Promoting the diffusion of technology to boost productivity and well-being in Korea

Korea is a top player in emerging digital technologies, with an outstanding digital infrastructure and a dynamic ICT sector. The COVID-19 outbreak highlighted the importance of digitalisation to contain the spread of the virus, by allowing quick testing and tracing of infected people, and spurred the development of the "untact economy". Remote access both facilitated physical distancing and mitigated the economic impact of the crisis by enabling more people to continue working. Digital technologies offer opportunities to raise firms’ productivity and the population’s well-being. However, wide productivity gaps between large firms and SMEs and between manufacturing and services weigh on economy-wide productivity, which is far below the OECD average. A wide skills gap between youth and older generations prevents an increasing share of the population from taking part in and enjoying the benefits from a digitalised economy. This paper suggests ways to narrow the digital divide by enhancing the diffusion of digital technologies among firms and among individuals. Increased participation in quality ICT education and training for students, teachers, SME workers and older people is key to address the lack of adequate skills and awareness of digital benefits or dangers (online security, cyberbullying, addiction). Promoting innovation networks between SMEs, academia and large firms through vouchers or platforms can support SMEs’ R&D and commercialisation of innovative goods and services. Waiving stringent regulations through regulatory sandboxes can help identify and alter regulations that hinder the adoption and diffusion of digital technologies.