This study aims at drawing out implications for promoting the service industry in the Korean economy. While assessing the current situation and problems objectively, this research focuses on industrial structure, linkage effects, and productivity of service sectors in the OECD member countries by application of the input-output model.
As the precedent researches involving international comparison analysis of service industries have generally used the national account data owing to limitations of statistical data, the majority focuses on the structure and change of service activities, such as the progress to a service economy. Although some studies include international comparisons analysis on linkage effects of service industries, the analysis is confined to a few countries. This study is distinctive in that it empirically analyzes the structure of service industries, its linkage effect and productivity of the OECD member countries, using the identical analysis method and sets of data. It contributes to a better understanding on the dynamic environment of the industry.
According to this study, service economies have grown in most OECD member countries in terms of total output, value added, and employment. The Korean economy, however, only shows employment-oriented progress in its service sector, unlike many other countries. It still has not used producer services in all areas of its economic activities at the same time. This study also states that there are significant changes in the linkage effect of services. As service industries play intermediate roles in national production system, the forward linkage effect of producer services is relatively greater than other service sectors. The Korean producer services is at a competitive disadvantage among the OECD countries due to sluggish service industries while its manufacturing sector is one of the greatest in terms of the forward linkage effect. The productivity of service sectors in OECD countries has improved, particularly producer services, while that of Korean services industries remains at a low level because of its reliance on labor.
This study seeks to draw some implications for promoting the service industry as follows. First, it is necessary to enact policies for promotion of the Korean service industry, focusing on stimulation of higher-value added service sector instead of employment-oriented policies. Second, the promotion of the Korean domestic producer services must be achieved within the earliest possible time considering its economic effect. Third, a competitive market environment including market access must be encouraged in the Korean commercial services sectors. Fourth, the Korean government must support the service companies to strengthen their area of specialty and extend their business abroad.