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The Evaluation and Challenges for Growth Capability of Korea’s Promising New Industry in the New Convergence Era

Author Kim, Jongki et al Date 2018.12.07 Page

Recently, the Korean economy firmly has become a low growth trend and the leading industry is facing the limits to growth. The leading industry has been globally matured and is showing the limits of growth due to the emergence of new technologies, and competition between among companies are getting intensified. As a result, the importance of the emergence of new industry along with the advancement of the leading industry is being emphasized than ever.

  Companies and governments in major countries such as the U.S., Germany, and Japan are investing competitively in the growing global new industry market to lead new growth engines in response to the new convergence era or the fourth industrial revolution. Major global companies are leading the market by releasing new convergence products and services based on core platforms in major new industries. In particular, China’s rapid development, which was considered a latecomer, is most prominent.

 The Korean government and companies are also actively responding to the changes in the global paradigm, but has yet to stand out in the global market. In this regard, it is urgent imperative to re-examine domestic growth conditions for creating new industries and sustainable growth, and to establish corresponding policy strategies.

 Based on this background, this study examines the growth potential and problems by analyzing the domestic and foreign status and domestic growth capabilities of the promising new industry which is emerging as a new growth engine in the fourth Industrial Revolution or the new convergence ear, and seek for the development position and strategies to create new industries in the future.

 In this regard, this study develops four evaluation frames of innovation factors to diagnose and evaluate the growth capability for creating new industries in Korea in response to the new convergence era based on various theoretical discussion on the development conditions of the new industry and the development model.  We derive four innovation factors such as ‘market demand’, ‘innovative resource’, ‘foundation for innovative growth’ and ‘activity for securing innovative capabilities’, and evaluate growth capabilities of nine new industries in Korea. In addition to the analysis using available quantitative indicators, the study also uses the results of a survey of major companies and experts in nine new industries. This study analyzes nine new industries, including ‘Intelligent Semiconductor’, ‘Next-generation display’, ‘Rechargeable battery’, ‘Artificial intelligence’, ‘Realistic contents’, ‘IoT Home appliance’, ‘Intelligent robot’, ‘Bio-health’, and ‘Self-driving car’.

 According to a result of comprehensive evaluation of nine new industries in Korea(5-point scale), it is estimated that innovation capability is generally insufficient. Next-generation display was the highest at 3.13, followed by rechargeable battery(2.93) and realistic contents(2.87). Bio-health and intelligent semiconductor were lower at 2.21 and 2.27 respectively. Meanwhile, the biggest common weaknesses and threats of the nine new industries are the weakness of the industrial ecosystem and rapid growth of China, which is urgently required for supplementation and countermeasures.

 In order to promote the development of new industries, innovative activities led by private sectors are needed. However, since the innovative growth capability of the new industry is evaluated to be weak, it cannot be left entirely on private sectors. Considering the nature of the new industry, which is in the beginning stage, it is necessary to create conditions in accordance with the new changes and a certain level of government role is required for the prime of investment promotion and innovative growth.

 As a result of comprehensive analysis of growth capability, strength and weakness, and development position for nine new industries, policy tasks are largely summarized following three areas: technology development (basic and source R&D), strengthening of industrial ecosystem (advancement of forward and backward industries, support of SMEs, activation of business start-up), support for commercialization (demonstration project, certification·standard, public purchase), expansion of foundation for innovative growth(Human Resource Development, Institutional and Regulatory Improvement, etc.).

 The policy priorities for the nine new industries is analyzed that the policy demand for supporting ‘basic and source technology’ and ‘commercialization technology’ is the highest overall. ‘Basic and source R & D’ has a relatively high priority in bio-health and artificial intelligence, ‘application and commercialization R&D’ in realistic contents, IoT home appliance and intelligent robot. Since nine new industries are located between market entry and early growth stage, policy demand for ‘commercialization support’ is found to be the second highest priority. These industries mainly include intelligent robot, self-driving cars, and realistic contents. The third priority is the policy for ‘promoting forward and backward industrial fields’ such as materials and equipment. Rechargeable battery and next-generation display correspond the third highest policy priority, and these industries require for strengthening the competence of backward industries such as core material and equipment. The rest of policy priorities are high in the order of institutional and regulatory improvement, strengthening of SMEs and business start-up, and human resource development. These support polices for nine new industries should be strategically implemented according to policy priories, considering the results of growth capability analysis and evaluation, rather than uniformly pursuing them.?