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Title Analysis of the contribution of ICT and intangible assets to growth, and productivity by industry
Author Jung Hyun Joon Hit 86
Journal KISDI Premium Report Vol. KISDI Premium Report 19-06
Language KOR Pages 1-32
  • Abstract
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Korea has recorded an annual growth rate of 2-3% since the global financial crisis, as growth has slowed down. The potential growth rate is also slowing, as the domestic and foreign environments change, such as the low birth rate and the aging population, and the spread of protectionism. This study attempts to identify the causes of the declining growth rate by conducting a growth accounting analysis and raises implications for sustainable growth in the era of Fourth Industrial Revolution.

The results of the growth account analysis showed that the growth rate of the Korean economy has slowed down because the TFP growth rate of the manufacturing industry is falling and the TFP growth rate of the service industry itself is low. The Korean economy is experiencing a drop in productivity because the manufacturing industry is facing a number of new challenges while transiting from the existing chasing model to the leading growth model, and, in the case of the service industry, start-ups are concentrated in small service industries such as wholesale and retail, food, and accommodation due to excessive industrial regulation and a lack of investment in service R&D. It seems that these problems should be resolved by innovation and convergence using ICT, such as data, networks, and artificial intelligence, which constitute the key area in the age of the Fourth Industrial Revolution, in order to transform the industry into a high value-added one.

Next-generation ICT development strategies are required to promote sustainable growth so that growth in the ICT sector will strengthen the core competitiveness of key industries and create new convergence industries. Various investments should be made in intangible assets, and the work force should be re-trained and made more proficient so that ICT can be routinely applied across the board to all corporate organizations and industries. Also, market-friendly institutional design and regulation improvements are required in line with technological changes, so that innovative products and services can be manufactured and made permanently available in the market.
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