitiveness Online (database), https://www.imd.org/wcc/products/eshop-world-
competitiveness-online/ (accessed November 2018)
Figure 2-14 Digital/Technological Skills, 2018
Note: IMD WCY Executive Opinion Survey based on a 0-to-10 index (digital/technological skills are readily available)Source: Author’s calculations based on IMD, World Competitiveness Online (database), https://www.imd.org/wcc/products/eshop-world-
competitiveness-online/ (accessed November 2018)
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Figure 2-15 Brain Drain, 2018
Note: IMD WCY Executive Opinion Survey based on an index from 0 to 10 (brain drain (well-educated and skilled people) does not hinder competitiveness in your economy)
Source: Author’s calculations based on IMD, World Competitiveness Online (database), https://www.imd.org/wcc/products/eshop-world- competitiveness-online/ (accessed November 2018)
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Korea is considered to have an excellent level of administrative support available for startups, while its funding environment is inadequate. In a 2018 IMD survey on credit and venture capital availability, Korea is at the bottom of the list of 36 OECD countries, coming in 35th place for both indicators. This means that businesses find it not easy to raise funds in Korea. By contrast, in terms of administrative support to facilitate business startups, Korea ranks 8th and 2nd for “days to start a business” and “start-up procedures,” respectively, as of 2017. This indicates that Korea offers close to the highest-level administrative services among the OECD countries on the strength of its simple procedures and fast processes.
4. Financial and Entrepreneurial Environment
Figure 2-16 Venture Capital, 2018
Note: IMD WCY Executive Opinion Survey based on a 0-to-10 index (venture capital is easily available for business)Source: Author’s calculations based on IMD, World Competitiveness Online (database), https://www.imd.org/wcc/products/eshop-world-
competitiveness-online/ (accessed November 2018)
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4. Financial and Entrepreneurial Environment
Figure 2-17 Credit, 2018
Note: IMD WCY Executive Opinion Survey based on an index from 0 to 10 (credit is easily available for business)Source: Author’s calculations based on IMD, World Competitiveness Online (database), https://www.imd.org/wcc/products/eshop-world-
competitiveness-online/ (accessed November 2018)
Figure 2-18 Number of Days to Start a Business, 2017
Source: Author’s calculations based on IMD, World Competitiveness Online (database), https://www.imd.org/wcc/products/eshop-world-competitiveness-online/ (accessed November 2018)
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Figure 2-19 Start-up Procedures, 2017
Source: Author’s calculations based on IMD, World Competitiveness Online (database), https://www.imd.org/wcc/products/eshop-world- competitiveness-online/ (accessed November 2018)
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5. Levels of ICT Infrastructure and Its Utilization
Korea has maintained its top place in ICT adoption, according to a survey conducted by WEF (2018) every year to assess all economies in the world for global competitiveness. The report is organized into 12 pillars, which are grouped into four categories. Korea leads the ICT adoption pillar for the second consecutive year after 2017. A closer look into five indicators under the pillar shows that Korea’s ranks moved up for mobile phone subscriptions and Internet users per 100 inhabitants, while they dropped for mobile-broadband subscriptions and fixed-broadband Internet subscriptions per 100 inhabitants, while its ranking stayed the same for fiber Internet subscriptions per 100 inhabitants.
Table 2-1 Korea’s Global Rankings in terms of ICT Adoption
Ranking in 2017 Ranking in 2018
ICT Adoption 1 1Mobile-cellular telephone subscriptions/100 inhabitants 62 52
Mobile-broadband subscriptions/100 inhabitants 14 17Fixed-broadband Internet subscriptions/100 inhabitants 5 6
Fiber Internet subscriptions/100 inhabitants 1 1Internet users/100 inhabitants 12 9
Source: WEF (2018)
Korea’s level of use for its world-class ICT infrastructure can be described as follows: As for businesses, in an IMD survey on competence in using big data, Korea came close to the OECD average, taking the 19th place out of 36 OECD member states. To find out how good individuals are at using ICT infrastructure, Internet retailing was looked into. When measured by online purchase amounts per 1,000 people, Korea ranked 4th place among the 34 OECD countries surveyed, behind the US, the UK and Denmark.
5. Levels of ICT Infrastructure and Its Utilization
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5. Levels of ICT Infrastructure and Its Utilization
Figure 2-20 Use of Big Data and Analytics, 2018
Note: IMD WCY Executive Opinion Survey based on an index from 0 to 10 (Companies are very good at using big data and analytics to support decision-making)
Source: Author’s calculations based on IMD, World Competitiveness Online (database), https://www.imd.org/wcc/products/eshop-world- competitiveness-online/ (accessed November 2018)
Figure 2-21 Internet Retailing, 2017
(In USD )
Note: USD per 1,000 people Source: Author’s calculations based on IMD, World Competitiveness Online (database), https://www.imd.org/wcc/products/eshop-world-
competitiveness-online/ (accessed November 2018)
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When it comes to the level of electronic government development, a barometer for the progress of the government’s ICT initiatives, Korea ranks high in the world. The UN conducts the e-Government Survey with its more than 190 members every two years to assess their e-government development status. On the e-participation index in the 2018 survey, Korea is tied with Denmark in first place, while it ranked 3rd on the e-government development index, following Denmark and Australia.
6. Industry-Friendly Policies and ICT Legislation
Table 2-2 Korea’s Rankings on the UN E-Government Development Index
Ranking in 2016 Ranking in 2018
E-Government Development Index 3 361 4 1
Source: UN (2018)
An international survey considered to indicate how favorable to ICT development a legislative system placed Korea in the mid/low-ranking group. On the indicators of whether technology development and application are supported and innovation is encouraged by the legal environment, the country comes in 34th and 26th place, respectively.
6. Industry-Friendly Policies and ICT Legislation
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6. Industry-Friendly Policies and ICT Legislation
Figure 2-22 Development and Application of Technology, 2018
Note: IMD WCY Executive Opinion Survey based on an index from 0 to 10 (development and application of technology are supported by the legal environment)
Source: Author’s calculations based on IMD, World Competitiveness Online (database), https://www.imd.org/wcc/products/eshop-world- competitiveness-online/ (accessed November 2018)
Figure 2-23 Scientific Research Legislation, 2018
Note: IMD WCY Executive Opinion Survey based on an index from 0 to 10 (laws relating to scientific research do encourage innovation)Source: Author’s calculations based on IMD, World Competitiveness Online (database), https://www.imd.org/wcc/products/eshop-world-
competitiveness-online/ (accessed November 2018)
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Next, for the IMD question on whether the ease of doing business is supported by regulations, Korea ranked lowest, except for Greece and Slovakia: 34th out of 36 OECD countries. Also, the IMD survey question on the adequacy of the enforcement of intellectual property rights ranked Korea as low as 32nd.
Figure 2-24 Ease of Doing Business, 2018
Note: IMD WCY Executive Opinion Survey based on an index from 0 to 10 (ease of doing business is supported by regulations)Source: Author’s calculations based on IMD, World Competitiveness Online (database), https://www.imd.org/wcc/products/eshop-world-
competitiveness-online/ (accessed November 2018)
Figure 2-25 Intellectual Property Rights, 2018
Note: IMD WCY Executive Opinion Survey based on an index from 0 to 10 (intellectual property rights are adequately enforced)Source: Author’s calculations based on IMD, World Competitiveness Online (database), https://www.imd.org/wcc/products/eshop-world-
competitiveness-online/ (accessed November 2018)
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Current States of Korean and Foreign Data Economies and Policy Responses2)
Part III
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Data economy has emerged as a hot topic of discussion, but global consensus has not been reached yet on its definition. Korea has also produced a number of studies on data economy recently, but there does not seem to be agreement on the definition in the country either. “Data economy” described in both domestic and foreign literature refers to “data-driven economy” from a broad perspective, or “data industry ecosystem” or “data industry” from a narrow perspective. “Data-driven economy” can be defined as an economic system where data is used as a core resource to create new value added in traditional industries and data forms the foundation of all economic activities. A study by the IDC (2018) defines data economy as an ecosystem created by participants involved in the generation, accumulation, processing, exchange and exploitation of data and the economic ripple effects of such activities. This is similar to the definition of data industry by the Korea Data Agency in its Data Industry Survey Report.3)
The dictionary definition of the word, “economy,” is “all activities used to produce, distribute and consume products and services required in human life, or social relationships formed in the process.” Therefore, an economy does not simply refer to a single industry; it includes an economic system as a whole. A framework for systematically understanding data economy as an economic system is to look at a data economy by dividing it into data industry and non-data industries, in other words, to define data economy as the sum of production activities within the data industry and production activities in all the other industries. In this case, however, we may end up with simply reclassifying and examining the components of the Korean economic system. Therefore, in order to avoid simple reclassification, it is reasonable to characterize the data industry as a basic industry underpinning the entire economic system in accordance with the concept of a data-driven economy and then to analyze the effects of the data industry as a basic industry on other industries.
The data industry has significance as a basic industry that produces a resource called “data” and supplies it across the entire spectrum of the data economy. The ripple effects that the data industry has on other industries in the capacity of a basic industry can be divided largely into two categories: direct and indirect effects. Direct effects refer to the value that increases directly with growth in production activities in the data industry and can be estimated by data industry revenues, for example. Indirect effects can be
1. Concept of Data Economy
2) This is a summary of the studies conducted by Daehong Min, et al. (2018a) and Daehong Min, et al. (2018b).3) The Korea Data Agency defines data industry as an “industry that produces and provides products and services, which create value
through the generation, collection, processing, analysis, distribution and utilization of data” in its annual Data Industry Survey Report.
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1. Concept of Data Economy
subdivided into forward and backward linkage effects. First, the backward linkage effect refers to an effect on upstream industries that provide intermediate inputs to the data industry and can be estimated by measuring the value of production that increasing production activities in the data industry cause to increase in other industries from which the data industry procures intermediate inputs. Second, the forward linkage effect is an economic effect on downstream industries that use the final goods of the data industry as intermediate inputs. It can be estimated by measuring the value of production that increases in other industries as increasing production activities in the data industry cause the other industries to increase purchases of intermediate inputs.
It can be said that a data economy consists of the value of final goods produced by its data industry, the value of products that increase as products required by the data industry as intermediate inputs to produce its final goods are produced in upstream industries, and the value of products produced in other industries that use the data industry’s final goods as intermediate inputs for their own production. This is the same as the definition that was applied in the abovementioned IDC (2018) study to estimate the value of data economies. The IDC study (2018) defines the sum of these three factors as the value of the data economy.4)
Backward linkage effects Forward linkage effects
Data economy
Data industry
Upstream industries
Downstream industries
Direct effects
Figure 3-1 Direct Effects, Backward Linkage Effects and Forward Linkage Effects of the Data Industry
4) Besides these, the IDC (2018) includes in the data economy induced impacts, such as demand growth caused by increasing wages for workers in the data industry.
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Due to lack of data on Korean and other data economies, this analysis has been performed focusing on the sizes of data industries, which constitute part of the data economies.
2.1. Korea
Estimated values of the Korean data industry in 2016 and 2017 can be found in the 2017 issue of the Data Industry Market Report, which is published by the Korea Data Agency (KDA) every year. The Data Industry Market Report (2017) defines the data industry market as an “industry that produces and provides products and services, which create value through the generation, collection, processing, analysis, distribution and utilization of data.” This is very similar to the definition of data economy by the IDC (2018), which can be interpreted to refer to the data industry: “An ecosystem created by economic players involved in the generation, accumulation, processing, trading and exploitation of data.” While the IDC (2018) estimated the value of the data industry based on data professionals, companies, and the overall data market, the Data Industry Market Report (2018) looked into the data industry in three categories: data solutions, data construction and consulting, and data services. First, data solution providers are companies that offer solution products on data modeling, analysis/visualization, search engines, quality, etc. These companies are mostly software developers, which generate revenues largely through intellectual property rights, maintenance and repair, and development. Second, companies falling into the category of data construction/consulting are engaged mostly in such businesses as database construction, data processing to convert/store text, voice and video into digital data, the construction of API or LOD to deliver data to external systems, or consulting services on data quality, designs or utilization. General consulting firms are excluded from this category. Lastly, data service providers run their business with data usage charges/fees generated by providing data or data analysis services through data sales/brokerage or raw data processing services. These companies are conceptually the closest to “data companies” from the context of data economy.
2. Current States of Domestic and Foreign Data Economies
2. Current States of Domestic and Foreign Data Economies
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2. Current States of Domestic and Foreign Data Economies
First of all, the Korean data market is expected to grow to 14,304.7 billion won as of 2017, a 4.0% increase from 2016. It has been on a steady upward trajectory, recording an annual growth rate of 7.5% since 2010.
A look into the shares of data industry segments shows that data solutions account for about 10%, whereas data construction/consulting takes up about 40% and data services about 47%, indicating that the latter two segments account for a large share of the industry. This trend has persisted without much change for the past seven years, which tells us that the core component of the Korean data industry is data services.
Table 3-1 Sizes of the Korean Data Industry(In billion won)
Category 2013 2014 2015 2016 2017(E)Percentage
Change2016–2017
Data solutions 10,789 13,619 14,124 15,720 16,536 5.5%Data construction/
consulting 49,985 53,730 55,280 55,850 58,565 4.9%
Data services 52,258 57,329 64,151 65,977 67,946 3.0%Grand total 113,032 124,678 133,555 137,547 143,047 4.0%
Note: E represents estimated values.Source: Korea Data Agency (2018)
Figure 3-2 Shares of Korean Data Industry Segments
Source: Korea Data Agency (2018)
7.8% 9.2% 9.9% 9.6% 10.9% 10.6% 11.4% 11.6%
43.3% 45.4% 45.2% 44.2% 43.1% 41.4% 40.6% 40.9%
48.9% 45.4% 44.9% 46.2% 46.0% 48.0% 48.0% 47.5%
2010 2011 2012 2013 2014 2015 2016 2017(E)
Data construction/consulting Data servicesData solutions
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2.1. Korea
The size of the data industry market described above represents a market size in the broader sense of the word, which includes indirect database-related revenues, such as revenues of ads using data and database system construction services. The value of the market with direct revenues only, excluding these indirect revenues, amounts to 6,052.3 billion won as of 2016 and is expected to grow to 6,297.3 billion won in 2017. If we look into the shares of direct revenues in each high-level data industry segment, direct revenues represent about 26% of total revenues for data solutions, whereas they account for about 46% in data construction /consulting and about 28% in data services. If indirect revenues are included as described above, the data services segment accounts for about 47% of the overall industry, but its share drops to about 28% if indirect revenues are excluded. This confirms that indirect revenues accounts for a large share of the data services segment.
Next, let us look at employment in the Korean data industry. As of 2017, the data industry employs a total of 294,753 persons, up about 2% from 2016 and growing continuously. Employees in the data industry can be divided into data-related and non-data workers. Data-related workers are defined as those employed as DAs, data developers, data engineers, data analysts, DBAs, data scientists, data consultants, or data planners/marketers, whereas non-data workers refer to those engaged in jobs other than those mentioned above, such as management support and accounting. Data-related workers increased about 5% compared with 2016, while non-data workers grew about 1%.
Figure 3-3 Direct Revenues of the Korean Data Industry
(In 100 million won)
Source: Korea Data Agency (2018)
Direct revenue % growth
2015 2016 2017(E)
56,950 60,523 62,973
6.3% 4.0%
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2. Current States of Domestic and Foreign Data Economies
Now, let us look into the workforce composition of the data industry at a data job level. It turns out that data developers account for 37.7% and DBAs and data engineers represent 16.3% and 15.2%, respectively, whereas data analysts and data scientists take up about 7.7% and 1.7%, respectively.
Figure 3-4 Workforce Composition of the Korean Data Industry
(In persons)
Source: Korea Data Agency (2018)
Figure 3-5 Workforce Composition of the Korean Data Industry, by Job Classifications
Source: Korea Data Agency (2018)
Data jobs Non-data jobs
70,338
209,985
73,256
215,365
77,105
217,648
280,323 288,621 294,753
2015 2016 2017(E)
Data developers
DBAs Data engineers
DAs Data analysts
Data planners/ marketers
Data consultants
Data scientists
37.7%
16.3% 15.2%
9.2%7.7% 7.6%
4.6%1.7%
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2.2. European Union
2.2. European UnionThe Data Market and Data Economy for the European Union are recording buoyant
growth rates. According to the IDC (2018), the data markets of the 28 EU member countries including the U.K. are estimated to have grown 9.3% from 59,496 million Euro in 2016 to 65,038 million Euro in 2017. The overall value of the data economy, which includes the direct, forward and backward, and induced impacts of the data market, is also estimated to have increased 9.7% from 305,977 billion Euro in 2016 to 335,618 Euro in 2017. In terms of data professionals, a total of 6.69 million workers are employed in data-related jobs in 2017, a year-on-year growth rate of 8.0%.
This upward trend is expected to continue in the EU even after the UK leaves the EU. The shares of the UK in the EU data market, data economy, and data professionals in 2017 amount to 22.4%, 24.3% and 27.7%, respectively. Nevertheless, the 2017–2020 growth rates for the data market and economy of the EU27, excluding the UK, are forecast to remain similar to those in the scenarios that include the UK.
Table 3-2 EU Data Market and Data Economy Forecasts
Metrics 2016 2017 2020Percentage Change (%)2016–2017
CAGR (%)2017–2020
Value of the data market (Million €)EU27 46,183 50,483 60,254 9.2 6.1EU28 59,496 65,038 77,407 9.3 6.0
Value of the data market (direct impacts, Million €)
EU27 46,183 50,438 - 9.2 -EU28 53,509 65,038 - 21.6 -
Value of the data economy (backward indirect Impacts, Million €)
EU27 2,171 2,505 - 15.4 -EU28 2,780 3,308 - 18.8 -
Value of the data economy (direct, forward and backward, and induced impacts, Million €)
EU27 243,205 267,006 365,761 9.8 11.1EU28 305,977 335,618 452,190 9.7 10.4
Number of data professionals(thousand persons)
EU27 4,875 5,273 6,619 8.2 7.9EU28 6,187 6,685 8,309 8.0 7.5
Note: EU28 includes the UK.Source: IDC (2018)
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2. Current States of Domestic and Foreign Data Economies
Data suppliers in the EU have also been increasing, although their growth rate falls behind those of the data market and data economy. Indeed, the UK has an absolute share of data suppliers in the EU– 48.7% as of 2017, but the numbers of data suppliers in both the EU27 (excluding the UK) and EU28 increased by 5.7% in 2017.5) With the growth of data suppliers, the share of data suppliers in all the companies in the ICT and professional services sectors also increased. The share of data companies in the EU28 nudged up from 14.2% in 2016 to 15.0% in 2017.
Table 3-3 Number and Share of EU Data Suppliers
Metrics 2016 2017Percentage
Change2016–2017(%)
Number of data suppliersEU27 134,300 141,900 5.7EU28 261,450 276,450 5.7
Share of data suppliers*EU27 10.9% 11.5% 5.6EU28 14.2% 15.0% 5.5
Note: 1) *% share of data companies on total companies in the ICT and Professional Services industries 2) EU28 includes the UK.Source: IDC (2018)
5) IDC (2018).
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2.2. European Union
Among the EU countries, Ireland has the highest share of data suppliers at 24.3% in 2017, followed by the UK (22.0%) and the Netherlands (17.0%). On the other hand, the Czech Republic recorded the lowest level in the EU28 at 5.2%.
It turns out that the number of EU data companies by size is completely dominated by those in the 1-249 size band. As of 2017, only 1.2% of data companies in the EU28 employ 250 or more.
24.3%22.0%17.0%15.8%15.7%15.3%15.2%15.0%14.6%14.6%14.3%14.1%13.7%12.3%12.1%12.0%11.5%11.1%10.7%10.0%6.0%5.9%5.9%5.8%5.8%5.7%5.6%5.6%5.5%5.2%
IEUKNLIT
ATDEMT
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Figure 3-6 Share of Data Suppliers in the EU28 Countries (%)
Note: % share of data companies on total companies in the ICT and Professional Services industriesSource: IDC (2018)
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2. Current States of Domestic and Foreign Data Economies
2.3. United StatesThe US has the largest data industry in the world, and it also has high growth
potential, recording two-digit growth rates. According to the IDC (2018), the US data market where digital data is exchanged as “products” or “services” is worth about 145,546 million Euro in 2017, a year-on-year growth rate of 12.7%. The US data market outperforms the EU28 data market (65,038 million Euro in aggregated value) by 123.8%. The US data economy, which measures the overall impacts of the data market on the economy, is also on the growth trend. When measured by direct impact, which is estimated based on data suppliers’ revenues from data products and services, and their backward indirect impacts, it is estimated at 113,677 million Euro and 7,766 million Euro in 2017, respectively, recording an year-on-year growth rate of 4.8% and 6.8%, respectively. This means that the US exceeds the data economy of the EU 28 as a whole by 74.8% in terms of direct impacts (65,038 million Euro) and by 134.8% in backward indirect impacts (3,308 million Euro), respectively.
Next, the number of data professionals–data workers who collect, store, manage, and/or analyze data as their primary activity or as a relevant part of their activity–also increased to 14,012,000 in 2017, gaining 10.1% year over year, which is about double the EU28’s total number of data professionals (7.29 million).
Table 3-4 Data Suppliers by Company Size in the EU
Size Band (Employees) 2016 (Number of Companies)
2017 (Number of Companies)
Share (%)2017
1–249 258,650 273,250 98.8
250+ 2,800 3,200 1.2Grand Total 261,450 276,450 100.0
Note: The data is based on 28 countries including the UK.Source: IDC (2018)
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2.3. United States
The number of data suppliers in the US also confirms the vitality of the US Data Market and Data Economy. The number of data suppliers in 2017 is 302.81 thousand, a 4.6% increase from the previous year, which is 9.5% bigger than the aggregated total of the EU28 countries (276.45 thousand).
Furthermore, data brokerage has become a vibrant business in the US data market. Data brokers facilitate data trades by collecting, cleaning and analyzing data from a wide range of sources including commercial, government, and other publicly available sources and then selling the data to other organizations. It is hard to measure the size of the entire US data broker market as it has a fragmented structure made up of diverse segments. A study by the Federal Trade Commission (FTC, 2014) found that a data broker market of a massive scale has already been formed in the US despite the fact that the study measured the market based only on some of the data brokers there. The FTC (2014) classified data products offered by data brokers into three broad categories (marketing, risk mitigation and people search) and estimated that the three product categories generated a combined total of approximately $426.7 million in annual revenue in 2012 for nine data brokers only.6) Among the three, marketing and risk mitigation represent the largest shares, 46.0% and 41.7%, respectively, with the sum of the two accounting for 87.7%.
Table 3-5 Values of the US Data Market and Data Economy (2016–2017)
Metrics 2016 2017Percentage
Change2016–2017 (%)
Value of the data market (Million €) 129,173 145,546 12.7Value of the data economy (direct impacts, Million €) 108,521 113,677 4.8Value of the data economy (backward indirect impacts, Million €) 7,270 7,766 6.8Number of data professionals (thousand persons) 12,732 14,012 10.1
Source: IDC (2018)
6) Nine data brokers are Acxiom, Corelogic, Datalogix, eBureau, ID Analytics, Intelius, PeekYou, Rapleaf, and Recorded Future (FTC, 2014).
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2. Current States of Domestic and Foreign Data Economies
2.4. JapanIn 2017, the Japanese data market and data economy are estimated to have achieved a
robust growth trend compared with 2016 as ICT investments have resumed and the data economy as a whole has been consolidating its position.7) The IDC (2018) reports that in 2017 the Japanese data market is estimated to have grown by 8.7% year on year to 27,723 million Euro, when measured by revenues of data companies, while the number of data professionals also rose by 8.0% from 3.74 million in 2016 to 4.04 million in 2017. Moreover, when it comes to the direct impact of the data economy, which measures the value generated by the data industry itself, the data economy generated 29,949 million Euro in direct impact in 2017, up by 9.3% from 2016, whereas it generated 1,269 million Euro in backward indirect impact (measured by the backward linkage effects of the data industry), up by 6.7% from 2016.
However, despite its high growth rate–which is close to a two-digit number–Japan’s data industry and economy still remain at low levels relative to those of the US. It is analyzed that the values of Japan’s data market, direct impact, and backward indirect impact as well as the number of its data professionals as of 2017 remain at 19.0%, 26.3%, 16.3% and 28.8% of those of the US, respectively. The number of data suppliers by which you can tell how vigorously data is traded also accounts only for 34.6% of that of the US.
Table 3-6 Value of the US Data Broker Market in 2012
Product Category Revenue (million dollars) Share (%)
Marketing 196.2 46.0Risk mitigation 177.8 41.7People search 52.7 12.3Grand total 426.7 100.0
Note: Based on the annual revenues for the following nine data brokers: Acxiom, Corelogic, Datalogix, eBureau, ID Analytics, Intelius, PeekYou, Rapleaf, and Recorded Future.
Source: FTC (2014)
7) IDC (2018).
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2.5. China
2.5. ChinaAs the use of big data has continued to expand across all industries in China, the
Chinese big data industry has also been growing rapidly. According to the White Paper on Big Data (April 2018) published by the (China Academy of Information and Communications Technology), the Chinese big data industry in 2017 is estimated to have grown by 30.6% year on year to 470 billion Yuan. This explosive growth trend is expected to continue, with the Chinese big data industry expanding at a CAGR of 29.0% from 2017 until 2020 ( , April 2018).
Table 3-7 Values of the Japanese Data Market and Economy (2016–2017)
Metrics 2016 2017Percentage
Change2016–2017 (%)
Value of the data market (Million €) 25,513 27,723 8.7Value of the data economy (direct impacts, Million €) 27,394 29,949 9.3Value of the data market (backward indirect impacts, Million €) 1,189 1,269 6.7Number of data professionals (thousand persons) 3,740 4,040 8.0
Table 3-8 Comparison of the Values of Japanese and US Data Markets and Economies (2017)
MetricsValue/Number Share Relative to
the US (%)Japan USValue of the data market (Million €) 27,723 145,546 19.0Value of the data economy (direct impacts, Million €) 29,949 113,677 26.3Value of the data economy (backward indirect impacts, Million €) 1,269 7,766 16.3Number of data professionals (thousand persons) 4,040 14,012 28.8Number of data suppliers 104,664 302,810 34.6
Source: IDC (2018)
Source: Adapted from the IDC data (2018)
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2. Current States of Domestic and Foreign Data Economies
Among the components of the Chinese big data market, applied applications represent the largest share. This segment is expected to grow to 318.7 billion Yuan in 2020, taking up 40% of the total big data industry. In the meantime, the big data exchange market accounts only for 4% yet.8)
Figure 3-7 China’s Big Data Market Size
(In 100 million Yuan)
Source: (April 2018)
Figure 3-8 Composition of the Chinese Big Data Industry in 2020
Source: (May 2016)
2015 2016 2017 2018E 2019E 2020E
2,8003,600
4,700
6,200
8,000
10,100
8) (May 2016).
Technology, 15%
Hardware, 17.50%
Derivative, 18.50%
Applied applications,
40%
Exchange market, 4%Big data sources, 5%
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2.5. China
Nevertheless, the big data exchange market is growing rather quickly. It increased from 2,076 million Yuan in 2014 to 3,385 million Yuan in 2015, recording a high YOY growth rate of 63%. The Chinese big data marketplace is projected to break through the 54.5 billion Yuan mark by 2020.9)
9) 贵阳大数据交易 (May 2016).
2014 2015 2016 2017 2018 2019 2020
600
500
400
300
200
100
0
120%
100%
80%
60%
40%
20%
0%
20.76
63%
84%
70%
96%
81%
45%
33.8562.12
105.52
206.74
374.93
545
Figure 3-9 China’s Big Data Exchange Market Size and Growth Rates (2014–2020)
(In 100 million Yuan)
Source: (May 2016)
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3.1. Korea
3.1. KoreaHaving recognized the importance of data, Korea has been pushing ahead with policies to
invigorate its data economy since 2011. Table 3-9 briefly summarizes government policies related to data or data industry that have been implemented since 2011.
Table 3-9 Korean Policies Related to the Data Industry
Year Policy Descriptions Responsibility
2011 Construction of a smart government utilizing big data
∙ Set up a Big Data Utilization Center∙ Lay key social and technological foundations
Presidential Committee on National Informatization
Strategies
2012 Big data master plan to build a smart country
∙ Support the development of data-based policies and select 12 projects in four areas for the purpose of creating big-data-based new growth engines
Jointly implemented by the ministries concerned
2013 Big data services pilot projects ∙ Implement six pilot projects for “smart services” using big data
Ministry of Science, ICT and Future Planning (MSIP)
2013 Opening of K-ICT Big Data Center ∙ Develop and implement plans for IoT, big data, public data (Government 3.0), and E-Government projects MSIP
2013 Big Data Industry Development Strategy ∙ Creative Economy and Government 3.0 MSIP
2014 Plan to make the government more competent by utilizing big data
∙ Improve the legal systems, establish a government-wide support system, and support the creation of an industrial ecosystem
Jointly implemented by the ministries concerned
2015 K-ICT Strategy ∙ Big data is included on the list of Nine Strategic Industries. MSIP
2016 Guidelines for the De-identification of Personal Data
∙ The Guidelines offer standards for making privacy data personally unidentifiable and the scope of the use of unidentifiable data, so that big data can be used securely and safely within the privacy protection laws and regulations
Jointly implemented by the ministries concerned
2016 Joint public-private taskforce on big data
∙ Understand the current status of big data tasks and support efforts to invigorate public and private big data
Jointly implemented by the ministries concerned
2018 Data Industry Invigoration Strategy
∙ Provide the right to control personal data, lay the foundation to nurture the data industry, and create an industrial ecosystem conforming to the data life cycle in order to achieve the goal of becoming a country that uses data in the most secure and effective way
Jointly implemented by the ministries concerned
3. Policy Trends on Data Economy in and out of Korea
Source: Adapted from data by So-young Park et al. (April 2018) and joint projects by the ministries concerned (June 2018)
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3. Policy Trends on Data Economy in and out of Korea
First, the policy directions on public data announced in 2013 are intended to establish a system for utilizing pubic data by opening data, starting with data in the government sector. For this purpose, the Act on the Promotion of the Provision and Use of Public Data was enacted in 2013. Pursuant to this law, a system has been established where the State and the heads of local governments are required to develop an implementation plan for promoting the provision and use of public data annually, and they are also subject to evaluation for implementation results. The third Public Data Strategy Committee inaugurated in February 2018 decided at its first meeting to take the complete inventory of public data in the possession of central administrative agencies, local governments and public institutions, starting in March, ultimately making all public data, except for the data containing national security and personal data, fully available to the public.
The Big Data Industry Development Strategy released in 2013 aims to achieve the vision of taking off as a leader in big data utilization. To this end, the MSIP divided policy areas into three categories (demand, supply, infrastructure) and offered policy directions to enhance data utilization for each category. The key points of the strategy include specific strategies to expand leading pilot projects to create a big data market (demand side), secure core technologies and professionals to improve the foundation for fostering industries (supply side), and create an ecosystem for a sustainable data economy (infrastructure side).
In 2016, the government agencies related to personal data including the Ministry of the Interior, Ministry of Science, ICT and Future Planning, Ministry of Health and Welfare, Korea Communications Commission, and Financial Services Commission announced the “Guidelines for the De-identification of Personal Data” to propose specific approaches to de-identifying personal data. They also set up a “joint public-private big data taskforce” involving government agencies, private companies and academic professionals to discuss various promotion policies, including the integrated management of big data implementations and regulatory improvement opportunities to invigorate big data in the public and private sectors.
The recently announced “Data Industry Invigoration Strategy” set the goal of becoming a “country that uses data in the most secure and effective way.” It is a strategy for invigorating a balanced data-driven economy that lays the foundation for the data industry to ensure the smooth distribution and use of data as well as promotes the secure use of personal data.10) It consists of three sub-strategies: shift the paradigm of data use systems, innovate the end-to-end cycle of the Data Value Chain, and lay the foundation to
10) Joint projects by the ministries concerned (June 2018).
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3.2. European Union
foster a global data industry. Each sub-strategy consists of projects to help Koreans safeguard their data sovereignty, ensure the secure use of personal data, invigorate the distribution, analysis and use of data, promote R&D on leading big data technologies, and train data professionals.
3.2. European UnionEurope has continued to push forward with policies to measure its data economy and
promote the opening, sharing and protection of data. First, the EU launched the “Data Landscape Project in 2014 as part of its European Data Market study to measure the EU data economy. With the goal of developing a tool to monitor the EU data market, this project calculates the (current and projected) sizes of data economies and recommend policies by defining players in data market and economic activities, designing the Data Value Chain, and developing metrics. It not only covers European data economies but also other data markets in the world to offer both their current statistics and forecasts; it also strives to come up with policy proposals by comparing and analyzing the current states of the US, Japan and other countries with those of the EU countries.
On the other hand, Europe has been pursing policies to ensure data sovereignty and the free flow of data while protecting data in order to facilitate the growth of a data-driven economy. The Impact Assessment: European Free Flow of Data Initiative within the Digital Single Market, which was published as part of the implementation of the Digital Single Market strategy in 2016, clearly states that the free flow of data is mandatory for data activities. In 2017, Europe set the goal of developing new business models by reinforcing data sovereignty and the free flow of data in its Building a European Data Economy plan.
Europe has also been promoting the establishment of personal data protection regulations in order to emphasize reliability and responsibility in the safe use and distribution of data while implementing policies on data sovereignty and the right to data portability. The Data Protection Directive 95/46/EC, which was adopted in 1995, had limitations despite its objective of protecting personal data: the introduction of new technologies as well as the institutional systems and legal environments that differed among the EU members resulted in restricting the free flow of data within the EU. This is why the General Data Protection Regulation (GDPR) was enacted in 2016 to replace the Directive 95/46/EC. The GDPR aims to enhance reliability in the free flow of personal
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3. Policy Trends on Data Economy in and out of Korea
data within a legitimate framework by establishing standards to strengthen the right to be forgotten (to have data deleted), right to data portability, and right to object to profiling. It took effect in May 2018 and has established itself as the benchmark for data protection laws and regulations across the world.
3.3. United StatesThe United States has been pursuing policies focusing on securing core technologies
through research and development as well as open data policies aimed at facilitating data utilization.
The US has opened data and developed plans to standardize open data in the direction of increasing economic and social benefits while protecting personal data. It pushed forward with opening unstructured data, such as documents, in addition to numerical data in its “Digital Strategy” in 2012. In its 2013 “Open Data Policy,” it defined open data as publicly available data structured in a way that enables the data to be fully discoverable and usable by end-users and proposed the principles of effective information management to promote the use of open data. The principles of effective information management proposed under the Open Data Policy can be summarized as follows: to comply with data standards and metadata standards, build information systems to support interoperability and information accessibility, build data stores to strengthen data management and openness, take a user-friendly approach to Application Programming Interfaces (API), ensure the full protection of privacy data, and require agencies to develop and maintain an Information Resource Management (IRM) Strategic Plan.
In 2014, the Digital Accountability and Transparency Act (DATA Act) was enacted to expand the Federal Funding Accountability and Transparency Act and establish government-wide data standards for financial data. This law provides a legal basis for promoting the use of government spending data available on a government website, which was established to disclose the federal government’s financial data. Also in 2014, a report entitled Big Data: Seizing Opportunities, Preserving Values, which was published, outlining the US approach to privacy issues caused by the opening of data pursuant to its open data policy as well as public-and private-sector management of data and a policy framework for big data. In terms of personal data protection, the report discusses privacy protection from a global perspective as well as the prevention of discrimination that may be enabled by big data technologies. With regard to data management, it emphasizes the
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3.4. Japan
needs to strengthen the use of data to serve the public good, promote research and development that will further power the big data revolution, provide big-data-based learning opportunities, ensure the responsible use of big data in law enforcement and national security. A Report on Algorithmic Systems, Opportunity, and Civil Rights released in 2016 describes how the US is examining case studies involving credit, employment, education, and criminal justice to shed light on how analyzing personal data using particular algorithms has the potential to inadvertently cause infringement on the human rights of certain individuals or groups. Based on this, discussions are also underway to resolve ethical issues that may arise in the future.
The US has also been implementing R&D policies focusing on securing core technologies and professionals in data science in keeping with the abovementioned policies that emphasize privacy protection and data use. A good example is the “Big Data R&D Initiative,” which was launched by the Office of Science and Technology Policy (OSTP) under the Executive Office of the President in 2012. A number of government agencies are participating in this $200-million initiative, which seeks to advance and harness core technologies and expand the workforce needed to develop and use big data technologies. As part of the initiative, Big Data Regional Innovation Hubs (BD Hubs) were established to facilitate data science innovations in four regions of the country in 2015, and a consortium was set up in each hub, involving more than 205 organizations in the business, academic, and government sectors. After that, the Big Data Interagency Working Group (BDIWG) under the Federal Government’s Networking and Information Technology Research and Development (NITRD) program announced the Federal Big Data R&D Strategic Plan in 2016, which has been under implementation ever since.
3.4. JapanJapan has been concentrating on establishing policies to facilitate the opening and use
of data for the purpose of addressing pending social issues. In the wake of the Great East Japan Earthquake in 2011, data has gained further importance as a means to achieve cooperation across Japanese society, leading the country to start improving its open data distribution environment in earnest.
In 2012, Japan enacted the “Open Data Strategy for Electronic Administration” as a basic strategy to promote the use of public data under the following basic principles: “The government should disclose public data actively, disclose public data in machine-readable
88
3. Policy Trends on Data Economy in and out of Korea
forms, promote the utilization of public data both for for-profit and non-profit purposes, and disclose data quickly, starting with public data.” The Chief Cabinet Secretary takes overall responsibility for the National Open Data Strategy, with the government agencies including the Ministry of Internal Affairs and Communications (MIC) and Ministry of Economy, Trade and Industry (METI) developing their own strategies. In the same year, the Ministry of Economy, Trade and Industry announced the “DATA METI Initiative” to make the Ministry’s data available for businesses to use. This initiative calls for the METI to proactively disclose data in its possession, such as measuring standards, geological maps, testing and evaluation methods, genetic information of organisms, reference materials, product accidents, advanced measuring technologies, and management of chemicals.
Japan has also been developing and implementing strategies to invigorate the ICT sector including plans to facilitate the use of data. A good example can be found in the Active Japan ICT strategy announced by the Ministry of Internal Affairs and Communications in 2012. This strategy includes an “Active Data Strategy” to drive social and economic growth through the use and utilization of big data. This Active Data Strategy can be summarized as a plan to foster growth engines by transforming big data into national assets. This can be achieved by constructing an environment in which a data use market worth tens of trillions of yen can be created as well as collecting, delivering and analyzing a wide range and large number of data in real time and linking it to efforts to resolve policy issues including disaster management.
In 2012, the Strategic Headquarters for the Promotion of an Advanced Information and Telecommunications Network Society (IT Strategic Headquarters), which was established within the Cabinet, released a national plan that contains plans to promote big data and cloud industries in a bill to revise the New Strategy in Information and Communications Technology Roadmaps. After that, the IT Strategic Headquarters announced the “Declaration to be the World's Most Advanced IT Nation,” with the objectives of promoting the opening of public data to the private sector, organically utilizing big data available in the market, and creating a society that brings about innovation in business activities and consumer behaviors. The “Japan Revitalization Strategy 2016” selected big data as one of the core enablers for the Fourth Industrial Revolution. In the “Future Investment Strategy 2017,” Japan declared that it would advance its legal system, starting with laws on intellectual property rights or standardization, in order to build a data-based platform as part of the infrastructure for a new society and promote the use of data.
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3.5. China
3.5. ChinaHaving designated big data as one of the national strategic new industries, the
Chinese government has been implementing diverse policies not only to advance the big data industry but also to develop the field of converging conventional industries with big data, Internet, cloud computing, and IoT.11)
In March 2014, “big data” broke into the scene as one of the new industries to lead the future (which include 5G, semiconductor, advanced manufacturing, new energy and new materials) for the first time in the “2014 Government Work Report.” Following the report, the central government started to implement policies actively to support the big data industry, as a result of which an ecosystem started to be formed for the data industry. In August 2015, the State Council of China announced the “Outline for Improving the Development of Big Data” to develop a master plan for developing big data, including sharing government data, opening public data resources, and building basic facilities for big data. In October 2015, the 18th Central Committee (19th CC) of the Communist Party of China included big data as one of the national strategic new industries in its fifth plenary session, which was convened to develop a plan for 2016 through 2020. The “2015 Government Work Report” also addressed big data as a main topic, resulting in the establishment of exchange centers in various provinces and cities, including Guiyang Big Data Exchange and Shanghai Data Exchange Center in Guizhou Province and Shanghai City.
In January 2017, the Ministry of Industry and Information Technology released the “Big Data Industry Development Plan (2016-2020),” which aims to develop the big data industry and take off as a data power by 2020. This plan proposed seven major tasks including strengthening the development of big data technology and products, accelerating industrial big data innovation and application, and facilitating the development and application of big data.
11) So-young Park et al. (April 2018) .
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2.5. Software
Conclusion
Thanks to the booming semiconductor industry, ICT exports are estimated to remain on an upward track in 2018, following growth in 2017. However, the growth of ICT exports is forecast to slow in 2019 because of slowing demand for semiconductors and fiercer global competition in Korea’s main export products including display panels, mobile phones, and digital TV. Korea’s exports to developed economies including the US, Japan, and the EU have continued to decline, whereas its dependence on China has been increasing fast since 2000; so fast that China has emerged as its largest trading partner for exports. Among ICT equipment, the share of electronic components, which include semiconductors, has been rising rapidly: It has recently grown from about 40% to close to 80%.
Korea should change its current industrial structure, which is focused on a small number of markets and product items. Once agreement is reached in the US-China negotiations, China is expected to open its market more widely, and Korea should prepare itself for that. If China increases imports of American semiconductors and other ICT equipment in particular, Korean ICT companies’ exports will inevitably suffer slowing growth due to their heavy dependence on the Chinese market. Therefore, we should break away from our China-focused structure for ICT exports by diversifying export markets, for example through multilateral economic cooperation frameworks centered on the ASEAN market. We also need to ensure innovation in manufacturing through ICT convergence and secure technological capabilities for key components and parts. Furthermore, if Korea would maintain its manufacturing competitiveness, one of its strengths, and enhance its competitiveness even in the services sector where it is lagging behind, it needs to improve the following areas, which are constantly pointed out as vulnerable in comparisons with other OECD countries: human resources and entrepreneurial support environments as well as our legal systems on ICT, which fails to facilitate the ICT sector.
Considering recent emphasis on strengthening competitiveness through use of data as well as the global growth trends of the data industry in particular, Korea also needs to put in more efforts to fostering a data economy by fine-tuning its policies for each stage of development. As short-term policies, it is proposed to implement polices to create demand for data, such as data voucher programs, run a data product information portal, or found a government-led data exchange policies that will prime the pump to invigorate the still-weak Korean data economy and industry. However, such policies are very likely to
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Conclusion
achieve nothing more than short-term results as they require the government’s direct involvement in the data industry ecosystem. To activate the data economy over the long term, it is necessary to push through policies for eliminating root causes underlying barriers to invigorating the data economy, in addition to pursuing the above-mentioned short-term policies. Examples include policies to improve the legislative system based on social consensus on use of privacy data, build a legal system on copyrights for data products, train and supply data professionals, enhance social awareness of use of data, establish data standards, improve the quality of public data, and induce the private sector to open raw data in the market. These policies should be implemented consistently from a long-term perspective.
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2.5. Software
<Korean>
Joint projects by the Ministries Concerned (June 2018). “Data Industry Invigoration Strategy.”
Ko, Dong-hwan et. al (2018). “ICT Industry Long-Term Forecasts (2019-2023).” Policy Research 18-79, Korea Information Society Development Institute (KISDI).
Korea Data Agency (2017). Data Industry White Paper for 2017._______________ (2018). Data Industry Survey Report for 2017.Min, Dae-hong (2018a). “A Study on Plans for Invigorating Data Trading to Develop New
ICT-Driven Industries.” Research Report 18-02, Korea Information Society Development Institute (KISDI).
______________ (2018b). “A Study on the Economic Impact of Data Economy and its Policy Implications.” Policy Research 18-37, Korea Information Society Development Institute (KISDI).
Park, So-young, and Hyun-sook Jang (April 2018). “Korea-China Comparisons in Big Data Exchange: Focusing on Uses by Businesses.” Korea International Trade Association.
<International>
FTC (Federal Trade Commission) (2014). “Data Brokers: A Call for Transparency and Accountability.”
IDC (International Data Corporation) (2018). “Updating European Data Market Monitoring Updating Tool.”
OECD (Organisation for Economic Co-operation and Development) (2017). “OECD Science, Technology and Industry Scoreboard 2017.”
UN (United Nations) (2018). “ UNITED NATIONS E-GOVERNMENT SURVEY 2018.” WEF (World Economic Forum) (2018). “The Global Competitiveness Report 2017–2018.”
(2016. 5). “2016 .” (2018. 4). “ (2018年).”
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Aboutthe Korea Information Society Development Institute
The Korea Information Society Development Institute Korea (KISDI) was es-tablished in January 1985 as the only professional research organization spe-cialized in policy studies regarding the information and communications sector. KISDI has conducted extensive research on the trend of IT industry, and the transformation of the traditional economic structure in the emerging informa-tion society. KISDI also carried out studies on a regulatory framework for fair competition in the telecommunications service market. Along with development of the information and communications sector in Korea, KISDI has contributed to the overall competitiveness of the nation by providing the vision and policy direction to the government to gear up for the knowledge-based society.
For More Information, Please Contact
Jeongeon Kim, Ph.D. in Economics / [email protected]
Jungsook Oh / [email protected]