Making transitions effective: The Korean approach to industry 4.0
Industry 4.0 is the new technological regime of the Fourth Industrial Revolution. Transitioning to Industry 4.0 is essential to maintain the international competitiveness of the Korean economy, where manufacturing and exports are the two pillars of sustained economic growth. The Korean government is trying various policies to effectively support companies' transition to this new technological regime. This presentation will highlight Korea's approach to Industry 4.0, focusing on key policy tools and ways to foster collaboration between companies.
Korea is investing massively in research and development, yet it still lags top economies in hourly productivity. The gaps are widening between industry and services, between large enterprises and small firms, and across regions. The state is therefore seeking a more sustainable model based on exports, evidence, and connecting innovations, with the rise of artificial intelligence providing additional momentum. Korea ranks among the largest investors in R&D as a share of GDP, yet hourly productivity remains low compared with OECD leaders. Historical growth has been driven mainly by the manufacturing sector, which is reflected in productivity differences: industry is highly efficient, services lag behind. This creates pressure to accelerate modernization and raise service-sector productivity in order to narrow the gap with "frontier" countries. There are yawning disparities between large enterprises and SMEs and — worryingly — they are widening rather than narrowing. Even within manufacturing, top-tier industries (electronics, machinery, automobiles) are pulling away from low-tech segments. Regional imbalances are adding to this. The previous model, in which the state planned and big business executed, delivered growth but also inequalities; the challenge is to transform it into a more sustainable and inclusive system.Productivity: strong manufacturing, weaker services, and widening divides
