Korean IT Firms Benefit from the Won's Decline

Korea's leading IT exporters are benefiting from the recent decline in the value of the Korean Won.  According to an article in today's Korea Times, the Won this week fell to as low as 1,062.6 per dollar, the weakest since December 2004.  A source at Samsung Electronics estimated that "if the exchange rate drops 10 won, we expect won-denominated sales to rise 300 billion won."  Exports account for 80 percent of Samsung's sales. In the second quarter, the electronics giant reaped an additional 300 billion won in sales thanks to the weakening won, sources say. LG Electronics benefits in a similar fashion.  "When the won-dollar rate drops 10 won, then we expect to gain some 70 billion in won-denominated sales," an LG spokesman said. 

However, the changing value of the won is a double-edged sword.  South Korea's airlines, steel makers and oil refiners, are suffering from the weaker won in the wake of surging prices for imported raw materials.

Wireless Broadband Boosts the Economy

A new report by Ovum for CTIA, the Wireless Association concludes that "wireless broadband, is having a massive impact on the productivity of the entire U.S. economy, and in particular is having a significant impact in five key states. Further, we find that small businesses and the health care sector in particular are realizing significant benefits from the implementation and use of wireless broadband." (Click on the graphic at the upper-left to view a full-size image.) Why mention this in a blog about Korea's telecommunications sector? The main reason is that Korea has a potentially huge stake in the buildout of wireless networks around the world by virtue of its WiBro, or mobile Wimax technology. Samsung and Sprint are building Wimax networks along the east coast of the U.S., including New York and Washington D.C. Another reason is that the economic impact of wireless broadband technology in the United States economy is likely to be similar to its impact in other advanced economies, such as South Korea.

More on ICT Indexes

My previous post noted the differences between Korea's ranking on the Digital Opportunity Index (DOI) and its world rank according to the Networked Readiness Index. In fact, although these two indices receive considerable attention, there are many more, as shown in Table 2 (click on the graphic to see a larger image) from the Global Information Society Watch website. The indices listed in this table all represent efforts to measure information and communication technology (ICT) and the manner in which it contributes to "development." However, they vary considerably in how ICT and development are conceptualized. They also differ in terms of the variables that are measured, the number of countries in which they are measured, and other important aspects. In future posts I plan to take a closer look at all of the major indices. However, at first glance it seems that the Digital Opportunity Index is a leader because of its origins and auspices. It is a product of the ITU's Partnership on Measuring ICT for Development , an international, multi-stakeholder initiative to improve the availability and quality of ICT data and indicators, particularly in developing countries. The World Bank's Knowledge Assessment Methodology (KAM) has produced other indexes, notably the Knowledge Economy Index (KEI) which can be explored in depth at their web site. For an interesting treatment of how these and other indices, including the Networked Readiness Index, compare, see the report "Measuring Progress" at the Global Information Society Watch website.

Korea Posts Large Digital Electronics Trade Surplus in 2007

The news is out. According to the Ministry of Commerce, Industry and Energy (MOCIE), Korea’s trade surplus in the digital electronics sector reached a record $57.1 billion in 2007, fueled by strong global demand for display panels and semiconductors. Total exports of digital electronics rose 8.9 percent year-on-year to $124.9 billion, while imports gained 10.1 percent to $67.8 billion. Exports of liquid-crystal display panels rose 36.4 percent over 2006. According to the Ministry Korea’s total exports rose 14.2% year-on-year to USD $371.8 billion in 2007. Digital electronics accounted for $124.9 billion or 33.6 percent South Korea's total exports. More evidence, if any were needed, that information and communication technology is the primary growth engine of Korea's economy today. This is especially true since exports of digital electronics do not factor in their influence on other leading export sectors such as automobiles, steel, general machinery or shipbuilding.