author : Byung-Ki Ha (Industrial Competitiveness Division)


1. Introduction

There are growing concerns, especially among private sector associations, over the possible collapse of Korean manufacturing in four to five years as the business environment deteriorates with the massive migration of domestic manufacturing operations. Coupled with Korea’s slow economic recovery and unstable industrial relations, fears of or concerns over hollowing-out, which has yet to be proven, may fuel economic instability and intensify uncertainty. Since the Korean economy has been highly dependent on the growth and exports of the manufacturing industry, the word “hollowing-out” itself may bring about a sense of crisis. Furthermore, as Korea’s service industries are generally perceived to be relatively weak than those of other countries, weakening of manufacturing competitiveness will adversely affect the nation’s economic future.
Given these circumstances, this paper will first look into the role of the manufacturing industries in the Korean economy, and then consider the facts about the hollowing-out of Korean manufacturing, evaluate future prospects and review policy directions.