This study is designed as a primary study to objectively analyze the economic meaning and potential of digital sector cooperation with Russia, Kazakhstan and Uzbekistan to derive implications for presenting new directions for promising cooperation. With the advent of the so-called “fourth industrial revolution era” just around the corner, the goal of the study is to discuss what the development of the digital industry means to the economies of the three countries, examine the characteristics of individual countries, and get policy clues on how cooperation with Korea should proceed in the future. To this end, this study performs the following four main analyses. First, the economic meaning of IT technology cooperation with three countries, Russia, Kazakhstan, and Uzbekistan, is viewed from the perspective of industrial transformation. Second, the effect of IT technology cooperation between Korea and Russia on the Russian economy is quantitatively estimated through the analytical framework of the structural transformation. Third, to supplement the limitations of theoretical discussions and derive customized cooperation directions for each country, we examine the current status and policies of the IT industry in the three new northern countries in detail. Fourth, we identify as objectively as possible which IT technology will have a high cooperation effect between Korea and Russia.

Chapter 2 is the first chapter of the main topic and was conducted to achieve the first and second research objectives. Section 1 briefly discusses the traditional characteristics of the structural transformation based on the experience of high-income countries. Section 2 discusses why the traditional structural transformation is not well represented and often delayed, centering on the recent middle-income countries’ experiences. Section 3 examines the structural transformation of the three countries in the New Northern Region. Section 4 examines how IT technology innovation can play a role in solving the delay in the structural transformation. In order to analyze this economically, a theoretical model is constructed based on the intuition that IT technology innovation has a positive effect on improving productivity in the service sector. Furthermore, by numerically approximating the theoretical model for Russia with available data, we quantitatively estimate how helpful IT technology innovation can be to the problem of delay in the structural transformation that Russia has to solve.

The conclusion of the analysis is positive. This is because the economy can naturally move from the “bad equilibrium” to the “good equilibrium” through technological innovations in the IT sector. According to the new structural transformation model considered in this paper, we can theoretically prove that the proportion of production in general manufacturing, including the IT sector, increases when IT technology innovation helps improve service industry productivity. Here, the increase in productivity of the service industry with advances in IT technology is based on the intuition that IT technology innovation can alleviate search and matching friction existing in the service industry. The quantitative analysis of how positive IT technology cooperation with Korea affects the long-term growth rate of resource-dependent middle-sized countries showed that if the positive effect of current productivity improvement in the Russian manufacturing sector rises by 173%, Russia’s long-standing delay in industrial structure can be resolved. 

Chapter 3 is the second chapter of the main topic and was prepared to achieve the third purpose of this study. In other words, it is a chapter prepared to compensate for the limitations of generality and universality of the theory. The individual characteristics of the three New Northern countries dealt with in this paper are analyzed in-depth. In the last section, by briefly comparing and analyzing the status of IT industry development and the governments’ development strategies, we derive the individual characteristics of these countries in the IT industry and development strategies as much as possible.

As a result of comparing and reviewing the current status of the IT industry in the three countries using the best data available, we conclude that the level of development in the IT industry is similar to that of Russia and Kazakhstan, while  Uzbekistan is relatively lagging. These differences in industrial development are reflected in differences in transition strategies to the digital economy and IT industry development strategies of the three countries. In particular, Russia and Kazakhstan, which are highly dependent on natural resources, are considered to be more interested in transforming the economic structure through the development of the IT industry. Specifically, Russia’s policy focus is on improving existing IT infrastructure and related systems and enhancing the practical competitiveness of the Russian IT industry in the global market. On the other hand, Kazakhstan has a policy focus on improving existing IT infrastructure and related systems, but no specific policy has been prepared to develop the IT industry. Finally, in Uzbekistan, the establishment of IT infrastructure should be prioritized, and accordingly, this becomes the most important policy goal. There is still no national policy for developing the IT industry like Kazakhstan. Both Kazakhstan and Uzbekistan have yet to have IT companies to secure competitiveness in the global market, so national strategies and policies for developing the IT industry are expected to differ from Russia’s.

In Chapter 4 we objectively identify which IT technology field can maximize the effectiveness of cooperation between Korea and Russia. We statistically analyzes technology patent data registered by Korea and Russia over the past five years. Chapter 4 examines which technological cooperation has a strong synergy effect and a positive propagation effect, and infers the immediate “need for technological cooperation” based on this. As a result of patent citation analysis, we find that the cooperative synergy between Korea’s semiconductor-related technologies and Russia’s digital computing or data processing will be prominent, reflecting each country’s technological comparative advantage. In addition, when using the network analysis method, we find that such technological cooperation has a high scope of the propagation effect and immediate influence of cooperation as well as synergy effect of cooperation.