Evolution of the linkage structure of ICT industry and its role in the economic system: the case of Korea

Abstract

ABSTRACTWhen assessing the structural role of an industry sector within an economic system, considering its relationship to other sectors is crucial. Among others, Information and Communication Technology (ICT) industry, one of the innovation accelerators or key engines of economic growth, is evaluated. Specifically, we analyze inter-industry production inducement linkages within a qualitative input–output analysis framework, since it is useful for understanding the key structure of an economic system. Our purpose is to understand the significant spillover structure of the Republic of Korea’s ICT industry within the national production system, as it has played an important role in the national economy and grown dramatically over the years. The findings from the structural analysis, focused on changes in links, are as follows: First, ICT manufacturing showed a higher degree of heterogeneity than ICT service sectors in its sensitivity effects structure, an indication that this sector needs to be utilized in various other industries. Second, the spectrum of industries having significant production inducement linkages with the ICT industry is limited and furthermore, the influence effects of the ICT manufacturing sector diminished considerably although the ICT industry’s sensitivity effects increased. Finally, intra-industry linkages within the ICT industry are gradually strengthened especially between ICT services and manufacturing. These findings call for sustained policy efforts to promote the virtuous circle in the overall inter-industry production inducement system, by increasing the utilization of products and services from other sectors by ICT sectors (especially ICT manufacturing) as well as the application of ICT in other sectors.