The document summarizes Korea's policy for supporting the development of a platform economy. It discusses Korea's economic growth and challenges in maintaining growth rates. It also outlines the opportunities and challenges of the fourth industrial revolution. Korea's government aims to support the platform economy by acting as a leader, supplier, facilitator, market maker, and regulator. Specific policies mentioned include establishing nine national strategic projects focused on emerging technologies, conducting new R&D projects through open citizen participation, setting up an AI research center through public-private collaboration, establishing test beds for smart technologies, and designating regulation-free zones to promote new industries with relaxed regulations.

1. 23 November, 2016
Korea’s Policy For Platform Economy
Science and Technology Policy Institute
Byong-Sam CHOI, Byeongwon PARK
Finnish Government Meeting

2. 2
Contents
02
03
Korea’s Challenges
Policy for Platform Economy
01 Overview of The Korean Economy

3. 3
The Korean Economy: Growth
GDP (1960-2015)
* Source: World Bank national accounts data / CIA The World Factbook
3.9 Billion (1960)
1.4 Trillion (2015)
• GDP (PPP): $1.849 trillion (ranking 14)
• GDP per capita (PPP): $36,500 (ranking 49)
• GDP composition: agriculture 2.3%,
industry 38.0%,
services 59.7%
• Exports: $548.8 billion (ranking 6)
• Imports: $428.5 billion (ranking 10)
Economic Profile (2015)
Miracle On The Han River: Making Something Out of Nothing
→ The GDP has increased 354 times Since 1960 (1960-2015 CAGR 11.3%)
(current US $)

4. 4
The Korean Economy: Rebound and Crisis Overcome
Korea is the only country that has switched from recipient to donor of ODA.
The Korean economy overcame the Asian Crisis in 4 years.
ODA History
Increasing Contribution
Asian Crisis (1997-98)
Korea implemented
deep and wide
structural reforms.
Hundreds of
companies were
restructured and
thousands of jobs
were lost.
Korea paid back
the IMF bailout
loan in 4 years
after the crisis.
* ODA: Official Development Assistance

5. 5
Korea’s Challenges: Low Growth
How to reinvigorate the economy again?
Per capita income growth rate (1980-2012)
* Exchange rate based on 2005 PPP. Per capita income was smoothed out using Hodrick-Prescott filter.
* Kim (2016), 20th Anniversary of Korea's membership to the OECD
Korea is At A Crossroads.
Growth rates are decreasing too early, too fast.

6. 6
Korea’s Challenges: The Fourth Industrial Revolution
• German Government “Industrie 4.0”
• World Economic Forum “The 4th Industrial Revolution”
* Source: Industrie 4.0 Working Group (2013.4). Recommendations for implementing the strategic initiative INDUSTRIE 4.0,
https://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-what-it-means-and-how-to-respond/
Driver
Role
Steam Power
Mechanize
Production
Electric Power
Create Mass
Production
Electronics / IT
Automate
Production
Create Intelligent
Production
Data Analytics,
Artificial Intelligence
* Cyber-Physical Systems = Internet of Things (IoT)
1st 2nd 3rd 4th

7. 7
Korea’s Challenges: The Fourth Industrial Revolution
Self-Driving Car
Voice Recognition
(Virtual Assistant)
Predix: Industrial Internet Platform Smart Factory
AI in Board Game AI in Healthcare AI in Robot Drone
Sharing Cars Sharing Houses Smart Security Synthetic Biology
Gather (Internet of Things), Store (Cloud Computing),
Analyze and Create value (Big Data Analytics, Artificial Intelligence)
Data is the key !

8. 8
Korea’s Challenges: The Fourth Industrial Revolution
Platform is the key !
IoT Technology Stack Creating New Value with Data
* Porter and Heppelmann (2014), Porter and Heppelmann (2015)
Data
Platform

9. 9
Korea’s Challenges: The Fourth Industrial Revolution
Dominance of Platform Companies:
North America has 72% of the Value → “Platform Anxiety”
“This digital infrastructure will be
controlled by a handful of American
internet companies, which could
dominate the economic life of the
21st century.”
(Sigmar Gabriel, Vice Chancellor of
Germany)
Platform Companies: Gang of Four & Sharing Economy
Platform Companies by Region
* Center for Global Enterprise (2016)

10. 10
Policy for Platform Economy
Government can support the development of platform economy
as Leaders, as Suppliers, as Facilitators, as Market Makers, and as Regulators
Topic Recommendation
Vision
Governmentneeds to foster and promotea clear aspirationand visionfor
the Internetof Things
Commissioning
Governmentmust be an expert and strategiccustomer for the Internetof
Things
Spectrum and
networks
Governmentshould workwith experts to developa roadmapfor an
Internetof Things infrastructureand to maximise connectivityand
continuity
Standards
Governmentshould support the development of standards that facilitate
interoperability,openness to new market entrantsand security against
cybercrime and terrorism
Skills and
research
Government,the education sector and businesses should prioritiseefforts
to developa skilled workforceand a supply of capable data scientists
Data
Open application programminginterfaces should be createdfor all public
bodies and regulatedindustries
Regulationand
legislation
Governmentshould developa flexible and proportionatemodel for
regulationin domains affected by the Internetof Things, to react quickly
and effectivelyto technologicalchange, and balance the considerationof
potentialbenefits and Harms
Trust
Governmentshould workwith industry and internationalpartnersto
agree best practice security and privacy principles
Coordination
The DigitalEconomy Council should create an Internetof Things advisory
board,bringing togetherthe privateand public sectors
Recommendations to Support Digital Revolution
“Leader”
“Facilitator”
“Market Maker”
“Regulator”
“Supplier”
* UK Government (2014)

11. 11
Policy for Platform Economy: Korean Government
Korean government supports the development of platform economy
as Leaders, as Suppliers, as Facilitators, as Market Makers, and as Regulators
Gov. as Suppliers Gov. as Facilitators Gov. as Marketers
Gov. as Leaders
Gov. as Regulators)
• “9 National Strategic Projects”
Vision
Rule
Input Process Output
• “X Project” (new R&D) • Setup of AI Research Center • Establishment of Test Beds
• “Regulation –Free Zones”

12. 12
Korea’s Policy: “9 National Strategic Projects”
Growth Engine Quality of Life
Precision Medicine
New Drug
Carbon Utilization
Fine Dust
Self-Driving Car
Light Material
Smart City
Artificial Intelligence
Virtual/Augmented Reality
Korean government set national priorities on emerging technologies and
applications

13. 13
Korea’s Policy: “X Project” (new R&D)
Korean government is conducting an experiment of how to maximize
the participation of the citizens to national R&D projects
Design philosophy of the platform
① Every idea should be respected
② Operations should be simple
③ All the information should be open to all
④ Every participant should be given rewards
⑤ Operations should be scalable
⑥ Problems should be solvable and executable

14. 14
Korea’s Policy: Setup of AI Research Center
Korean government help private companies collaborate.
Seven companies set up the AI Research Institute (2016.7)

15. 15
Korea’s Policy: Establishment of Test Beds
Smart
Home
Smart
Grid
Smart
Healthcare
Smart
Car
Korean government established test beds for smart home, smart grid,
smart healthcare, and smart car.

16. 16
Korea’s Policy: “Regulation–Free Zones”
14 Regulation-free Zones
Korean government is conducting an experiment of relaxing the regulation
for boosting new industries while minimizing the risk of side effects
• Choose 2 industries per
a region
• Remove virtuall all the
existing regulation
• Promote the introduction
of new industries

17. 17
Q & A