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Value added products accounting for less of S. Korea's GDP: think tank

All Headlines 13:54 September 16, 2018

SEOUL, Sept. 16 (Yonhap) -- High tech value added products are making up less of South Korea's gross domestic product (GDP) amid a general growth slowdown in the country's cutting-edge industries, a report by a local think tank showed Sunday.

According to the Hyundai Research Institute (HRI), value added to the overall economy by new sectors peaked at US$500 billion in monetary terms in 2014 before backtracking 1.2 percent and 0.7 percent in the following two years, respectively.

As measured in percentage, numbers hit a high of 35.6 percent of the GDP in 2015, before dipping 1 percentage point to 34.6 percent in 2016.

High value added industries covers information and communication technology (ICT), aerospace, pharmaceuticals and knowledge-based manufacturing and service sectors designated by the Organization for Economic Cooperation and Development, HRI said.

One of South Korea's leading private think tanks then said the percentage numbers for 2016 are lower than the 38.3 percent tallied for the United States, 36.1 percent for Japan and 35.2 percent tallied for Germany. It said Seoul was even overtaken by China, which had made considerable strides in making high-tech goods since 2012. In 2016, high value added goods made up 35.2 percent of China's GDP.

The latest findings said that Asia's fourth-largest economy was starting to fall behind in the realm of innovation potential that bodes ill for the future.

The country's research and development (R&D) investment growth in ICT, aerospace and pharmaceuticals that surged around 10 percent on an annual basis up till 2014 contracted 4 percent in 2015.

This is in contrast to steady growth in R&D being reported by countries like the United States and Germany.

The latest findings then showed South Korea's global market share in high value added products that stood at 6.4 percent in 2014 was down to 5.9 percent in 2016, with the country's so-called revealed comparative advantage (RCA) index that stood at 2.05 in the 2010-12 period falling to 2.04 from 2013 through 2016. A RCA exceeding 1 indicates export competitiveness, with downward trends viewed as trouble on the global stage going forward.

HRI said that overall deterioration has led to the country creating fewer high paying jobs.

In 2012, the percentage of posts in managerial, professional and top engineering made up 22.4 percent of all jobs, but this was down to 21.6 percent in 2016.

Corresponding numbers for Germany and the U.S. stood at 43.5 percent and 38 percent, respectively.

"The numbers clearly show that there is a pressing need to promote innovation in the private sector and get startups to strengthen their competitiveness in high-tech, future growth areas," HRI said.

Value added products accounting for less of S. Korea's GDP: think tank - 1


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