Analysis of the State of Progress on the 5 New Leading Industry Projects and Their Policy Effects
Published on 10 December 2018
Published by Industry & Employment Analysis Division of the Economic Analysis Bureau
This report provides the background and details of policy initiatives on 5 major new industries related to the 4th industrial revolution and relevant trends in major countries such as the US, Germany, Japan and China; Korean regulatory trends with regard to the 5 new industries as well as policy implications drawn through a comparative analysis of the economic impacts of each new industry and an analysis of their export competitiveness compared to those of major economies.
In order to respond promptly to the transformative global industrial trends such as the 4th industrial revolution, the Ministry of Trade, Industry and Energy (MOTIE) has designated 12 industries as new growth drivers and after the announcement of its 2018 report on 「Accelerating Life-Changing Innovative Growth for Industries」, MOTIE set out “outcome production targets primarily for 5 major new industry projects” as its core action plan. Major economies including the US, Germany and Japan are solidifying their status as pioneers of the 4th industrial revolution by establishing their own strategies to foster new industries in the mid-to-long term through the utilization of their respective technological advantages.
New industries based on the 4th industrial revolution have evolved through the cross-over of existing and future industries, as they create new technology and services. As such, imposing the regulatory framework used in traditional industries on these new industries is likely to lead to problems such as a failure to develop new ideas or business models. Therefore, the regulatory triangle consisting of in-advance regulation, positive regulation and lack of regulatory infrastructure needs to be resolved.
Except for electric and autonomous vehicles, most of the five new industries designated by MOTIE appear to have a lower per-unit impact on the economy compared to existing manufacturing industries, whereas the budget allocation for government R&D investment in each of the new industries has been enhanced in 2019 for industries with higher economic impact such as robotics, compared to the allocations made in 2017 and 2018. This results in a higher impact on average, compared to existing manufacturing industries. The results of the comparison analyses of direct and indirect employment, value-added (income) and production inducement effects of each new industry according to the government’s budget injection could serve as a reference for deciding on investment priorities.
Upon analysis of the export competitiveness of the 5 new industries against the rest of the world through a comparison of the Trade Specification Index (TSI) and export-import unit price ratio (export unit price/import unit price), technological development strategies differentiated by region and industry should be established by incorporating export competitiveness indicators such as export and import trends and technological prowess, in order to enhance the national competitiveness of the 5 new industries.