High-tech Industry Able to Give Korea a Way-out

Manufacturing bases considered, it is said that Korea takes the lead in skilled labor force and R&D whereas it falls far behind in competitiveness of labor costs.

Korea International Trade Association (KITA) said yesterday that labor-cost competitiveness ranked Korea 16th out of 25 emerging markets, quoting a recent study by Switzerland-based Nova Institute. Nova Institute has evaluated “the Global Production Scoreboard” for 25 nations against seven categories including cost competitiveness for business operation.

An hourly wage in Korea averaged 10.82 dollars, seven times that of China (1.62 dollars). The nation`s wage level even exceeded Taiwan (9.23 dollars in 13th place), and Singapore (10.26 dollars in 14th).

In the meantime, Korea ranked the first in labor expertise, indicating availability of recruiting higher education graduates, and the third in R&D expenditures.

The Korean government took the fifth place in macro-economic stability, market liberalization, and corruption, the seventh in export growth rate as well as high-tech products` contribution level to export, and the ninth in infrastructure development.

Lee Jae-chul, head of planning and research team at KITA said, “The study shows that Korea needs a foreign investment attracting strategy, focused on high-tech industries, which requires high skills and knowledge, such as software, precision equipment, bio-engineering rather than manufacturing industry, in which cost competitiveness is crucial.”

Specialized in a transfer of manufacturing bases to overseas, Nova Institute, a professional consulting firm studied 25 nations, which were picked up as emerging markets by the British Economist.

Out of 25 nations, the study chose Israel and Taiwan as the best destination for manufacturing bases, followed by Singapore, South Korea, and China. Singapore was ranked high in overall categories: top in infrastructure and government, the 2nd in high-tech products` contribution level to export, and 4th in R&D.

China was behind Korea in labor expertise (22nd), R&D (18th), and government (12th) while outscored Korea in labor cost and export growth rate, which ranked China the 4th place respectively.

Mi-Kyung Jung mickey@donga.com