South Korea lags far behind the United States and other major economies in the size and productivity of the service industry and should take steps to nurture it, a report said Monday.
The country’s service industry accounted for 59.3 percent of the economy’s total nominal gross domestic product (GDP) in 2013, the lowest among major members of the Organization for Economic Cooperation and Development (OECD), according to the report by the Korea International Trade Association (KITA), Yonhap reported.
GDP, the broadest measure of an economy’s performance, is the total value of goods and services produced within the economy in a given period.
Comparable figures for the US and Japan stood at 80.1 percent and 72.6 percent, respectively, the report said. The average for the nine OECD countries studied by KITA stood at 73 percent.
“Unlike some of the major OECD economies, South Korea has not been able to see steady growth in the service sector that is in line with the rise in the country’s income level,” the report said.
In addition, labor productivity in the service industry was also under par, according to the KITA report.
“Labor productivity in the local service industry is about half that of the US and 71 percent of the level tallied for Japan,” the report said. “It was due mainly to a lack of workers in high value-yielding jobs.”
KITA warned that should the trend of low growth in the service sector continue, it may have an adverse effect on the country’s manufacturing industry down the road.
“The role of the service industry relative to the manufacturing sector is becoming increasingly important,” said Kim Jeong-duk, a researcher at KITA. “A decline in the service industry could erode the competitiveness of the country’s manufacturing as well.”
Economy Initiative
Now, Naver is part of President Park Geun-hye’s creative economy initiative.
President Park thanked Korea’s biggest Internet company for helping turn Gangwon Province into a hub for cloud computing.
“I have no questions Gangwon Province is ideally positioned to create new markets by actively utilizing Naver-developed big data as such patents could be used to boost tourism and healthcare-related businesses,” she said in a ceremony to open the Gangwon Creative Economy Innovation Center in Kangwon National University.
The center, which lies on 1,267 square meters of land, is her 10th pet project. The government plans to build up to seven more centers.
Park is urging Korea’s top-tier chaebols and leading companies to join moves for a creative economy as she seeks to add 2.5 million jobs during her five years in office, 410,000 of them in areas overseen by the Ministry of Science, ICT and Future Planning.
