South Korea: $4.4 Billion to Become a Powerhouse of Innovation
TechnologyBit News Today2 min read
On August 13, the South Korean government revealed its 2019 "growth through innovation" investment plan, a 5 trillion won ($4.4 billion) initiative to drive economic growth. The plan focuses on three key strategic technologies—big data, blockchain, and artificial intelligence (AI)—as well as eight leading industries, including fintech, future cars, drones, healthcare biotechnology, smart cities, smart factories, smart farms, and new energies.
Deputy Prime Minister Kim Dong Yeon, presiding over the meeting, highlighted the significance of this investment, which is more than 2 trillion won more than the amount allocated for 2018. The plan aims to support eight pilot projects in these priority areas and to build a robust "platform economy."
A total of 9 to 10 trillion won is planned for the platform economy across five years, starting with an expenditure of 1.5 trillion won in 2019. The 2019 budget for the eight pilot projects will be 3.5 trillion won, representing a 62 percent increase from 2018. A five-year plan for these projects is expected to be finalized soon.
The 1.5 trillion won designated for the three strategic technologies is a 71 percent increase over 2018's 900 billion won budget, while the 3.5 trillion won for strategic industries represents a 62 percent rise from the previous year. The government also plans to invest over 1 trillion won in big data, blockchain, and the sharing economy—almost double the amount allocated for 2018.
Challenges and a Shifting Focus
The government's renewed emphasis on innovative growth comes amidst economic challenges. The Moon Jae-in administration increased its focus on innovative growth in the second half of 2018 following strong public backlash against its income-led growth strategy centered on raising the minimum wage. While labor unions demand immediate implementation of a promised 10,000 won per hour minimum wage, the business community has raised concerns about the high costs this could impose.
Against this backdrop, there have been longstanding calls for a shift in Korea's economic structure to focus more on high-tech industries, as traditional businesses face growing competition from emerging economies like China. Figures from the state-run Korea Development Institute show a decline in the growth of Korea's manufacturing output, with an annual growth rate of 7.3 percent between 1995 and 2000 falling to 3.1 percent between 2010 and 2013.
Deputy Prime Minister Kim also highlighted progress from a joint public-private task force, reporting that regulatory reforms would allow more than 100 billion won in stalled investments to move forward. In July 2018, the Financial Services Commission created the Financial Innovation Bureau to oversee the cryptocurrency sector, large data, and fintech operations. This follows the Ministry of Science and ICT's blockchain technology development strategy, which aims to secure a global competitive edge and raise 230 billion won ($207 million USD) by 2022. The funds will support the development of blockchain expertise, companies, and projects.
Reports also indicated that South Korea's Jeju Island is seeking to establish itself as a center for the blockchain sector. Local officials have requested that the central government designate the island a special zone for these fields, indicating growing regional interest in the technology.
