A Review on Korea, China and Japan's Comparative Advantage in the IT Services Sector: Focusing on Productivity Analysis

Abstract

This research attempts to draw the policy implication of cooperative activities among Korea, China and Japan based on an analysis on a comparative advantage of the IT service industry, focusing on productivity analysis. The results of the productivity (efficiency) analysis show that productivity gap exists between the three countries, but the gap is narrowing. The changing gap seems to result from a catch-up effect between countries and companies rather than technical advancement across the industry. In addition, a close look into the institutional framework which affects the productivity of IT services sector in Korea, China and Japan revealed five areas (introduction and enforcement of regulations, existing legal and regulatory frameworks, transparency of IT related policies, preferential treatment of home-grown technologies in the public sector, bureaucracy) that can prove to be excessive regulations on IT service companies. Based on the study results, this paper draws the policy implications for further cooperation among three countries. First, the three countries could cooperate in building a common data set for a more concrete productivity analysis. Second, the three countries could further cooperate in the industry level and lower the entry barriers for instance. Finally, the three countries could cooperate to upgrade the expertise of middle management and foster human resource development.