OECD Economics Department Working Papers
Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
- ISSN: 18151973 (online)
- https://doi.org/10.1787/18151973
Boosting Productivity in Korea's Service Sector
Labour productivity growth in the service sector has been low relative to manufacturing. This is
explained in part by weak competition in services resulting from strict product market regulation and the
low level of import penetration and inflows of foreign direct investment (FDI). Increasing productivity
growth in the service sector, which accounts for 67% of employment and 58% of value added in Korea, is
essential to sustain high potential growth. The priority is to strengthen competition by eliminating domestic
entry barriers, accelerating regulatory reform, upgrading competition policy and reducing barriers to trade
and inflows of FDI. Another challenge is to enhance the performance and accelerate the restructuring of
small and medium-sized enterprises, which account for over 90% of service-sector employment.
Furthermore, it is essential to boost productivity in service industries with high growth potential, such as
telecommunications and financial and business.
Keywords: Business service, competition policy, KFTC, FTAs, productivity and growth, services trade, regulatory reforms, Korea, financial services, telecommunications, legal services, foreign direct investment, small and medium-sized enterprises, service sector
JEL:
R11: Urban, Rural, Regional, Real Estate, and Transportation Economics / General Regional Economics / Regional Economic Activity: Growth, Development, Environmental Issues, and Changes;
R31: Urban, Rural, Regional, Real Estate, and Transportation Economics / Real Estate Markets, Spatial Production Analysis, and Firm Location / Housing Supply and Markets;
R21: Urban, Rural, Regional, Real Estate, and Transportation Economics / Household Analysis / Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
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