The National Economic Advisory Council, the Korean Information Society Development Institute, and the Korea Society for Innovation Management & Economics held a joint policy forum on May 28 (Fri) 14:30 under the theme of ｢Reevaluation of innovative growth, search for new ideas｣at the international conference room of the Korea Federation of Banks.

The forum was organized by the National Economic Advisory Council's Innovative Economy Division (Chairman: Park Chan-hi, Professor, Chung-Ang University) in order to review the performance of the related policies on six major issues* related to innovative growth and present a new policy direction.

* ❶ Controversy over the abuse of monopoly power in the app market and potential hindrances to innovation

❷ Industrial policy, especially with regard to restructuring amid the prolonged period of low growth and the retreat of the international division of labor

❸ Ways of examining and reflecting on innovation strategies (especially R&D)

❹ Future direction of the mobility platform policy

❺ Future direction of job creation in the contact-free era

❻ Ways of fostering ICT human resources

 

During the comprehensive discussion, advisors and experts critically reviewed the policy goals and practical tasks.

Lee Keun, vice-chairman of the National Economic Advisory Council, declared in his opening remarks that “Korea, among all major countries, has minimized the economic impact even amid of the unprecedented COVID-19 crisis. Nevertheless, the Korean economy faces certain structural problems, such as a weakening of its main growth engines, poor job creation due to prolonged low growth, and the challenge of making the transition to a low-carbon and eco-friendly economy.” He also emphasized that “as the imminent digital economic society has two disparate sides, namely abundance and inequality, it is necessary to anticipate and prepare for the upcoming changes.”

In his opening speech, KISDI President Kwon Ho-yeol said: “Due to the unexpected proliferation of COVID-19 last year, the volume of economic and social transactions through digitally-based, contact-free means increased massively, accelerating the 'digital transformation' to all sectors of industry and society, with the result that we are now experiencing the weakening and dismantling of the existing system and the establishment of a new order.” He also opined that “Amid these changes, discussions on the ongoing structural changes in the platform industry due to digital transformation, the monopoly status and fair competition of platform operators, job creation and polarization in the contact-free era will be of great help in formulating a policy to prepare for the so-called ‘new normal’ in the post-COVID era.”

The first part of the forum kicked off with a video presentation by Park Chan-hi, chairman of the sub-committee, followed by presentations by advisors Oh Hyung-na (Professor of Kyunghee University), Park Tae-young (Professor of Hanyang University), and Rena Lee (Director General of Radiation Health Institute). In Part 2, three presenters participated in comprehensive discussions, namely, Choi Kye-young, senior research fellow at the Korean Information Society Development Institute, Kim Yeon-bae, professor at Seoul National University, and Ahn Sang-hoon (Director of the KDI International Development Cooperation Center), with advisory member Lee Ho-yeong (Director of the Korean Information Society Development Institute) acting as the chair.

Presentation 1: ❶ Controversy over the abuse of monopoly power in the app market and potential hindrances to innovation

❷ Industrial policy, especially with regard to restructuring amid the prolonged period of low growth and the retreat of the international division of labor

(Advisory member Oh Hyung-na, Professor of Kyunghee University)

Advisory member Oh pointed out that there are concerns that monopolistic platform companies would abuse their superior position in order to restrict digital content transactions such as charging fees above the fair level, and preloading their own apps, and to stifle innovation of market participants by forcing in-app payment, etc. She introduced the trend of adopting digital taxes to equalize the competitive conditions between domestic and foreign app providers, as well as a case of tacit collusion among global platform companies was broken due to lowering fees to small and medium-sized developers. She also discussed the urgent necessity of formulating policies capable of breaking the implicit collusion between vendors; implementing a policy focused on restoring the competitiveness of the app market rather than direct regulation; making efforts to reinforce transaction transparency in the app market and mobile operating system (OS) market; preventing violations of the laws; and promoting parallel cooperation between the Fair Trade Commissions of each country.

 

In addition, she emphasized the need to implement reshoring policies, etc. with the aim of increasing support for high-tech companies, core companies in the global value chain, and to strengthen the efforts to foster the manufacturing industry through corporate governance reforms that could provide benefits for long-term R&D investment, instead of high dividend payouts. She also highlighted the risks facing the export-dependent economic structure due to a slowdown in manufacturing growth and the spread of protectionism.

Presentation 2: ❸ Ways of examining and reflecting on innovation strategies (especially R&D) ❹ Future direction of the mobility platform policy

(Advisory member Park Tae-young, Professor of Hanyang University)

Advisory member Park stressed in her presentation that, despite Korea's inclusion in the top ten countries in the world in terms of the level of its innovation for the first time in 2020 (WIPO Global Innovation Index), its technology trade balance remains in the red, while the productivity, export value, and technological competitiveness of Korean SMEs, which employ 89% of all Korean workers, are not commensurate with such a high global ranking. She went on to point out that there is no proper R&D project planning leading to cross-ministerial cooperation, and that international cooperation with researchers in advanced countries is relatively poor; and also emphasized the need for the participation of evaluators with a profound understanding of technology and markets in the task selection evaluation, as well as a task management system where researchers participating in research can immerse themselves in their research without being snowed under with administrative chores.

 

Furthermore, in a situation where more efficient mobility solutions are required due to the high global rate of urbanization (68.4% in 2050) and the cessation and retirement of internal combustion engine vehicles to achieve the carbon neutral goal, not only mobile devices but also ecosystems, including services provided by platform operators and transportation infrastructures that help promote autonomous driving, are growing explosively. Hence, she pointed out that it is important to preempt leadership in order to secure future income. She then discussed the need to propose specific supply-demand measures concerning the decline in jobs in existing industries (e.g. employees of existing automobile factories, taxi drivers); to develop human resources with knowledge of new technologies such as autonomous driving; to improve regulations to alleviate conflicts of interest between old and new industries (e.g. mobility platform vs. taxi companies) and to prevent hindrances to the development of future industries; and to develop and expand mobility services for vulnerable areas and groups in public transportation through public-private cooperation centered on local governments.

Presentation 3: ❺ Future direction of job creation in the contact-free era

❻ Ways of fostering ICT human resources

(Advisory member Rena Lee, Director General of Radiation Health Institute)

Advisory member Lee acknowledged that public concern about a potential job crisis and high unemployment is increasing due to the development of advanced technologies such as Big Data, Artificial Intelligence, and the Internet of Things in the era of the Fourth Industrial Revolution, but predicted that new business opportunities and new jobs would be created due to the explosive growth of the platform industry and the digital industry in the contact-free era. She proposed that the future job policy needs to focus on creating new type of work rather than job creation and to expand the share of creating new type of work in the private sector and provide support to innovative companies. She also suggested that efforts should be made to train key digital personnel in the long term.

In addition, she asserted that the core technologies of the digitalized world are coding and artificial intelligence (AI) algorithms, and that major countries such as the United States and the United Kingdom are strengthening education on AI and computing. She also emphasized the need for universities to provide AI convergence courses as well as national education that strengthens computing and coding education from the kindergarten age, in tandem with the establishment of a plan for fostering human resources in stages according to skills levels and aptitudes, and the establishment of education and training processes such as utilization, practice, and coaching, in order to provide education on the supply and demand of industrial manpower necessary for fostering ICT manpower in the era of digital transformation.

The National Economic Advisory Council plans to play an advisory role so that the contents and implications discussed at this policy forum can be utilized when implementing government policy, while further systemic cooperation with the related organizations will be strengthened in order to reinforce the specialties of advice.