Go to the Mian menu
Go to the Mian menu

i-KIET Issues & AnalysisKIET Korea Institute for Industrial Economics and Trade

  • home
  • Publications
  • i-KIET Issues & Analysis

Prospect for Plant and Equipment Investment of Manufacturing Sector and Measure for Reinvigoration of Investment

Author Seo, Donh Hyouk et.al Date 2014.05.19 Issue No 589
File

The characteristics revealed in the recent trend of plant and equipment investment are as follows:  a growing effect of structural factor, investment led by IT industry and a relative increase in the investment for the purpose of the development of new and eco-friendly products.

 

Plant and equipment investment in major industries is anticipated to be on the sharp recovery in the next year after slightly growing this year. Notably, general machinery, semiconductor, food and beverage and pharmaceuticals are expected to be on the increase for the two consecutive years, and the investment is expected to be most booming. 

 

In contrast, material industry such as petrochemicals, steel and textile sector which is expected to witness a slowdown in its investment between 2013 and 2014, is anticipated to improve from the next year.


Automotive and telecommunication device sectors which are exhibiting a sharp rise in their export, would undergo the trend of drastically deteriorated virtuous circle as the export growth of the industries is not leading to any investment increase in the sector as much due to their expanded overseas production. 

Automotive and telecommunication device sectors which are exhibiting a sharp rise in their export, would undergo the trend of drastically deteriorated virtuous circle as the export growth of the industries is not leading to any investment increase in the sector as much due to their expanded overseas production. 

 

As expanded overseas production, persisting oversupply and sluggish demand are prospected to serve as 3 main constraints for plant and equipment investment since the recovery of global economy, it is a critical moment to preemptively boost investment in plant and equipment in preparation for the recovery of global economy in the future.

 

For a sustainable growth of manufacturing sector, it is urgent to strengthen the linkage between investment in R&D and investment in the production of new product, sophisticate industrial structure and reinforce ecosystem through an improvement in the capacity of downstream industry which raise the likelihood to realize domestic production of high value added product.

 

Furthermore, it is necessary to aggressively expand domestic demand by focusing on the combination with the manufacturing sector which is equipped with competitiveness, and strengthen the competitiveness of production locations for domestic production which delays the movement of production base to foreign countries.