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S. Korea's technology trade balance lowest among OECD members

All Headlines 10:58 September 10, 2012

SEOUL, Sept. 10 (Yonhap) -- South Korea's trade balance in technology transactions ranked the lowest among a group of advanced countries due to its weakness in original technologies, data showed Monday.

According to the Organization for Economic Cooperation and Development (OECD), the technology trade balance ratio of Asia's fourth-largest economy came to 0.33 in 2010, the lowest among the 25 member countries surveyed.

The export-to-import ratio serves as a barometer of a country's competitiveness in path-breaking technology. An index below the 1.0 unit level indicates expenditure outnumbers earnings in royalty payments.

The figure lagged far behind other advanced countries such as Japan and the United States, which reported 4.6 and 1.46, respectively, the data showed.

"The country has been reporting shortfalls in technology trade balance as it focuses more on reprocessing foreign patents rather than developing its own," said Kang Hyun-chul, an analyst at Woori Investment & Securities Co.

The country spent US$10.2 billion on overseas payments of royalties in 2010, up 21.3 percent from a year earlier, the organization said.

In the cited period, local firms earned $3.35 billion from royalties paid by foreign companies, but their overseas payments far outweighed their income, leading the country to post a royalty balance deficit of $6.88 billion, the data showed.

South Korea's dependency on the U.S., which accounts for 57.4 percent of its royalty expenditures, also increased 23.4 percent on-year in 2010, the Paris-based club of industrialized economies added.

"South Korea's information technology industry focuses on applied technology and therefore makes huge royalty payments to foreign countries," said Son Min-sun, a researcher at LG Economic Research Institute.

"The country needs to make efforts in securing its own path-breaking technology and increase its royalty earnings," he added.


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