light industries such as textiles, apparels
TRANSCRIPT
2020 Megatrends and Korea Industry Vision
KIET Korea Industry Vision 2020 TeamDongsoon Lim, Ph. D.
Research Fellow
Jan. 19, 2006 www.kiet.re.kr 2
Contents
Introduction
How to Identify Megatrends
Megatrend Analysis by KIET Team
Megatrend Analysis by Survey
Megatrend and Korea Industry Vision
Jan. 19, 2006 www.kiet.re.kr 3
Introduction
□ Megatrends that will shape the future for the Korean Industries of 2020.
□ KIET, in close collaboration with KIET specialists and a wide range of experts outside the institute, has worked to identify major factors and megatrends that will shape the world of 2020.
□ The key megatrend fields identified are:
(1) World Economic Order(2) Labor, Resources, and Management: Aging, Environment
and Natural Resources, and New Management(3) Science and Technology(4) New Culture and Consumption Patterns(5) Korea-specific Situation: South-North Relations and
Balanced National Development
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Methodology
□ To Select the Megatrends for the KIET Korea Industry Vision Project, we reviewed a number of reports and books, and brought together some 24 leading outside experts from a wide variety of disciplines and backgrounds
- KIET Team selected more than 60 major trends, studying various methodologies and reviewing a vast number of recent future studies, (MOCIE, KISDI, STEPI; NIC, DBR)
- The experts engaged in wide-ranging discussions with the KIET project team and jointly held seminars and workshops for in-depth reviews of key megatrends.
- We solicited the first selection of trends into 15 major megatrends
- KIET, with R&B Research, Co., conducted a survey to identify core features and priority of the megatrends
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Megatrend Analysis
More than 60Megatrends
- Future studies by various disciplines and backgrounds- Seminars, workshops for in-depth reviews and selection
Delphi SurveyCheck the features of
Megatrends
24 leading Outside experts
15 Megatrends
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15 Megatrends
Fields of Megatrends 15 Megatrends
Change in World Economic Order
1) Integration of the World Economy
2) Power Shift in World Economic Order and Change in Comparative Advantage
Labor, Resources, and Management
3) Aging : Change in Demographic Structure
4) Degradation of Environment and Natural Resources
5) Paradigm Shift in Financial Markets
6) New Wave in Management : Knowledge-based and CSR
Acceleration in Technology Innovation
7) Maturation of Digital and Network Technology
8) Advent of Bio-economy
9) Fusion Technology: IT ㆍ BT ㆍ NT ㆍ New Materials
10) Challenge to New Technology : Rise of National Strategic Technology
11) Hegemony of Technology : Standardization and Intellectual Property Rights
Evolution of New Culture and Consumption Patterns
12) New Consumption Patterns
13) Evolution of New Culture
Korea-specific Situation
14) Progress in South-North Korean Economic Cooperation
15) Regional Innovation and Balanced National Development
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Change in World Economic Order
1) Integration of the World Economy
□ Trade:
- Contradictions of globalization
- Relative weakening of multilateralism and continuous expansion of regionalism and cooperation in economic blocs
□ Financial Markets:
- Globalization in international financial Markets
- Improvement and cooperation in financial and macroeconomic policies and management will set the stage for future dynamism, e.g. deregulation
□ Multinational Corporations:
- Acceleration in global network in production, processing, and services
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Change in World Economic Order
2) Power Shift and Comparative Advantage
□ U.S. and Asian Heavyweights : role of growth engine (Growth prospects during 2005-2020: U.S., 3.1-3.2%, China, 7.5%-5.8%)
□ EU and Japan : Still need to manage their demographic challenges (Growth prospects during 2005-2020:Japan, 1.3-1.8%, EU, around 2.0%)
□ Energy and population growth : core driving forces for power shift in the world economic order
□ China as Manufacturing Superpower and continuous competition against existing Superpowers:
- Emergence of China and the need to adapt
- Superpowers of the previous age such as Japan and Germany still maintain competitive edge in manufacturing
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Labor, Resources, and Management
3) Aging : Change in Demographic Structure
□ Divergent aging patterns displayed, but mostly having negative influence on world economic growth
- In developed countries and many of the more advanced developing countries, the declining ratio of working people to retirees are straining supply as well as social services, pensions, and health systems
- Measures being taken to counterbalance aging include delaying retirement, encouraging greater participation in the workforce by women, and relying on migrant workers
□ New consumption pattern and rise of elderly-care and –elderly-friendly industries
□ Need to prepare and support ‘double-cropping’ of life by active labor policies
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Labor, Resources, and Management
Forecast of Korea’s Future Demographic Structure
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Labor, Resources, and Management
Proportion of Immigrants by Major Countries
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Labor, Resources, and Management
4) Degradation of Environment and Natural Resources
□ Climate Change and Urban Pollution as two key environmental challenges
□ Continuous strengthening of international environmental regulations by various multinational environmental agreements-acting as trade barriers?
□ Growing demands for energy—especially by the emerging powers—through 2020
- Substantial impacts on the world economy as well as geopolitical relations (most importantly, China and India)
- Fossil fuels, still dominant; more than 90 % of additional energy supply through 2020
- Nuclear power, very moderate increase
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Labor, Resources, and Management
- However, 96 percent of the total projected increase in nuclear power capacity accounted for by emerging economies; Of the 55 GW of additional nuclear power installed for emerging Asia, 24 GW went to China, 12 GW to India, 12 GW to South Korea (EIA, 2005)
- High uncertainty and moderate increase in energy prices
- Possible oil price volatility in the future principally because of unforeseen political and economic circumstances-tensions in the Middle East
- On the other hand, market forces to restore balance in long-term
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Labor, Resources, and Management
5) Paradigm Shift in Financial Markets
□ Global Financial Market Paradigm: Deregulation, Liberalization, Integration
□ Financing innovation and networking alignment between financing and (IT) technology & infrastructure
□ Multi-polarization in Global Financial Market
□ Increase in long-term financial assets such as mutual funds
□ Securitization: expansion of private equity market as a non-standard form of securitization
- Diversification of investment and risk hedging
- Converging financial functions
□ Horizontal integration of financial and non-financial ind.
□ International integration of financial regulation for risk-sharing
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Labor, Resources, and Management
6) New Wave in Management
□ Knowledge-based economy: continuous creation, expansion, and utilization of knowledge in new management
- Important role of CKO (Chief Knowledge Officer)
□ Corporate Social Responsibility-Ethics and Transparency
- Rising consumer sovereignty
- SRI (socially responsible investment); UN, TI (Transparency International-Ethic Round; EU, Promoting a European Framework for Corporate Social Responsibility-Green Paper
Speed management
Global sourcing of Human Resources
Investment on Human
Resources
Strategic Alliance
Quality Control
R&D
3.4 14.4 35.9 6.9 2.0 37.4
Importance of New Management Features: Survey results
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Acceleration in Technology Innovation
7) Maturation of Digital and Network Technology
□ Complication of Technologies vs. Simplification of Interface
□ Digital and network technology: - Acceleration-Huang's Law instead of Moor's Law,
- Fusion-TSP (Total Service Provider),
- Ambient and Business Intelligence,
- Servitization-SoC (System-on-Chip), Embedded Software
□ Consumer Demands: Multimedia, Customization, Mobility, Security
□ Entering Ubiquitous society-Computing, Networking, Censoring
□ Softening, increasing transparency and efficiency for (manufacturing) industries-weightless economy
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ComplicationComplication
Multimedia
Customization
Security
Mobility
SimplificationSimplification
Demand-sideSupply-side
Acceleration
Fusion
Servitization
Intelligence
Acceleration in Technology Innovation
Key words for 2020 Digital·Network Technology Trends
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Acceleration in Technology Innovation
8) Advent of Bio-economy
□ The biotechnological revolution is at a relatively early stage, and major advances in the bio-sciences and bio-industries continue to punctuate the 21st century
- Major achievements made in combating disease, increasing food production, reducing pollution, and enhancing the quality of life
□ Most significant developments are:
- Genomic profiling, Biomedical engineering, Therapy and drug developments, Genetic modification, DNA identification
□ Intensifying competition in biotechnology among leading and following countries
□ Some biotechnologies will continue to be controversial for ethical and religious reasons: strengthening global bio-standards, e.g., biosafety protocol
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Areasbelow
6061∼70 71∼80 81∼90 91∼100 Average
Major Fields
Economics & Biz.
0.0 3.2 25.4 49.2 22.2 84.0
Science & Technology
2.3 8.2 31.0 46.2 12.3 80.8
Human and Social Sciences
2.9 1.4 21.4 51.4 22.9 84.0
Total (Average) 1.4 4.9 27.0 48.4 18.4 82.7
Korean Biotechnology Competitiveness Index: Survey results
Note: The index at the last column is the forecast of future Korean Biotechnology Competitiveness compared to world top technology in 2020; based on responses from 438 experts from three major fields
Acceleration in Technology Innovation
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Acceleration in Technology Innovation
9) Fusion Technology: IT ㆍ BT ㆍ NT ㆍ New MaterialsDevelopment stages
Development stages
Source: Ahlqvist, T. (2005). "From Information Society to Biosociety? On Societal Waves, Developing Key Technologies, and New Professions", Technological Forecasting and Social Change, 72(5), June, pp. 501-519
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□ The synergic combination of IT, NT, BT, and new material technologies
□ Rapid change induced in value-chain, manufacturing process, industrial structure and paradigm
□ Creation of new fusion technology markets and increased employment
Acceleration in Technology Innovation
FusionTech.
INT(IT+NT) IBT(IT+BT) NBT(NT+BT) INBT(IT+NT+BT)
Detailed products and tech.
- Nano-computer
- Nano-motor- Nano-sensor
- Bioinformatics- Bioelectronics- Human Interface
- Bio-computer- Biosensor- Biochips- Telemedicine
- Nano-biosensor
- Nano-biology- Nano-medicine
- Healthcare censor- DDS (Drug Delivery Sys.)- Bio-photodiode - Bio-EL Device - Visual Prosthesis- Molecular imaging - Micro environment censor- Ubiquitous Healthcare System
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Acceleration in Technology Innovation
10) Challenge to New Technology : Rise of National Strategic Technology
□ Strategic Technology: beyond economic profitability - Requires longer-term investment and high quality human
resources
- Up to the sky; Into space; deep down to the sea
□ Dual-use technology (military-commercial technology): Lightweight helicopter; mid- and low-orbit satellite; new energy sources such as fuel cell, hydrogen cell
□ Aircraft technology: lightweight, smart technology, unmanned airplane; geostationary orbit projectile
□ Marine technology: sustainable marine development - Food, natural resources, and environment
- “Blue Revolution”
- Development of wing-in-ground-effect ship (WIG)
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Acceleration in Technology Innovation
11) Hegemony of Controlling over Technology : Standardization and Intellectual Property Rights
□ Standards war and reinforcing intellectual property rights
- In 2020, intense global competition and rapid innovation will lead to a shortening of product lifecycles.
- To remain competitive, successful countries as well as businesses and industries need to maximize the potential of their products using standards and IPR
□ The WTO TBT (Technical Barriers to Trade): “one standard, one test, accepted everywhere"
□ In the long-run, Standards and IPR present opportunities as well as challenges
- The potential for high technology companies to profit in the world market is quite optimistic.
- Korea as a technology- and culture-exporting country
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Evolution of New Culture and Consumption Patterns
12) New Consumption Patterns
□ Major driving forces of new pattern: Increasing trend of aging and single families
□ Greater Polarization and Fragmentation - Wealthier groups leading consumption change
- The live-for-today ‘now’ attitude of the young and single family will thrive
- Polarization is not only income based: too much choice can be equally polarizing and a source of great pressure on individuals
□ Desire for greater security, health, and customization in consumption as major factors of purchase.
□ Greater Emphasis on Sustainability and Environmental Concerns
- Behavior will change by price increase as well as attitude
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Evolution of New Culture and Consumption Patterns
13) Evolution of New Culture
□ Globalization of ethnic cultures will lead to harmonization with dominant cultures
- Glocalization (Globalization + Localization) continues
□ However, changes within cultures from “institution-centric" to "citizen-centric“ or "customer-centric“ by networked, distributed culture; Homing increases
- More LOHAS (Life of Health, Amenity, and Security) and downshift
□ From he Big Politics and "grassroots“ activity to the emergence of Big Grassroots
- NGO and Role of Women: Arising political activity that is bottom-up, empowered by electronic networks, and large and sophisticated enough to challenge Big Politics without generating substantial costs
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Korea-specific Situation
14) Progress in South-North Korean Economic Cooperation
□ The inter-Korean relationship will shape the future of South-North economic cooperation around 2020
- Stability of North Korean regime; Reforming and Opening of North Korea
- Easing political and military tensions between South and North Korea
□ Two scenarios: ①fast vs. ②moderate Inter-Korean economic cooperation progress
- In ②, South Korean firms will increase investment mainly in economic zones like Gaeseong Industrial Complex; light industries such as textiles, apparels, and labor-intensive electronics will garner gain of intra-industrial division
□ Economic cooperation will contribute to the improvement of North Korea’s industrial structure
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Scales ① ② ③ ④ ⑤
Major Fields
Economics & Biz.
1.1 25.9 27.5 33.3 12.2
Science & Technology
4.6 24.6 32.0 28.0 10.9
Human and Social Sciences
1.4 21.4 15.7 50.0 11.4
Total (Average) 2.5 24.7 27.4 33.9 11.5
Prospect for Inter-Korean Econ. Cooperation: Survey results
Note: Scales ① , ③, ⑤ represent negative, neutral and positive areas of inter-Korean economic cooperation and integration prospect, respectively; based on responses by 438 experts from three major fields
Korea-specific Situation
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Korea-specific Situation
15) Regional Innovation and Balanced National Development (BND)
□ “Regional competitive advantages” is the essential element in BND strategy that attempts to generate long-term competitiveness and ensure the growth of the national economy as well as regional rejuvenation and sustainability
□ Innovation, in terms of creative technological knowledge, is a key driver of economic growth and community development in 2020
□ Continuous efforts needed to adjust spatial discrepancy between industrial location and regional innovation system (RIS)
□ In 2020, BND will be progressing, coupled with RIS, by economic zones
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Korea-specific SituationProspect for Regional Innovation and Balanced Growth
Source: Kim, Sunbae (2005), “Major Issues and Directions of Building of a RIS,” KIET IER, KIET.
Globalization-Regionalization (knowledge-based economy)Global EconomicEnvironment
Input & investment-driven economyGoal of the Korean Economy
Per capital income 50,000 dollars Soundness of the domestic economy
Policy Directions & Strategies
Uni-core spatial structure centered On Seoul metropolitan area
Efficiency (NIS focus) Equity (cluster focus)
Independent economic bloc(multi-core spatial structure)
Sustainable development of the Korean national economy
Establishment of Innovation Systems(NIS, RIS, Clusters)
Innovation-driven economy
Regionalization of NationalEconomic Development
Agglomeration efficiency(cluster-centered RIS)
Strengthening of regional competitiveness
Advocacy of Balanced develop-ment in 16 cities & provinces
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Megatrends Selected by Expert Groups
Megatrends All
By experts
Economics and Biz
Science & Technology
Human /Social Sci.
1) Integration of the World Economy 6.5 6.7 7.0 4.7
2) Power Shift and Comparative Advantage 11.5 12.9 10.0 11.4
3) Aging : Change in Demographic Structure 12.4 14.5 10.6 11.1
4) Degradation of Environment and Natural Resources 10.4 9.0 12.1 10.0
5) Paradigm Shift in Financial Markets 1.4 1.2 1.3 2.2
6) New Wave in Management : Knowledge-based and CSR 3.9 3.3 3.7 5.8
7) Maturation of Digital and Network Technology 8.6 8.4 9.0 8.3
8) Advent of Bio-economy 5.9 6.5 5.1 6.4
9) Fusion Technology: IT ㆍ BT ㆍ NT ㆍ New Materials 10.3 10.1 10.5 10.3
10) Challenge to New Technology : Nat’l Strategic Tech. 1.7 1.6 2.2 0.8
11) Standardization and Intellectual Property Rights 4.2 3.7 5.7 1.9
12) New Consumption Patterns 3.6 3.5 3.8 3.3
13) Evolution of New Culture 7.0 5.5 7.8 8.9
14) South-North Korean Economic Cooperation 10.5 11.8 9.1 10.8
15) Regional Innovation and BND 2.2 1.5 2.3 3.9
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Which is Most Influential?
12.4
11.5
10.5
10.4
10.3
8.6
7.0
6.5
5.9
4.2
3.9
3.6
2.2
1.7
1.4
Aging: Change in Demographic Structure
Change in Comparative Advantage
South-North Korean Economic Cooperation
Environment and Natural Resources
Fusion Technology: IT ㆍ BT ㆍ NT ㆍ New Materials
Maturation of Digital and Network Technology
Evolution of New Culture
Integration of the World Economy
Advent of Bio-economy
Standardization and Intellectual Property Rights
New Wave in Management : Knowledge-base, CSR
New Consumption Patterns
Regional Innovation and Balanced Nat’l Dev.
Challenge to New Tech. : Nat’l Strategic Tech.
Paradigm Shift in Financial Markets
Jan. 19, 2006 www.kiet.re.kr 32
Positive Megatrends
Development of Digital∙Network
IT∙BT ∙NT New Materal – Fusion Technology
South-North Korean Economic Cooperation
Economics & Biz Sciences Human & Social Sciences Economics & Biz Sciences Human & Social Sciences
25.2%
23.5%
23.3%
14.0%
14.4%
14.7%
13.0%
14.7%
14.0%
Source: KIET-R&B Delphi Survey (2005)
Jan. 19, 2006 www.kiet.re.kr 33
Negative Megatrends
Aging: Change in Demographic Structure
Environment and Natural Resources
Standardization and Intellectual Property Rights
Economics & Biz Sciences Human & Social Sciences Economics & Biz Sciences Human & Social Sciences
26.2%
25.6%
26.4%
21.4%
20.2%
22.0%
15.3%
15.7%
16.2%
Source: KIET-R&B Delphi Survey (2005)
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Megatrend Groups15 Megatrends Impacts
Demographic ChangeAging : Change in Demographic Structure
Technology Innovation
Integration and Comparative Advantage
Environment and Resources
Korea-specific
Labor
TFP
Capital,TFP
Capital,TFP
Labor,TFP
Management and Demand TFP
Maturation of Digital and Network Tech.
Advent of Bio-economy
Fusion Technology: ITㆍ BTㆍ NT
Challenge to New Tech. : Nat’l Str. Tech.
Standardization and Property Rights
Integration of the World Economy
Change in Comparative Advantage
Environment and Natural Resources
South-North Korean Econ. Cooperation
Reg. Innovation and Balanced Nat’l Dev.
Other Megatrends
An Overview on Megatrends and Their Impacts
Jan. 19, 2006 www.kiet.re.kr 35
Upper-bound+ 0.5%p
Baseline
Economy-wideIndividual industries
Lower-bound- 0.5%p
15 Megatrends
Megatrends and Economic Impacts
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The Growth Effects of Major Megatrends
Upper-bound(Active policies)
Baseline(BAU policies)
Lower-bound(Passive policies)
Change in Demographic
Structure+0.10 0
(1.8) -0.10
Technology Trends1)
+0.20 0(3.9) -0.20
Environment/Natural Resources
+0.07 0(1.9) -0.07
South-North Cooperation
+0.06 0(3.4) -0.06
Globalization/ Comparative Advantage
+0.07 0(3.2) -0.07
Total +0.50 0 -0.50
Note: 1) Maturation of Digital &Network Technology, Advent of Bio-economy, IT∙BT ∙NT, New Material Tech-Fusion Technology, New Tech Challenge: Rise of National Strategic Technology
2) () in Baseline results from the expert survey results; 1(most negative), 3(neutral), 5(most positive); Number 0 means no effect on the baseline growth path
Jan. 19, 2006 www.kiet.re.kr 37
Major Megatrends and Impacts on the Industries
Trends Positively affected Negatively affected
Globalization/ Comparative Advantage
Aircraft, Business service, Logistics, Automobiles, Shipbuilding, General
machinery, Iron & Steel, Electric equipment
Textiles, Chemicals, Electronic parts,
Construction, Consumer electronics, Office &
Computing Machinery
Change in Demographic
Structure
Elderly care (medical equipment and service), Food and Beverage, Finance
and Insurance, Real estate
Automobiles, Shipbuilding, General machinery, Iron & Steel, Textiles, (Precision)
Chemicals, Office & Computing Machinery
Environment/Natural Resources
Machinery (Environmental equipment), Medical service
Iron & Steel, Textiles, Chemicals, Non-Metallic
Mineral Products
South-North Cooperation
Textiles, Consumer electronics, Electronic parts, Electric machinery,
Construction, Logistics-
Technology Trends1)
Automobiles, General machinery, Textiles, Consumer electronics,
Communications equipment, Electronic parts, Electric machinery, medical
equipment , Aircraft, Communication service, Precision machinery
-
Note: 1) Especially, fusion technology.
Thank you