The Digital Transformation of Korean Industries Today and Implications for Policy

The accelerated pace at which digital transformation is unfolding across various sectors of Korean society is exerting a profound impact on the overall structure of Korean industries and the Korean economy as well, with the rise of the contactless and stay-at-home economies, the growth of digital services, and the increasing emphasis on health and hygiene. Governments worldwide have established policy measures facilitating digital transformation, and major companies worldwide are leading digital transformation in global industries. Digital transformation (DX) serves a number of business objectives, including enhancing competitiveness in response to changes in market demand and industrial structures, facilitating the research and development (R&D) of new products and services (as well as differentiating and innovating existing ones), enhancing cost-competitiveness, and strengthening productivity. Much of the DX phenomenon occurs spontaneously in response to the growing use of artificial intelligence (AI) technologies, smart manufacturing, metaverse systems and platforms, online services, and digital platforms across industries. In Korea, however, there is a general lack of awareness of and preparation for digital transformation, with much of the DX that has occurred still in its early stages. DX has yet to produce results to the extent and depth desired by businesses. Relative to their global competitors, Korean companies’ capabilities for DX also fall short. The current situation of digital transformation in Korea attests to the importance of effective policy measures that foster the use of DX and digital innovations by companies. Most importantly, infrastructure needs to be developed to provide small and medium-sized enterprises (SMEs) with digital technologies and platforms. Policy measures promoting DX should also reflect the characteristics, current issues, and changing trends of different industries. The four types of industries examined in this study (IT manufacturing, non-IT manufacturing, IT services, and non-IT services) show different levels of progress with DX in line with the different conditions and characteristics they have as industries. Policymakers and businesses alike ought to consider these differences in devising their DX strategies.