IT has become a mainstay of Korea’s export driven economy, and aggressive investments have made Korean firms into dominant players in semiconductors, LCD panels, and mobile phones. Despite their success, new challenges await Korean firms in the form of increased competition from China, and pressure to diversify into components and software.
Korea’s IT and electronics industry began with assembly of radio sets in the 1950s. By the 1980s, Korean firms had moved into semiconductor production, and by the 1990s, Korean firms were producing high quality consumer electronics and exploring high-speed Internet services. IT is now one of the nation’s backbone industries, accounting for nearly 11 percent of GDP, and 33 percent of exports in 2010. Korea’s IT success has thus far been mostly a hardware phenomenon, but Korean firms are now increasingly looking into software as the industry evolves.
IT Drives Korea’s Export
Korea’s IT exports reached $158.8 billion in 2011, a three-fold increase from 2001. Share for the IT industry in exports is characteristically high, peaking at 39 percent in 2004, though this is expected to decline to 29 percent in 2011. The trade surplus for IT, moreover, has consistently outstripped the nation’s overall trade balance since 2001. Even during the global financial crisis of 2008, when Korea posted a trade deficit of $13 billion, the IT industry recorded a surplus of $58 billion. Korean IT has also been a strong performer in comparison to other nations. After ranking third in the world from 2005 to 2008, Korean IT’s trade balance overtook Japan in 2009 and 2010 to take the No. 2 spot behind China. In terms of IT export volume, Korea climbed to 5th in the world in 2009 from 10th in 2001, greatly narrowing the gap with No. 4 Japan.
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