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The Servitization of Korean economy observed in the Production Process and its Implication

Author Lee Kun Woo Date 2013.10.11 Issue No 568

Although the servitization of the production process from the perspective of the entire Korean industry is steadily in progress, the servitization of the production process in the manufacturing sector is relatively very slow.


Not only that, the international comparison shows that the servitization of the production process in the Korean manufacturing sector remains at an extremely low level compared even to those of Mexico and China as well as to those of OECD countries.

-This implies, when it comes to the relationship that the production in manufacturing sector generates input of service, which again boost the growth of service industry, Korea reveals the weakness compared to the advanced countries.   


The input ratio of produce service for the production in manufacturing sector appears to be higher in the case the technological level of manufacturing sector is higher, implying that the role of producer service is important in enhancing the technology level, product quality and value added of manufacturing sector.       

- However, it seems not just that there is no significant change in the intermediate goods-like role of producer service, but also that the input coefficient of producer service in the manufacturing sector tends to decline.    


In order to maintain the technology and competitiveness of Korean manufacturing industry in a sustainable manner, it is necessary to make steady efforts to strengthen the linkage between service and manufacturing industries. 

- It is required to help the financial sector function as the financial intermediary for the manufacturing industry in a smooth way, and to vitalize the outsourcing demand through the improvement in the quality of the specialized service related to business and the maintenance and the standardization of certification system.