New industry innovation led by private sector is key to Korea’s growth: Survey

[Image source: Gettyimagesbank]

South Korea’s ecosystem and competitiveness in new industry innovation are below the average of the Organization for Economic Cooperation and Development (OECD) countries, mainly due to the country’s low growth and rural decline, a survey showed Tuesday.

Maeil Business Newspaper and the Korean Academic Society of Business Administration (KASBA) released the results of a survey ahead of the three-day summer convergence conference that kicked off Wednesday in Busan.

The survey was conducted among a total of 310 Korean business scholars and entrepreneurs over the past month.

According to the survey results, Korea’s national composite competitiveness index stood at 46.5 out of 100, which is below the average of 50 for OECD countries’ competitiveness in the glocal new industry innovation ecosystem. Korea’s regional index was even lower at 36.2.

The respondents saw that the glocal new industry innovation ecosystem will not be able to revive as long as Korea’s low-growth industrial ecosystem remains stagnant and regional extinction continues.

In particular, 61.9 percent of the surveyed unveiled a pessimistic outlook, stating that “the local crisis is serious” and that “the possibility of local extinction cannot be ruled out.”

They pointed out that a global new industry innovation ecosystem, which integrates the competitiveness of enterprises, knowledge and technology, social innovation, and government innovation, will provide momentum for domestic economic growth.

The results showed that 13.2 percent cited policies to foster new industries as a key success factor for creating one, 12 percent training and supply of specialized manpower, and 11.6 percent technology and innovation capabilities of private companies.

Additionally, knowledge and technology ecosystems, enterprise ecosystems, innovation finance ecosystems for new industries, testbeds including testing and certification institutes and industrial complexes, local settlement conditions, and environments for utilizing foreign experts and industrial skilled workers were highlighted.

Unlike in the past when the innovation system relied on resource inputs centered on the government, innovation in new industries is now considered possible only through the organic relationship between various factors.

[Image source: Gettyimagesbank]

A majority of respondents agreed that hyper-centralization in the Seoul metropolitan area and local extinction of regions must be overcome for an innovation ecosystem to be created on a glocal level.

Currently, rural areas are facing a crisis as industrial and population hollowing out accelerates. About 37 percent of respondents cited stagnation of the local job ecosystem as one of the three major causes for rural depopulation, while 28.4 percent said stagnation of local industrial and business ecosystems and 12.9 percent said local social culture and worsening settlement conditions.

The government has been relocating 153 public institutions in the metropolitan area to non-metropolitan areas to overcome the rural decline.

In addition, 10 innovation cities were created around the relocated public institutions. The government’s first public institution relocation policy and the first innovation city policy, however, were not considered to have significant impacts.

If a rural decline can be overcome only if a glocal new industry innovation ecosystem is created and dynamism is enhanced in non-metropolitan areas, private investment in the areas will eventually be key to resolving the crisis.

KASBA sees that it is imperative to attract investment considering characteristics of each region to bring in more companies to the regions.

In particular, it emphasizes the need to introduce a company specializing in industrial innovation capable of investing, recovering investment, and business restructuring altogether to bring a game changer to the Korean industry and economy.

“The gap in competitiveness of glocal new industry innovation ecosystems between Korea and the U.S. lies with whether the government or the private sector takes the initiative,” said Lee Young-dal, vice chairman of KASBA.

“This survey shows that results will be different if private companies and universities take the initiative to create the glocal new industry innovation ecosystem while the government, the National Assembly, and local councils support them with laws, institutions, and policies.”