What will happen to Korea's industrial economy in 2017?

With international affairs and economic conditions changing rapidly day by day, it is difficult to foresee what lies ahead. Next year will be no different. While key industries such as computers, displays, and wireless communication devices are facing difficulties, an increasing number of industries are being rapidly overtaken or have already been surpassed by China. What is concerning is the reality that even the industries being fostered as new growth engines for the future are losing competitiveness compared to developed nations.

Looking at China alone, one can glimpse the ruthlessness (?) of time. When examining the sectors where China—once considered a relatively latecomer in technology—has caught up with Korea in global market share, analyses indicate that the steel and oil refining industries fell behind in 2003, followed by petrochemicals in 2004, automobiles and shipbuilding in 2009, and finally the smartphone market in the second quarter of 2014. Even the semiconductor industry, which still maintains the top spot, faces a situation where it could be overtaken at any moment due to China's declaration of its "rise" and the astronomical sums it is pouring into it.

However, this does not mean that new growth engines are promising. Although the government has focused on developing new industries through policies such as the 19 future growth engines and new energy industries, it has found itself in a position where it must watch as advanced nations, which are already far ahead due to regulations and fragmented support, continue to advance.

<From the Tesla Autopilot introduction video>

Now the world talks about the Fourth Industrial Revolution. Having passed through the First Industrial Revolution, which transitioned from the steam engine to the age of mechanization, the Second Industrial Revolution of mass production, and the Third Industrial Revolution of automated production and the IT revolution, we have now entered the era of the Fourth Industrial Revolution, the era of one-on-one customized production.

With the emergence of these new industrial trends, hyper-connectivity, intelligence, product-service convergence, networked collaboration structures, and low-carbon, eco-friendly new industries are garnering attention. Accordingly, global companies are continuously securing future competitiveness through mergers and acquisitions, and are attempting changes by boldly divesting from industries lacking differentiation or launching entirely unimaginable new businesses. Collaboration between IT companies and automotive firms has become a natural occurrence, and medical companies are partnering with IT firms to develop advanced materials.

The government is also focusing on fostering new industries such as smart cars, drones, robots, wearable devices, and bio-health to create new sectors. Focusing on these new industries is tantamount to striving for regulatory improvements alongside continuous investment.

A prime example is that, starting next year, test runs of autonomous vehicles will be possible anywhere in the country. To provide intensive support for smart car R&D, the government is investing 145.5 billion won by 2021 to develop eight key components for autonomous vehicles. In particular, it is focusing on activating convergence alliances to foster the future autonomous vehicle industry through inter-industry convergence.

The same applies to the drone industry, which aims to create an initial market specifically with high-performance medium-to-large unmanned aerial vehicles. The plan is to develop the industry by specializing in high-performance, medium-to-large commercial UAVs, which represent a promising, untapped market in the global market that is a step behind. Efforts are also being made to continuously improve regulations regarding deregulation, which is an obstacle to the drone industry, such as allowing flight beyond visual range and night flight.

To promote the development of the robot industry, we are advancing smart factories to expand advanced manufacturing robots, while also making efforts to identify public demand for service robots and expand their distribution. For wearable devices, we have focused on securing an early market advantage through rapid commercialization. The bio-health industry, aiming to secure global niche markets, has permitted genetic testing services by non-medical institutions for 12 categories, including beauty and wellness.

Despite the government's determination, concerns remain. The tens to hundreds of billions of won the government plans to invest often falls short of the investment of a single global company, and the development of core components is frequently limited to specific sectors. Although deregulation is emphasized, relevant legislation remains stalled in the National Assembly, and concrete examples of inter-industry collaboration networks for industrial convergence are rare.

Next year's economic situation will by no means be easy. The factors destabilizing our economy are bound to increase rather than decrease. However, we cannot simply sit idly by. Therefore, I believe we need to be bolder going forward. 'Bold' regulatory reforms, 'bold' investments, and 'bold' inter-industry convergence cannot be emphasized enough.