Servitization of South Korea economy: Causes for sluggishness and policy issues

Abstract

Since the 1960 s, the South Korea economy has achieved a rapid economic growth, whereas from the mid 1990’s and beyond, servitization showing the growth of the service section over the nominal GDP has rapidly developed. On the other hand, the service industry productivity declined, even lower than the OECD average. These results continue recently through the deterioration of income inequality. Therefore, the objective of this study is to examine the status and characteristics of the servitization of South Korea economy, analyze the causes for the service industry’s productivity slowdown and income inequality. By presenting the policy issues for securing the service industry’s competition, this study attempts to define the policy implications to build the framework for economic advancement.