Industrial Structure of Korean Chong-Sup KIM Seoul National University

Main Industries production and export shares: textile, clothing industries

Main Industries production and export shares: steel, machinery industries

Main Industries production and export shares: electro-domestic, automobile, and ship building industries

Main Industries production and export shares: semiconductors & telecommunication equipment, and computer industries

Main export products in the last 10 years   Production share1) Export share 1990 1995 2000   IT제품   8.4 12.3 18.3 18.0 28.2 34.1   (통신기기)   1.6   1.5   3.9   1.8   5.1   (컴퓨터)   1.1   3.3   3.1   3.5   (반도체)   3.6   6.8   7.1   6.9 17.7 15.1 비IT제품 93.4 87.7 81.7 76.9 66.9 63.1   (섬 유)   7.0   5.5   4.0   9.9 10.7   7.9   (의 류)   3.8   2.6   2.9   (석유제품)   4.1 10.5   1.0   1.9   5.4   (철 강)   9.5   8.8   8.2   8.3   8.0   6.6   (기 계)   6.0   7.2   8.6   (가 전)   2.5   (자동차)   9.2   9.7   9.3   7.3   8.7   (선 박)   2.3   4.3   4.4   4.8   기  타2) -   4.9   2.8 계 100.0 1) In manufacture

Korea’s total export and its share in world market Market share

World market share of Korea’s main export products   World market share (%) rank (2000) 1980 1990 2000 Manufacture 1.4 2.5 3.3 10   (textile) 4.0 5.8 8.1 3   (cloth) 7.3   (steel) 2.2 3.4 4.7 8   (chemical products) 0.5 0.8 2.4 12   (office and telecom eq.) 2.0 4.8 5.5   (semiconductors)1) - 7.7   (automobile) 0.1 0.7 2.7 11 Total export 0.9 1.9 1) Production base

Strength and Weakness of the Korean Industry

Strength: quality labor Share of workers with more than high-school education among economically active population Korea (2001) USA (2000) Japan (1997) Germany (1999) UK France (1998) China 24.9 (17.2) 31.1 ( - ) 30.9 (18.6) 23.8 (13.7) 24.7 (16.1) 23.7 3.8

Economically active population by age   15~24 Sub total (25~34) (35~44) (45~54) 55~64 65 이상 Korea (2001) 9.5 74.1 (24.2) (29.4) (20.5) 11.1 5.3 100 Japan (2000) 11.2 65.3 (22.3) (19.2) (23.9) 16.1 7.4 USA 71.0 (22.5) (26.9) (21.6) 9.9 3.0 note: based on population over 16 in the case of USA

Strength: IT Infrastructure IT infrastructure of selected countries (2000) note : per 100 (per 500 for ADSL)

Strength: IT Infrastructure Share of IT industry in GDP: Korea, USA, Japan

Strength: Access to large market China’s Economic Indicators (2000)   world China (a) Korea (b) (a/b) Population(100 mill) 60 12.7 0.4727 26.87 GDP ($bill) 30,000 1080(7th) 457(13th) 2.36 <PPP>1) - 4452(2nd) 728(13th) 6.11 GDP per capita ($) 855 9,628 0.09 Export ($bill) 6364 249(7th) 172(12th) 1.45 Import ($bill) 6669 225(8th) 160(13th) 1.40 Int’l reserves ($bill) 1952)(2nf) 1023)(5th) 1.90 note: 1) 1999      2) Sep. 2001     3) Dec. 2001

Expected Growth Rate of Chinese Economy 1979~2000 2001~2005 2006~2010 2011~2015 9.5 7.7 7.5 7.2

Share of Korean Products in Chinese Market (2001)   China’s import (A) Import from Korea (B) Share (B/A, %)    textile 150.5 27.9 18.6    Cloth 12.1 0.5 4.3    Petrochemicals 343.6 53.1 15.5    Nonferrous metal 18.8 2.2 11.8    Steel 130.3 19.8 15.2    Machinery 384.1 20.5 5.3    Electro-domestic 16.0 1.2 7.7    Computer 118.6 5.0 4.2    Semiconductors 207.4 17.2 8.3    Telecom equip. 106.7 6.9 6.4    other elect. 237.5 2.1    automobile 45.3 1.7 3.8    ship   7.0 0.1 1.6 total 2,435.7 234.0 9.6

Weakness: lack of core technology R&D expenditure $100 mill Korea          USA          Japan          UK        Germany       France (2000)       (1999)       (2000)       (1999)       (2000)       (1999)

Competitiveness of Korean Industries (Industrialized countries = 100)   Prod. tech Tech devel. digitalized Standardization Quality control design Out- sourcing Textile 95 70 50 90 60 Petroq. 75 80 Steel - Machinery 85 Electro-d Automobile Ship build Telecom eq. Computer Semicond. 100

Technology trade balance $100 mill

Technology trade of selected countries   Korea (2000) USA (1999) Japan UK (1998) Germany France Tech Export (a) 2.0 364.7 98.2 157.3 130.6 25.9 Tech Import (b) 30.6 132.8 41.1 87.2 169.2 31.2 (a/b,%) 6.5 274.6 238.9 180.4 77.2 83.0

Weakness: Competitive pressure from other Developing Countries monthly wage of selected countries Korea (2000) Taiwan Hong Kong Singapore Malaysia (2001) Thailand China (1999) Vietnam 1,415 (1.0) 1,235 (0.87) 1,294 (0.91) 1,761 (1.24) 390 (0.28) 146 (0.10) 78 (0.06) 58 (0.40)

Export share of Korea, China, and ASEAN in US and Japan

Weakness: High dependence of parts and components Import dependence and import induction index   Import dependence (%) Import induction Korea (1995) (1998) Japan Textile 18.7 16.7 6.4 0.33 0.31 0.11 Chemic 19.5 20.9 5.8 0.34 0.38 Steel 18.9 8.8 0.39 0.41 0.18 Machinery 13.6 13.9 2.0 0.28 0.30 0.07 Electric 23.3 33.5 0.35 0.46 Med. Eq. 11.4 17.7 4.6 0.23 0.09 Trans eq 12.6 14.3 1.4 Manufacture 18.0 21.8 5.7 0.36

Ratio of Value Added: Korea and Japan Textile chem steel machinery electr med eq transp manuf Korea Japan

Weakness: Low development of service sector Share of service industry in GDP Share of service in trade world Industrial C. Middle income C Low income C Korea 63.0 71.0 54.0 44.0 52.4 World Industrial C Middle income C Low income C Korea 18.1 18.8 14.9 17.8 15.9

R&D investment and value added per worker in service sector compared to manufacture <R&D investment> Korea       USA        Japan       UK             Korea       USA       Japan       UK (1999)       (1997)       (2000)     (1999)           (2000)       (2000)      (1999)      (2000)