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Industry Report

Industry reports, briefs issued by Samsung Economic Research Institute

Diagnosing the Status of Korea’s Major Industries

Diagnosing the Status of Korea’s Major Industries

LEE Chi-Ho, BOK Deuk-Kyu, JANG Sung-Won, BAE Young-Il
PARK Sung-Bae, CHO Won-Young, CHO Sung-Jae

Feb. 12, 2013

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A combination of external and internal obstacles has dragged down Korea's manufacturing exports, threatening their traditional role as the central pillar of economic growth.

With the exception of 2009, when world trade dived during the worst of the global financial crisis, exports have grown more than 10% every year since 2003. In 2012, however, exports declined 1.3%. Due to slowing exports and sluggish domestic demand, manufacturing output growth also plunged to 1.6% last year.

Such unfavorable circumstances are the result of three obstacles currently facing Korean industries. The first is slow global growth. The world economy is undergoing a prolonged slowdown with uncertain prospects for recovery, making it difficult for companies to make investments to secure new markets.

The second obstacle is the risk posed by Japan and China. Appreciation of the Korean won has weakened Korea's export competitiveness, while the yen's decline has simultaneously benefited Japanese firms. China is increasing its competitive edge based on its massive investments in technology.

The third obstacle is increasing uncertainties. Global industries have reached the upper limits on differentiating their products through hardware, and face uncertainties involving which next-generation technologies and markets will prosper.

Against this backdrop, Samsung Economic Research Institute selected six industries based on their contribution to the nation's total exports, and examined the key issues they are facing, as well as potential response measures.

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