Korea’s dynamism is running out of steam

The government must radically excite daring entrepreneurship and investment.

Korea’s competitiveness in cutting-edge technology is regressing. According to the Korea Enterprises Federation’s data analysis in a report from the U.S. International Trade Commission, Korea is losing ground in high-tech exports, including semiconductors, display, secondary battery, future mobility, bio and robotics.

Korea ranked second in high-tech exports in 2018 with a share of 8.4 percent after China’s 14.5 percent. Korea fell to fifth in 2022, accounting for just 6.5 percent behind Germany, Taiwan and the United States. Taiwan jumped to third during that period with 8.1 percent, from fifth with 5.9 percent.

The reversal of fortune owes much to Korea’s underperformance in the chip sector. Taiwan’s semiconductor exports surged 31.8 percent thanks to its dominant foundry pure player, TSMC, whereas Korea’s shrank.

The prospects for Korea’s competitiveness in high-tech areas are dimming as well. According to the Critical Technology Tracker by the Australian Strategic Policy Institute (ASPI), Korea fell short of the top spot for all of the 64 critical technologies the institute has been following to assess the global race for future power. China and the United States shared the top rank whereas Korea took a distant third, for competitiveness in high-performance computing and electric batteries.

To bring chagrin to our pride as a chip powerhouse, Korea could not even make the top five in the advanced integrated circuit design and fabrication area. The top two were the U.S. and China. ASPI projected the R&D advance would materialize in industrial competitiveness five to 10 years later. If Korea cannot catch up with the advances in future technologies, its industrial and national competitiveness would inevitably bear the toll.

At this rate, the economies of the U.S. and China would ride on their global leadership in future-generation semiconductor, battery, and bio industries, while Korea stumbles along. Chips and batteries are Korea’s mainstay high-tech industries. Korean producers appear to be doing well in the global market, but they are limping, while their competitors are racing in full speed.

The rise of China in particular should be a rude awakening. Under the “Made in China” 2025 agenda, Beijing has been going all out to revamp its industrial structure toward cutting-edge technologies. In the meantime, Korea has posed more as a hindrance than help for enterprises. The previous liberal government pressed an anti-business agenda, and the incumbent government shaved budgets for research and development (R&D) and did not show any substantial improvement in deregulation and innovation. The government must radically excite daring entrepreneurship and investment. There is no time to waste.