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A Study on Development Potential and Restructuring of Korean Industries

Author Jung, Eunmi et al Date 2018.12.17 Page

The Korean economy has experienced rapid growth in a short period of time and has encountered various difficulties in the process of industrialization, but achieved unprecedented results. It is also part of this achievement that we have diversified our leading industries with global competitiveness. However, the recent slowdown in the growth of the industries, which are seen simultaneously in exports, production, and employment, is causing great concern.

  At present, the new megatrend, represented by digital transformation, require the transition to production and demand paradigm fundamentally different from existing technology innovation and globalization. The external conditions are also changing drastically by the rise of China are strengthening industrial policies with an emphasis on manu facturing innovation. 

 In this study, we approach the goal and strategy of the transformation of the leading industry, which was confronted in the structural upgrading, as a substantive approach and suggest alternatives. To this end, we are looking for ways to strengthen our industrial competitiveness as a development potential not only in the past or present but in the future. In addition to general discussions on the leading industries, we tried to analyze in depth the automobile and semiconductor industries, which are the major industries. This emphasized the need for a more precise analysis and strategy for the competitiveness or competitive advantage structure of the leading sectors in the industrial ecosystem.

 The reform of the Korean industry is not a passive goal of restructuring the mature industry, but it should have an aggressive goal of structural improvement. In addition, for the purpose of improving the added value of not only some industries but also the whole industry, the value added of domestic manufacturing remains at 25% despite the quantitative growth due to unbalanced growth in industry or industry.

 The policy target should be not the specific company or industry but the industrial innovation capacity. And, the transformation of the leading industry must respond to the paradigm shift of the new manufacturing industry, not only by the production method, but also by building a new product portfolio and increasing inter-industry linkages and convergence.

 The increase in the value does not simply mean a change in the indicator. This means that we will create more social and economic value by using our resources more effectively and that we will have the capacity to strengthen our potential continuously despite the changes.

 In order to achieve these goals, the following steps must be taken. First, changes in the production structure are needed. In order to overcome the high export concentration of specific industries in the leading industry, promising products should be discovered and reflect the convergence trend of products and services. In addition to expanding the market for growth areas such as China, we should expand toward developed countries. The creation and industrialization of a new product in the leading industry should take into consideration the relation with the existing economic and industrial base rather than the ‘totally new’ product or industy, and at the same time, it should perform long term industrial structure enhancement and connection.

 Second, we must overcome the dependence of import of advanced materials, core parts, and major equipment, and strengthen the industrial ecosystem. It is necessary to establish a vital factor in changing the growth strategy from chase to lead, and future industries should include strategies of supply not only specific products, but also related materials and components, and even equipment. Of course, it is difficult to solve the situation where high-tech materials, core parts and major equipment are highly dependent on foreign countries instantly. However, it is necessary to establish measures to find and supply the essential elements for industrial development in advance. Of course, all processes should be based on strengthening industrial ecosystem.

 Third, production conditions such as location, cost, labor, and regulation should be improved. The improvement of the domestic production conditions should promote the transition to the industrial structure corresponding to the transition to the high cost - high productivity structure, and it should be able to bring about the reorganization of the value chain and the capacity enhancement as well as production. In addition, the reorganization of the leading industry should strengthen the basic competence of our industry by strengthening various factors on the value chain such as R & D, design, engineering and marketing as well as manufacturing.

 Fourth, strengthening domestic core competencies and strengthening demand base are necessary to strengthen domestic and overseas industrial relations and expand overseas production. In this process, intelligent information technology should be actively utilized to strengthen the ability to cope with demand changes, and platform strategies should be able to promptly capture the demands of customers and reflect them in the supply system. It should be noted that digital conversion is accelerated based on intelligent information technology. Intelligent information technology differs from existing technologies such as physics and chemistry, so application and diffusion should be emphasized rather than new technology development, and more focus on the expansion of human capital to implement it.

 Finally, R & D, commercialization, human resources and regulatory reform for industrial structure upgrading should be closely integrated with industry policy. The development of the fourth industrial revolution, which is the most important factor in the change of the future industrial development paradigm, is promoting not only product innovation and process innovation but also organizational innovation and business innovation.

 And it is necessary to shift from industrial policy objectives, policy targets, policy instruments, and implementation systems, aiming at interventions to build better markets and better socioeconomic development. The policy target should aim at full conversion of the production-demand-competition-institution-policy paradigm optimized for existing technologies. An integrated approach to ecosystems should be made to break away from existing approaches to specific products, technologies and industries.?