Fiscal Policy in Korea for building Infrastructure and its Knowledge based economy October 9, 2003...
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Transcript of Fiscal Policy in Korea for building Infrastructure and its Knowledge based economy October 9, 2003...
Fiscal Policy in Korea for building Fiscal Policy in Korea for building Infrastructure and Infrastructure and
its Knowledge based economy its Knowledge based economy
October 9, 2003October 9, 2003
WB-Vietnam-Korea Conference WB-Vietnam-Korea Conference
on Public Expenditureon Public Expenditure
Moon-Kyu BangMoon-Kyu Bang
Ministry of Planning and Budget Ministry of Planning and Budget
Republic of Korea Republic of Korea
I. Korea’s Public Expenditure in building SOC and I. Korea’s Public Expenditure in building SOC and
Knowledge based economyKnowledge based economy
II. Korea’s Building InfrastructureII. Korea’s Building Infrastructure
III. Korea’s Transition into Knowledge Based III. Korea’s Transition into Knowledge Based EconomyEconomy
• • Knowledge Revolution in KoreaKnowledge Revolution in Korea
• • Its strategy for building a KBEIts strategy for building a KBE
Contents Contents
0
2
4
6
8
1958 1962 1966 1970 1978 1982 1986 1990
Rep. of Korea
Ghana
Per capita GDP Thousands of 1985 international dollars
Difference Difference attributed to attributed to KnowledgeKnowledge
Difference due Difference due to physical and to physical and human capitalhuman capital
I-1. Korea’s Economic MiracleI-1. Korea’s Economic MiracleKorea’s GDP/Capita growth(61-96) : average 7.9%
GDP per capita(PPP): US$14,731(96), US$17,380(00)
1974
Source: WBI knowledge for development program
Source: WBI knowledge for development program
1 1
2 2
• • Korea’s public expenditure has focused on buildingKorea’s public expenditure has focused on building
- physical capital (SOC) and human development, - physical capital (SOC) and human development,
- its knowledge based economy. - its knowledge based economy.
< Expenditure ratio by sectors in the integrated public finance (%) >< Expenditure ratio by sectors in the integrated public finance (%) >
‘‘70 70 ‘80 ‘80 ‘90 ‘90 ‘97 ‘97 ‘03‘03
economic development 27.7 28.5 30.5 31.2 25.0economic development 27.7 28.5 30.5 31.2 25.0
education education 16.7 14.6 17.0 16.4 15.1 16.7 14.6 17.0 16.4 15.1
socail welfare 6.2 6.7 9.8 10.5 16.4socail welfare 6.2 6.7 9.8 10.5 16.4
• • Expenditure in economic development and education is very Expenditure in economic development and education is very high compared with other countries.high compared with other countries.
USA(01) USA(01) UK(99) UK(99) Japan(recent)Japan(recent) Korea(03)Korea(03)
economic development 9.3 6.6 16.2 25.0economic development 9.3 6.6 16.2 25.0
education education 1.9 3.7 6.0 15.1 1.9 3.7 6.0 15.1
socail welfare 50.1 51.9 38.4 16.4socail welfare 50.1 51.9 38.4 16.4
2. 2. Public Expenditure for this MiraclePublic Expenditure for this Miracle
33
For 40 yrsFor 40 yrs, , SOCSOC investment has been very highinvestment has been very high
< Public SOC investment ratio to GDP (%, 2000) >< Public SOC investment ratio to GDP (%, 2000) >
KoreaKorea France France Germany Germany UK UK Itary Itary
2.92.9 1.0 1.2 0.9 0.6 1.0 1.2 0.9 0.6
•• SOC investment ratio to total size of general accountSOC investment ratio to total size of general account
: 11.1 % (‘93) : 11.1 % (‘93) 15.9 % (03) 15.9 % (03)
• • Huge jump in SOC stock accumulation but still way to goHuge jump in SOC stock accumulation but still way to go
: SOC Stock value in 1995 price 0.7 (‘68) : SOC Stock value in 1995 price 0.7 (‘68) 388.3 trillion won (‘97) 388.3 trillion won (‘97)
•• 40 yrs investment 40 yrs investment SOC Stock is still small SOC Stock is still small <Stock of transportation facilities to GDP* (%, 1999)><Stock of transportation facilities to GDP* (%, 1999)> KoreaKorea Japan Japan USA USA UK UK Germany Germany
4242 61 73 114 91 61 73 114 91
(* accumulation ratio) (* accumulation ratio)
Korea’s Public investment to SOCKorea’s Public investment to SOC
Public Expenditure to support KBEPublic Expenditure to support KBE
Aggressive Investment Aggressive Investment in R&D, Education and IT infrain R&D, Education and IT infra
R&D investment : R&D investment : 2.9% of GDP, 4.8% of cetral government budget2.9% of GDP, 4.8% of cetral government budget
< R&D investment ratio to GDP (IMD,2003, %) >< R&D investment ratio to GDP (IMD,2003, %) >
KoreaKorea USAUSA JapanJapan France France UKUK
2.92 2.80 2.98 2.20 1.85 2.92 2.80 2.98 2.20 1.85
Education has been a stepping stone for Korea’s miracleEducation has been a stepping stone for Korea’s miracle
< Expenditure ratio to the Integrated Public Finance (%) >< Expenditure ratio to the Integrated Public Finance (%) >
USA(01) USA(01) UK(99) UK(99) Japan(recent) Japan(recent) Korea(03)Korea(03)
education education 1.9 3.7 6.0 15.1 1.9 3.7 6.0 15.1
Investment in IT infra and trainingInvestment in IT infra and training
- For 3 yrs (00~02), 7.9 trillion won invested (annually 2% of IPF)- For 3 yrs (00~02), 7.9 trillion won invested (annually 2% of IPF)
- - Information highway : 1.2 trillion won (95~03)Information highway : 1.2 trillion won (95~03) 4 4
Total R&D Expenditure (PPP, 1996)
Russia
Japan
USAustraliaDenmark
CanadaUK
NetherlandKorea
SpainItalyPoland
Austria
Switzerland
FinlandFrance
Germany
Turkey
China
IndiaBrazil
0
1000
2000
3000
4000
5000
6000
0 0.5 1 1.5 2 2.5 3 3.5R&D expenditure as % of GNP
Sci
enti
sts
& E
ng
inee
rs (
per
mil
lio
n p
eop
le)
a. Initial industrialization: ‘60s a. Initial industrialization: ‘60s
EconomyEconomy• • Take-off (‘60s) Take-off (‘60s)
: launched the 1st 5 yr : launched the 1st 5 yr economy development plan economy development plan
• • Export-oriented policyExport-oriented policy
: policy loan, promoting : policy loan, promoting general exportersgeneral exporters
• • Top 5 ExportsTop 5 Exports : Iron, Tungsten, : Iron, Tungsten,
Silk, Anthracite, CuttlefishSilk, Anthracite, Cuttlefish
Key PoliciesKey Policies• • develope develope Seoul-Pusan Seoul-Pusan
Highway, Highway, Pusan Port Pusan Port
• • focus on steam power focus on steam power plant (urgent needs) plant (urgent needs)
• • main resources from main resources from foreign borrowing foreign borrowing
• • KIST (‘66)KIST (‘66)
• • expand primary expand primary education education
5 5
b. Accelerated industrialization: 70’sb. Accelerated industrialization: 70’s
EconomyEconomy• • Promoting Heavy and Promoting Heavy and
Chemical Indusry (HCI)Chemical Indusry (HCI) - HCI ratio to manufacturing: - HCI ratio to manufacturing:
4141 51% 51%
• • Top 5 Exports:Top 5 Exports:
- - Textiles, Plywood, Wigs, Iron Textiles, Plywood, Wigs, Iron Ore, ElectronicsOre, Electronics
Key PoliciesKey Policies• • Building SOC investment Building SOC investment
system : National Land system : National Land Development PlanDevelopment Plan
• • Seoul Metro, Honam Seoul Metro, Honam Highway, yongdong Highway, yongdong
Highway, Industrial complexHighway, Industrial complex
• • nuclear power plantnuclear power plant
- able to supply electricity - able to supply electricity
more than demandsmore than demands
• • established established KDI (‘71)KDI (‘71)
6 6
c. Industry rationalization : 80sc. Industry rationalization : 80s
EconomyEconomy
• • Industry Restructuring Industry Restructuring
: expansion : expansion upgrading upgrading
• • Top 5 ExportsTop 5 Exports : : Textiles, Electronics, Iron & Textiles, Electronics, Iron &
Steel Products, Footwear, Steel Products, Footwear, ShipsShips
Key PoliciesKey Policies• • high growth, trade surplus high growth, trade surplus
inflation pressure inflation pressure slow SOC slow SOC investment investment SOC shortage SOC shortage high cost high cost
• • develop LNG base, regional develop LNG base, regional energy supply system energy supply system
• • upper secondary upper secondary & tertiary & tertiary educationeducation (Vocational HS & (Vocational HS & Junior Colleges) Junior Colleges)
• • National R&D programNational R&D program
7 7
d. Transition into KBE: 90s~03d. Transition into KBE: 90s~03
EconomyEconomy• • CCompetitiveness,ompetitiveness,
Knowledge-based Knowledge-based Economy Economy
• • Top 5 Exports:Top 5 Exports: 1990: Electronics, Textiles, 1990: Electronics, Textiles,
Footwear, Iron & Steel Footwear, Iron & Steel Products, Ships Products, Ships
2000: Semiconductor, Motor 2000: Semiconductor, Motor Cars, Computers, Ships, Cars, Computers, Ships, Petroleum ProductsPetroleum Products
Key PoliciesKey Policies• • Established the special account for Established the special account for
transportation facilitiestransportation facilities• • private investment to SOCprivate investment to SOC• • Inchon Airport, High speed Inchon Airport, High speed
railwayrailway•• Informatization highway project Informatization highway project : 97-05, 831 bllion won : 97-05, 831 bllion won • • E-government project (01~07)E-government project (01~07) : 1 trillion won : 1 trillion won • • Public investment in higher ed.Public investment in higher ed.
8 8
II-1. Korea´s SOC Investment II-1. Korea´s SOC Investment
60 60 70 70 80 80 90 90 00 00 02 02
- - SOC (A) Investment 0.1 1.4 5.7 15.4 31.3 29.2 SOC (A) Investment 0.1 1.4 5.7 15.4 31.3 29.2
- - GDP (B) GDP (B) 16.3 56.2 115.0 263.4 478.5 524.7 16.3 56.2 115.0 263.4 478.5 524.7
- SOC/GNP(B/A, %) 0.6 2.4 5.0 5.8 6.5 5.6 - SOC/GNP(B/A, %) 0.6 2.4 5.0 5.8 6.5 5.6
9 9
((trillion won=about $ billion, 1995 price)trillion won=about $ billion, 1995 price)
During ‘60~‘02, average growth of SOC investment is 14.5 %, During ‘60~‘02, average growth of SOC investment is 14.5 %,
•• much higher than GDP growth : 7.9 % during ‘61~’99 much higher than GDP growth : 7.9 % during ‘61~’99
• • SOC investment ratio to GDP : 0.6 % (‘60) SOC investment ratio to GDP : 0.6 % (‘60) 5.6 %(‘02) 5.6 %(‘02)
((The value in 1960 is adjusted by 1970 value)The value in 1960 is adjusted by 1970 value)
Infrastructure Investment and Ratio to GDPInfrastructure Investment and Ratio to GDP
(billion won, (%) , 1995 price)
25,438
5,745
10,466
15,373
29,21931,284
2,1311,36928999
(5.6)(6.5)
(6.7)
(5.8)
(6.3)
(5.0)(2.6)(2.4)(1.3)(0.6)-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
1960 1965 1970 1975 1980 1985 1990 1995 2000 2002
(Bank of Korea) 10 10
1111
Investment Increase rate (%)Investment Increase rate (%)
6060s s 70s 70s 80s 80s 90s 90s 00s 00s
30.1 15.4 10.3 7.4 15.530.1 15.4 10.3 7.4 15.5
In 60s : Foreign borrowing (World Bank, countries) In 60s : Foreign borrowing (World Bank, countries) In 70s : building SOC investment systemIn 70s : building SOC investment system • • BBudget expenditure in SOC increasedudget expenditure in SOC increased
• • National Land Developmet PlanNational Land Developmet Plan
In 80s :In 80s : slows down to avoid inflation pressure from slows down to avoid inflation pressure from
current account surplus current account surplus (low oil price, strong Yen)(low oil price, strong Yen)
high transportation cost and high transportation cost and
weak competitiveness in 90s.weak competitiveness in 90s.
II-2. Mobilizing Resources for Soc InvestmentII-2. Mobilizing Resources for Soc Investment
1212
In 90s : Expansion of public spending to stimulate economyIn 90s : Expansion of public spending to stimulate economy
• • SOC investement ratio to general accountSOC investement ratio to general account 11.1 % (93) 11.1 % (93) 14.2% (97) 14.2% (97) 15.9 % (03) 15.9 % (03)
• • The special account for transportation facilities openedThe special account for transportation facilities opened
- It sets up a stable base to mobilize funds for SOC investment- It sets up a stable base to mobilize funds for SOC investment
- Main revenue : transportation tax, fee, etc. - Main revenue : transportation tax, fee, etc.
- 5 sub accounts for road, railway, port, airport, etc.- 5 sub accounts for road, railway, port, airport, etc.
•• Private Investment Promotion Law (95) establishedPrivate Investment Promotion Law (95) established
- During 90~01, total 33.2 billion US$ is invested - During 90~01, total 33.2 billion US$ is invested
- Private investment ratio to SOC in general account increases.- Private investment ratio to SOC in general account increases.
: 0.2% (95) : 0.2% (95) 9.6% (02) 9.6% (02)
•• SOC for building knowledge based economy strengthenedSOC for building knowledge based economy strengthened - - Informatization highway (97-05, 831 billion won) Informatization highway (97-05, 831 billion won)
- E-government project (01~07, 1 trillion won)- E-government project (01~07, 1 trillion won)
SOC total Road Railway Airport Port etc.SOC total Road Railway Airport Port etc. (10 point) ((10 point) ( ㎞㎞ // ㎢㎢ ) () ( ㎞㎞ // ㎢㎢ ) (1,000 person) (10 point)) (1,000 person) (10 point)
- - KoreaKorea 4.51 0.88 0.0313 31,319 4.74 4.51 0.88 0.0313 31,319 4.74 (rank)(rank) (29) (20) (18) (8) (38) (29) (20) (18) (8) (38)
- - SingaporeSingapore 8.66 4.71 0.0002 15,283 8.76 8.66 4.71 0.0002 15,283 8.76 (1) (2) (47) (20) (3)(1) (2) (47) (20) (3)
- - Malaysia Malaysia 5.68 5.68 0.17 0.0059 14,985 6.45 0.17 0.0059 14,985 6.45 (18) (38) (37) (22) (22)(18) (38) (37) (22) (22)
- - JapanJapan 5.48 3.05 0.0533 105,960 6.85 5.48 3.05 0.0533 105,960 6.85 (1) (4) (16) (2) (19) (1) (4) (16) (2) (19)
II-3. Soc Indicator in Asian countriesII-3. Soc Indicator in Asian countries
1414
1. Background : Fundamental Problems in economy
Booz Allen&Hamilton
McKinsey
Advanced Nations
Knowledge-Based, productivity-ledEconomic Growth Strategy
Knowledge Gap Productivit
y GapSecond-Tier Korea
Solve the High-CostStructure
III. Krea’s transition to Knowledge Eeconomy
Korea’s World Competitiveness declines :26 (‘95) 30 (‘97) 41(‘99)
Resource / Input-BasedEconomic Growth
Productivity Realityof 8 Industries(Half of USA)
1515
1999 ‘00‘98‘975 10 11
12
1 4
Knowledge Campaign by the Press (e.g.Vision Korea Campaign)
The WB joined (W B-OECD:
Korea’s KBE Report)
Booze-Allen-Hamilton ReportMcKinsey Report Monitor Report
Road Map to KBE: Background and Proceeding
M
acro
KB
E
IMF Crisis
NEAC
CrisisManagement(-6.7 % G)
Rebound & Recovery(10.9 % ---> 9.3%)
12
Research Project
PublicHearing
Implementation
Strategy Report
3-Years Action Plan
Presidential Mandate
Policy Forum (KDI -MOFE)
‘01-02
Setback & Regaining (3.0% -> 6.2 %) ?
1616
1. 1. Government : Strong PushGovernment : Strong Push - Cyber Korea 21 (99) : Top 10 Informatization Country- Cyber Korea 21 (99) : Top 10 Informatization Country
- The 3-yr Action Plan for Knowledge based economy: 00-02 - The 3-yr Action Plan for Knowledge based economy: 00-02
- SOC for building knowledge based economy strengthened- SOC for building knowledge based economy strengthened : : Informatization highway (97-05, 831 bllion won) Informatization highway (97-05, 831 bllion won) : E-government project (01~07, 1 trillion won): E-government project (01~07, 1 trillion won)
2. 2. Media : improving public awarenessMedia : improving public awareness - Maeil Business Newspaper, Vision Korea Campaign (96)- Maeil Business Newspaper, Vision Korea Campaign (96)
3. 3. Private sectorPrivate sector - knowledge management boom, cultural changes in work place- knowledge management boom, cultural changes in work place
4. 4. Venture MovementVenture Movement - KOSDOQ market opened in 1996 (like US NASDOQ)- KOSDOQ market opened in 1996 (like US NASDOQ) - 380 venture firms listed - Total Mk Value/GDP: 11%- 380 venture firms listed - Total Mk Value/GDP: 11%
3. 3. Moving into a Knowledge driven economy Moving into a Knowledge driven economy
1717
Push to Internet UsesPush to Internet Uses IT training during 99~04 : 190 billion wonIT training during 99~04 : 190 billion won - 15 million people (housewives, soldiers, students, etc.)- 15 million people (housewives, soldiers, students, etc.)
Various programs conductedVarious programs conducted - - Internet PC Drive : Internet PC Drive : Supplied 2 Million Low-Price PCs in 1999)Supplied 2 Million Low-Price PCs in 1999)
- - Internet Skills Education for 10 Million Students Internet Skills Education for 10 Million Students
- - Internet Skills Education for 2 Million Housewives Internet Skills Education for 2 Million Housewives (Partnership with 1,057 private institutions)(Partnership with 1,057 private institutions)
- - Internet Skills Education for 100,000 Elder Citizens Internet Skills Education for 100,000 Elder Citizens
- - Internet Skills Education for 600,000 SoldiersInternet Skills Education for 600,000 Soldiers - - One Million Free HomepagesOne Million Free Homepages
- Ten Million Free Internet Ids- Ten Million Free Internet Ids
-- Used PC Donations to SchoolsUsed PC Donations to Schools
1818
Nationwide Informatization (as of 2002)Nationwide Informatization (as of 2002)
• Internet Users : 26 mil. (total population 47.6 mil.)Internet Users : 26 mil. (total population 47.6 mil.)• High Speed internet : 19 per 100 persons (world 1st)High Speed internet : 19 per 100 persons (world 1st)• Mobile phone service : 68 per 100 personsMobile phone service : 68 per 100 persons• Internet Banking: 31%, Cyber trading: 67 %Internet Banking: 31%, Cyber trading: 67 %
1998 1998 2002 2002
• E-procurement rates : 19.3 % E-procurement rates : 19.3 % 91.6 % (‘03) 91.6 % (‘03)• Customs process for imports : 2 days Customs process for imports : 2 days 2.5 hrs 2.5 hrs • Low income Internet users : 5.0 % Low income Internet users : 5.0 % 34.9 % 34.9 %• Female internet users : 7.7 % Female internet users : 7.7 % 52.4 % 52.4 %
1919
IT Industry is a new Growth Engine in KoreaIT Industry is a new Growth Engine in Korea
IT industry grows fast in its production, exports and creates jobs. IT industry grows fast in its production, exports and creates jobs.
IT Industry IT Industry GDP growthGDP growth
(‘97-’02): 21.6 % 5.6 % (‘97-’02): 21.6 % 5.6 %
1998 1998 20022002
IT share of GDP (%) 9.3 IT share of GDP (%) 9.3 14.9 14.9
IT export share (%) 23.0 IT export share (%) 23.0 29.4 29.4
Mobile phone set exports (US $ bil.) 1.8 Mobile phone set exports (US $ bil.) 1.8 8.9 8.9
No. of IT companies (thou.) 10.2 No. of IT companies (thou.) 10.2 22.1 22.1
No. of IT employees ( mil.) 1.0 No. of IT employees ( mil.) 1.0 1.2 1.2
Korea’s Korea’s World leading producer: CDMA, TFT-LCD, D-RAM,etc.World leading producer: CDMA, TFT-LCD, D-RAM,etc.
2020
4. 4. Korea’s IT boom ModelKorea’s IT boom Model Market changed. Market changed.
a. Created huge Demands a. Created huge Demands
- Old Generation: Cyber trading rate, 69% (commission charge : 3% - Old Generation: Cyber trading rate, 69% (commission charge : 3% 0.3%) 0.3%)
- Young Generation: Computer game, “Starcraft”- Young Generation: Computer game, “Starcraft”
b. Competition brought huge Supply; b. Competition brought huge Supply; new tech new tech cost down cost down
- PCS in mobile telecom ( mobile phone price : 1/10- PCS in mobile telecom ( mobile phone price : 1/10 thth))
- ADSL in high speed internet ( connection fee : - ADSL in high speed internet ( connection fee : $12) $12)
- PC café for online- computer game and cyber trading ($1 per hour)- PC café for online- computer game and cyber trading ($1 per hour)
Government : facilitating changes in marketGovernment : facilitating changes in market
- Demand- Demand : training, banning s/w copy, low-priced PC policy : training, banning s/w copy, low-priced PC policy
- Supply Side : building IT Infra, supporting venture startups (KOSDAQ) and - Supply Side : building IT Infra, supporting venture startups (KOSDAQ) and
e-commerce, educating IT experts e-commerce, educating IT experts
* For Cyber 21 project (Mar.99-02), the gov’t invested US$19.7 billion* For Cyber 21 project (Mar.99-02), the gov’t invested US$19.7 billion
* * Informatization highway (97-05, 831 billion won) Informatization highway (97-05, 831 billion won)
21 21
Strong leadership and Strong leadership and Entrepreneurship Entrepreneurship - - envisioning goals and strategyenvisioning goals and strategy
““We fell behind in the industrial revolution but we won’t be left behind in the We fell behind in the industrial revolution but we won’t be left behind in the
Information revolution” (Information revolution” (The President Kim’s Speech to the Parliament, The President Kim’s Speech to the Parliament, ‘00) ‘00)
Aggressive Investment Aggressive Investment in R&D, Education and IT infrain R&D, Education and IT infra
IT manufacturing Power and Chaebol’s Deep PocketsIT manufacturing Power and Chaebol’s Deep Pockets
- Korea’s - Korea’s IT h/w production’s ranked as 4th with 6.3% in the world marketIT h/w production’s ranked as 4th with 6.3% in the world market
- - DRAM production (1st) : market share: 38% (00) DRAM production (1st) : market share: 38% (00) 41.5% (01) 41.5% (01)
- TFT-LCD production (2nd) : market share: 42% (01, 2/4) - TFT-LCD production (2nd) : market share: 42% (01, 2/4) 37% (02, 1/4) 37% (02, 1/4)
- Mobile phone production- Mobile phone production
: market share: 6.5%(2000) : market share: 6.5%(2000) 10.5%(2001) 10.5%(2001)
: CDMA market share: 53.7%(00): CDMA market share: 53.7%(00)2222
5. 5. Key Factors of this SuccessKey Factors of this Success
Cultural characteristics suitable for Internet Cultural characteristics suitable for Internet - Well educated population : high teciary education- Well educated population : high teciary education
- Tendency to follow fashion - Tendency to follow fashion internet community, game internet community, game
- Quick temper, living pattern (apartments) - Quick temper, living pattern (apartments) broadband broadband
internet, cyber apartment program(99) internet, cyber apartment program(99)
- Shyness to public - Shyness to public active participation in cyber space active participation in cyber space
IT Boom changes Korean Culture and Value SystemIT Boom changes Korean Culture and Value System
- Knowledge & Technology (=make money) became a key to success in life - Knowledge & Technology (=make money) became a key to success in life
- Confucian Value has been changing into performance, Market Value system- Confucian Value has been changing into performance, Market Value system
Saving face, reputation, seniority, modest Saving face, reputation, seniority, modest show up, self-expression, money show up, self-expression, money
- - chaebol based business culture (lifetime employment)chaebol based business culture (lifetime employment) venture (risk taking) venture (risk taking)
2323
Internet Users in KoreaInternet Users in Korea
366 731 1,6343,103
10,860
19,040
02,0004,0006,0008,000
10,00012,00014,00016,000
1995 1996 1997 1998 1999 2000
18,00020,000
26,270
2002 24 24
Internet Users (per 100 people, 2002)
31.4
40.644.9
53.855.2
0
10
20
30
40
50
60
Korea USA UK France Japan
Korea achieves top level informatization Korea achieves top level informatization
25 25
IT Industry Output and Share of GDP
150.3145.3
115
189.1
88.1
0
20
40
60
80
100
120
140
160
180
200
Tri
llio
n K
ore
an
wo
n
19981998 1999 2000 2001 2002
(9.3%)
2626
(11.2%)
(13.1%) (12.9%)
(14.9%)
Broadband Internet User (per 100 people)
19.1
5.63.8
1.3
0
5
10
15
20
25
World’s Top Broadband Internet Users rateWorld’s Top Broadband Internet Users rate
27 27
USA Korea UK OECD
Internet Usage (hrs per month)
16.2
9.68.2
10.5
7.6
0
2
4
6
8
10
12
14
16
18
Korea USA Germany Canada Japan
Source: Nielsen Co., January 2002 28 28
Online Stock Trading (June 2000)
28%
1.8%
7.2%
40%
57%
0
10
20
30
40
50
60
Korea USA France Japan Sweden
* * Internet banking users : 11.3 million (2001) Internet banking users : 11.3 million (2001) 2929
Mobile Phones per 1,000 people(2000, WDI 2002)
567
398
493
720
526
0
100
200
300
400
500
600
700
800
Korea US France Finland Japan
- In 2001, Mobile phone users : 29 million (617 per 1,000 people) - mobile internet handsets : 23.8 million 3
030
Mobile phone handset Exports (billion US$)
1.8
4.8
7.38.5
11.8
0
2
4
6
8
10
12
14
1998 1999 2000 2001(est.) 2002(est.)
Korea holds 53.7% of world CDMA mobile handset market which was US $14 billion in 2000. 3131
Korea has effectively invested for building SOC and its Korea has effectively invested for building SOC and its
knowledge economy, which enables its eonomic success knowledge economy, which enables its eonomic success
- - Korea’s investment in Knowledge to GDP is ranked as 3rd in the world. Korea’s investment in Knowledge to GDP is ranked as 3rd in the world.
Korea’s experience implies that the government should have Korea’s experience implies that the government should have
an effective strategy for developing its economy by stages.an effective strategy for developing its economy by stages.
- In the early stage, primary education, steam power plant focussed- In the early stage, primary education, steam power plant focussed
- After building capacity, investment in knowledge strengthened - After building capacity, investment in knowledge strengthened
But in 00s, huge demands for public expenditure inBut in 00s, huge demands for public expenditure in
- welfare including pension, medicare, etc. - welfare including pension, medicare, etc.
- regional development and supports for S-North Korea relation- regional development and supports for S-North Korea relation
Under this constraints, it’s important to continue effective Under this constraints, it’s important to continue effective
investment to SOC and KBE to sustain Korea’s succssinvestment to SOC and KBE to sustain Korea’s succss 3232
IV. Prospect and ImplicationIV. Prospect and Implication
Investment in Knowledge * as % of GDP (1998)
5.26
6.5
4.14.7 4.7
0
1
2
3
4
5
6
7
Korea US Sweden France Japan OCEDave.
( * = R&D + software + higher education )
* OECD Science, Technology and Industry Scoreboard 2001 - Towards a knowledge-based economy
Korea’s Investment in Knowledge : world top three
3333
THE END : Thank You