Yonhap news agency cited the South Korean Economic Association 28 released an analysis of the report said that South Korea’s advanced industry export competitiveness has been behind China for 3 consecutive years. The association attributes this to the gap in R & D investment between the two countries. There are concerns that South Korea, which spends less on research and development than China, may continue to lag behind the competition, the Korean economy said.
The Korea Economic Man Association (KBA) analyzes the high-tech industry trade specialization index (TSI) of Korea and China in the past ten years. This index reflects the relative competitive advantage of the same products produced by countries in the global market, and the larger the index, the more competitive the products’ exports are.
Based on the january-august period, South Korea failed to overtake China at 27.8, with a trade specialization index of 25.6, the Association found. In 2014, the index (29.9) was significantly ahead of China (11.8) , but in 2022, South Korea (20.2) was overtaken by China (24.0) for the first time, and has continued to lag behind China since then, according to Korean media.
From the industrial point of view, China’s leading edge in the electrical and mechanical industries further expanded, in the mobile travel and chemical industry, South Korea’s leading edge shrinking. According to the Korean economic association, this phenomenon stems from the gap in R & D investment between the two countries, with South Korean high-tech firms 2023 only a quarter of the $51.04 bn spent on R & D by Chinese firms. Since 2013, R & D spending by Chinese companies has grown at an average annual rate of 18.2 per cent, compared with 5.7 per cent for South Korean companies.
The association said the government needed to improve the tax system and increase support to ensure more R & D investment by high-tech companies in South Korea. Lee Sang-ho, the association’s Director of Economic and industrial affairs, said that for South Korean companies, even if they were competing at a similar pace to Chinese companies, it would be difficult to get ahead in cutting-edge industries because of their small size. In addition to tax breaks, there is a need for investment subsidies, hydropower infrastructure and other policy assistance.