Title page
Contents
Introduction 8
Part I. The IT Industry in the Korean Economy 10
1. IT Industry Trends and Economic Status 11
1.1 IT Industry Trends 11
1.1.1 IT Industry Structure 11
1.1.2 IT Production 11
1.1.3 IT Domestic Sales 12
1.2 IT Trade and Globalization of the IT Industry 14
1.2.1 Trends 14
1.2.2 Characteristics of IT Exports 15
1.2.3 Globalization of the Korean IT Industry 17
1.3 IT Industry and the National Economy 18
1.3.1 Contribution of the IT Industry to GDP 18
1.3.2 IT Utilization and Contribution to Productivity Growth by Industry 20
1.3.3 IT Utilization as an Inflation Inhibitor 21
2. Foundation of The Korean IT Industry 23
2.1 Human Resources in IT 23
2.1.1 Changes in IT Employment 23
2.1.2 Employment in IT and Related Industries 24
2.1.3 Job Creation and Destruction in the IT Industry 25
2.2 IT R&D Expenditure 27
2.2.1 IT R&D Expenditure 27
2.2.2 Characteristics of IT R&D Expenditure 28
2.2.3 R&D Accomplishments 29
2.3 IT Venture Enterprises and Venture Capital 30
2.3.1 Definition of a Venture Enterprise in Korea 30
2.3.2 Growth of Small and Medium-sized Companies and Venture Enterprises in the IT Industry 31
2.3.3 Growth of Venture Capital 32
2.3.4 IT Venture Enterprises and Venture Capital 33
3. Internationl Comparison 36
3.1 International Comparison of the IT Industry 36
3.1.1 Contribution of the IT Industry to Economic Growth 36
3.1.2 International Competitiveness 39
3.2 International Comparison of the IT Industry Infrastructure 40
3.2.1 Employment in the IT Industry 40
3.2.2 R&D Investment Level and Performance 44
3.2.3 Venture Capital Investment and Entrepreneurship 46
3.2.4 Status of IT Infrastructure 49
Part II. Trends and Prospects by Sector 54
4. IT Equipment 55
4.1 Overview 55
4.2 Information Equipment 57
4.2.1 Monitors 58
4.2.2 PCs 59
4.3 Communication Equipment 60
4.3.1 Mobile Handsets 61
4.4 Components 62
4.4.1 Semiconductors 63
4.4.2 Flat Panel Displays 65
4.5 Competitive Edge of the IT Equipment Sector 66
5. Telecommunications Service 69
5.1 Overview 69
5.2 Mobile Service 71
5.2.1 Market Trends and Forecast 71
5.2.2 Possibility of Delayed IMT-2000 (3G) Service Introduction 73
5.2.3 Market Competition and Regulation 74
5.3 Broadband Service 75
5.3.1 Market Trends and Forecast 75
5.3.2 Leased Line Service 77
5.3.3 Internet Users 77
5.3.4 ISP Market 78
5.4 Wireline Telephony Service 79
5.4.1 Market Trends and Forecast 79
6. Software 81
6.1 Overview 81
6.2 Packaged Software 83
6.2.1 Market Trends and Forecast 83
6.2.2 ERP 84
6.2.3 CMS 87
6.2.4 E-Commerce Application 88
6.3 Computing Service 89
6.3.1 Market Trends and Forecast 89
6.3.2 ASP 91
Concluding Remark 93
Appendix 94
Appendix A. Data Source for International Comparison 94
Appendix B. IT Industry Classifications 95
References 97
Table 1-1. Korean IT Industry Production, 2000-2007 12
Table 1-2. Domestic IT Industry Sales, 2000-2007 13
Table 1-3. Korean IT Industry Trade Balance, 2000-2007 15
Table 1-4. Shares of IT Exports/Imports in All Industries, 2000-2003 15
Table 1-5. Korea's Market Dominance in Top Five IT Exports Markets, 1997-2001 16
Table 1-6. Korea-Japan/Korea-Taiwan ESI Score 17
Table 1-7. Foreign Investment in Korea's IT Industry, 1997-2001 18
Table 1-8. Value Added of IT Industry to GDP, 1999-2007 19
Table 1-9. Value Added and Employment by Industry, 1997-2000 20
Table 1-10. Comparison of PPI Growth Rate between All Industries and IT Industry of Korea, 1997-2000 22
Table 1-11. PPI Growth Trends, 1997-2000 22
Table 2-1. Employment in IT-Related Occupations, 1995-2001 23
Table 2-2. Forecast for Employment in IT-Related Occupations, 2002-2007 24
Table 2-3. Employment in IT and IT-Related Industries, 1998-2001 24
Table 2-4. Forecast for Employment in IT and Related Industries, 2002-2007 25
Table 2-5. Job Creation and Destruction in Manufacturing and IT Industries, 1998-2001 26
Table 2-6. Job Creation and Destruction Rate in Manufacturing and IT Industries by Size, 1998-2000 26
Table 2-7. R&D Experditure by Type of Research, 1993-2000 29
Table 2-8. Types of Venture Enterprises 30
Table 2-9. Growth of Venture Enterprises, 1998-2002 31
Table 2-10. Average R&D Expenditure by Venture Enterprise, 1998-2001 31
Table 2-11. Small and Medium-Sized Companies in the IT Industry, 1998-2002 32
Table 2-12. Number of IT Venture Enterprises, 2000-2002 32
Table 2-13. Types of Venture Capital Investment Resources, 1998-2001 33
Table 2-14. Trends of Venture Capital Investment, 1997-2001 33
Table 4-1. Production and Trade Balance for Information Equipment, 2000-2007 58
Table 4-2. Production and Trade Balance for Monitors, 2000-2007 59
Table 4-3. Production and Trade Balance for PCs, 2000-2007 60
Table 4-4. Production and Trade Balance for Communication Equipment, 2000-2007 61
Table 4-5. Production and Trade Balance for Mobile Handsets, 2000-2007 62
Table 4-6. Production and Trade Balance for Components, 2000-2007 63
Table 4-7. Sales of Global DRAM Manufacturers, 2000 and 2001 64
Table 4-8. Production and Trade Balance for Semiconductors, 2000-2007 64
Table 4-9. Production and Trade Balance for Flat Panel Displays, 2000-2007 65
Table 4-10. Market Share of Large TFT LCD Makers, 2000 Based on Volume 66
Table 4-11. Rank of Countries by Production Volume 67
Table 4-12. Rank of Countries by Exports Volume 67
Table 4-13. Production Shares of Korean communication Equipment in the Global Market, 2000-2002 68
Table 4-14. Share of Korea in Major IT Industry Exports, 1999-2000 68
Table 5-1. Sales for Telecommunications Service, 2000-2007 70
Table 5-2. Sales for Facilities-Based Service, 2000-2007 71
Table 5-3. Sales for Mobile Service, 2000-2007 73
Table 5-4. Number of Subscribers by Service Provider and Service Type as of June 2002 76
Table 5-5. Current and Future Internet Usage in Korea, 1998-2006 78
Table 5-6. Number of Internet Users and Usage by Country 78
Table 5-7. Number of Subscribers by Type of Internet Access, 2000-2002 78
Table 5-8. Number of ISPs in Korea, 1994-2002 79
Table 5-9. Sales Forecast for Major Wired Services, 2000-2007 80
Table 6-1. Software Industry Classification System 81
Table 6-2. Production for the Korean Software Industry, 2000-2007 82
Table 6-3. Production and Trade Balance for Packaged Software, 2000-2007 84
Table 6-4. Size of Korean E-Commerce Application Market, 1999~2000 88
Table 6-5. Production and Trade Balance for Domestic Computing Service, 2000-2007 90
Figure 1-1. IT Industry Contribution to Economic Growth Rate, 1992-2001 19
Figure 1-2. Labor Productivity Growth Rate by Industry, 1997-2000 21
Figure 2-1. Share of IT R&D Expenditure in Science and Technology, 1995-2000 27
Figure 2-2. IT R&D Expenditure by Private and Public Sectors, 1995-2000 28
Figure 2-3. Composition of Venture Capital Investment in the IT Industry, 1998-02000 34
Figure 2-4. Composition of Venture Capital Investment in the IT Industry, September 2001 35
Figure 2-5. Movements of Major Indices in the KOSDAQ, 1999-2001 35
Figure 3-1. Share of IT Industry Value Added in GDP, 1999 36
Figure 3-2. Average Annual Growth Rate of IT Industry's Added Value, 1995-1999 37
Figure 3-3. Contribution of IT Industry to GDP Growth Rate, 1995-1999 38
Figure 3-4. Labor Productivity Growth Rate of the IT Industry, 1995-1999 38
Figure 3-5. IT Exports in Selected OECD Countries, 2000 39
Figure 3-6. Revealed Comparative Advantage of the IT Industry in Selected OECD Countries, 1995 and 2000 40
Figure 3-7. Employment Share of IT Industry from Overall Industrial Employment in Selected OECD Countries, 2001 41
Figure 3-8. Average Annual Growth Rate of IT Industry Employment in Selected OECD Countries, 1995-1999 42
Figure 3-9. Share of Computer Related Jobs in Workforce, 1995 and 1999 42
Figure 3-10. High Skilled IT Job Market in Selected OECD Countries, 2001 43
Figure 3-11. IT Training and Education in Selected OECD Countries, 2001 43
Figure 3-12. IT R&D As a Percent of Total R&D in Private Sector in Selected OECD Countries, 1999 44
Figure 3-13. Average Annual Growth Rate of IT R&D in Private Sector in Selected OECD Countries, 1995-1999 45
Figure 3-14. Number of U.S. Patents in IT per GDP in Selected OECD Countries 46
Figure 3-15. Domestic Venture Capital Investment As a Percent of GDP in Selected OECD Countries, 2000 47
Figure 3-16. Share of High-Technology Sectors in Total Venture Capital Investment by Country, 1995-1999 48
Figure 3-17. Venture Capital Availability in Selected OECD Countries, 2001 48
Figure 3-18. Total Entre p reneurial Activity by Country, 2000 49
Figure 3-19. Cellular Mobile Telephone Service Penetration in Selected OECD Countries, 2001 50
Figure 3-20. Telecommunications Investment as a Percent of GDP in Selected OECD Countries, 1995 and 2000 51
Figure 3-21. Internet Users in Selected OECD Countries, 2001 52
Figure 3-22. Broadband Service Penetration Rates in Selected OECD Countries, June 2001 52
Figure 4-1. IT Equipment Production, 2000-2007 55
Figure 4-2. IT Equipment Exports, 2000-2007 56
Figure 5-1. Shares of Telecommunications Service by Type, 2000-2007 70
Figure 5-2. Market Share in the Mobile Communication Market, 1999 and 2002 72
Figure 5-3. Market Share in Wi reless Internet Service Market, 2000 and 2002 73
Figure 5-4. Market Shares in High-Speed Internet Service, 1999-2002 Based on Number of Subscribers 76
Figure 6-1. Korean Software Industry's Exports and Trade Balance, 2000-2007 83
Figure 6-2. Size and Growth of the Korean ERP Market, 1999~2002 85
Figure 6-3. Changes in Market Shares of Foreign ERP Packages and Korean ERP Packages 86