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South Korea investing $4.5bn in new tech over 8 key industries

South Korea investing $4.5bn in new tech over 8 key industries

South Korea is set to invest KRW 5trn (USD $4.5bn) in a new "Growth Through Innovation" strategy centered around cutting-edge technology such as blockchain, hyper-connectivity and smart devices.

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By Jay Banerjee 17.08.2018

 

South Korea is set to invest KRW 5trn (USD $4.5bn) in a new “Growth Through Innovation” strategy centered around cutting-edge technology such as blockchain, hyper-connectivity and smart devices. 

The government announced these plans mid-week as it looks to develop domestic “platform economies” with a new wave of strategic investments in a range of emerging and established tech sectors. The platform economy is a vital foundation for driving economic growth, as it supports both infrastructure and technology in South Korea.

Eight key industries will benefit from the new spend, including fintech, drones, future cars, smart farms and new energy. In terms of the platform economy, two areas will be the focus: a hydrogen fuel cell supply chain and a digital infrastructure capable of supporting cognitive tech such as artificial intelligence (AI), machine learning, big data analytics and blockchain. The new investment aims to boost security in data management and the “sharing economy”.

South Korea’s Strategy and Finance Minister Kim Dong-yeon went into detail about the latest investment plans at a media briefing earlier this week. He said that the latest efforts by the government will facilitate efforts to drive “innovative growth” via reforms to regulations. This is important, as the economy has slowed down in recent months and is in danger of slipping into recession.

President Moon Jae-in has been keen on innovative growth during his time in office and has said that it now forms one of three primary pillars in the pursuit of economic growth, alongside economic fairness and growth led by income. Kim said that the investment will support “future industries”.

He added: “The platform economy is an ecosystem and infrastructure for future industries. We should become a platform powerhouse to lead the economy in the digital era. The world’s top five companies in market cap last year – Apple, Google, Microsoft, Amazon and Facebook – were all platform companies. You lag behind if you don’t lead in this game.”

The government’s recent commitment to platform economy investment reflects the fact that the latest round of spend has soared by KRW 2trn compared to 2017. South Korea is planning to increase investment further, so platform economies will benefit to the tune of KRW 9–10trn by around 2023.

“Innovation is creative destruction for the market,” Kim added. “It is an omni-directional structural reform for the national economy. For innovative growth, we need to reform all social systems, including education and the labor market, on top of regulatory reform.”

In other economic news, Kim said that domestic spending will increase at a higher rate than previously planned during the next four years as South Korea looks to offset a slump in the job markets and growing inequality. The government revised its job outlook on Thursday from a previous estimate of 320,000 jobs to 180,000 jobs added during the calendar year.

“The job market is the worst since [the] financial crisis. The government's big challenge is how to support the job market through fiscal policies," Kim revealed in a speech on Thursday. "The polarization issue is very perplexing. From my point of view, economic growth and innovation would be difficult to sustain without addressing the issue.”

Kim revealed that the 5.7% rise in annual budget spending set earlier this year is no longer relevant and that it will be far higher in 2019 and beyond. Spending on research and development will be a priority to support private companies as they target digital transformation and uptake new tech developments.

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