[Editorial] Concerns about technology trade deficit

It comes as a shock that Korea is growing more and more dependent on overseas technology year after year.

A Bank of Korea survey shows that the nation`s reliance on foreign technology dropped from 20 percent in the 1980s to a low of 11 percent in the middle of the 1990s, largely as a result of its independent efforts to develop its industries, but has recently soared to as high as 23 percent.

The sharp rise was mainly attributed to the increase in imports of state-of-the-art technology in electronics and other fields, but the continuance of this phenomenon is feared to aggravate the nation`s dependency on foreign know-how.

As a result of its increasing dependency on foreign technology, the nation has recorded deficits of more than $2 billion in technology trade annually since 1996. Korea, which is the world`s 12th largest trading country, is ranked 22nd in industrial technology standards, and furthermore, with the United States` capability to develop technology set at 100, Korea recorded only 27, compared Japan¡¯s 113. This indicates how far the nation`s industrial technology lags behind the highest international levels.

The question is how much attention the government is paying to the industrial sector in formulating economic policies considering the current industry outlook. Discouraged by the power of finance-related economic agencies, which concentrate only on securing credit, offices in charge of industry seem to be unable to find their own voice.

While finance has been regarded first in formulating economic policies, inter-ministry conferences on industrial competitiveness at Chong Wa Dae, which were once held frequently, disappeared a long time ago. Industrial policies seem to be neglected, particularly by the incumbent administration.

Of course, the then backward financial industry was partially responsible for the 1997 currency crisis, and it is hard to dispute that financial restructuring was one of the nation¡¯s most urgent tasks.

Yet strengthening competitiveness through improving industrial technology is just as important as financial restructuring to help our economy emerge completely from the crisis. Industrial technology is a means the nation needs badly to survive.

At this point, we need to recall that the currency crisis occurred as a result of an eight-year accumulation of trade deficits, which began in 1990. The increase in trade deficits caused by the payment of royalties for technology imports is itself a problem.

If the government continues to neglect export policies based on industrial technology as it does now, the entire balance of payments will soon break down and will record a deficit, and thus a financial crisis may recur. In this regard, the current trend of disregarding industry cannot be overlooked.

The government is bound not to forget even for a moment the common truth that the economy should develop amid the balance of two forces -- finance and object economy.