The Bank of Korea has called for aggressive corporate investment and bold regulatory easing to accelerate South Korea’s service exports. (Image courtesy of Yonhap)
SEOUL, March 21 (Korea Bizwire) — The Bank of Korea has called for aggressive corporate investment and bold regulatory easing to accelerate South Korea’s service exports, emphasizing the need to build an independent content export infrastructure that doesn’t rely on foreign platforms.
In a report titled “Current Status and Future Direction of South Korea’s Service Exports” released on March 20, the central bank highlighted that while global trade in services grew from 19.4% in 2011 to 24.1% in 2023, South Korea’s service export growth and market share have lagged behind.
The bank pointed out that high-value industries such as law and consulting are dominated by advanced economies, while labor-intensive outsourcing services are led by China and India. Korean service exports have largely remained supplemental to goods exports and lack the competitiveness to actively participate in global supply chains.
However, there has been strong growth in knowledge-based services, with average annual growth of 13.4% between 2010 and 2024, outpacing the overall service export growth rate of 3.8%. Key sectors driving this surge included intellectual property royalties (54%), professional and business services (27%), ICT services (14.1%), and cultural and leisure services (4.9%).
The report attributes this trend to the convergence of manufacturing and services and the global appeal of Korean pop culture, including K-pop, webtoons, and gaming.
Nonetheless, the Bank of Korea warned that most intellectual property exports are tied to manufacturing firms and not sufficiently leveraged as independent revenue sources. Furthermore, the country’s video content is often sold through foreign platforms like Netflix, rather than being distributed through domestic channels with full ownership of intellectual property rights.
Kim Tae-ho, head of the balance of payments team at the Bank of Korea, cited Japan’s Nintendo as a model example, noting that it directly distributes intellectual property such as Pokémon through overseas subsidiaries. “In contrast, Korean production companies often work as subcontractors, relinquishing ownership and potential revenue streams,” he said.
He pointed to Squid Game as a missed opportunity: “While the production cost was around $100 million, the success of the show contributed to billions of dollars in added market value for Netflix, which held the rights.”
Multimedia production service exports stood at only $710 million in 2024, a figure that represents payments for content delivered to global companies, which then reap substantially larger profits.
The Bank of Korea concluded that companies must shift from traditional manufacturing and construction-focused investments toward the service sector. “The government must aggressively relax regulations to support this shift,” the report stated, adding that early identification and nurturing of talent in foundational technology and creative industries will be essential for South Korea’s next phase of growth.
M. H. Lee (mhlee@koreabizwire.com)
