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Government Policies Summary The growth in Korean economy was based on traditional manufacturing industries. However, the number of developing countries emerged in the international market. Thus, Korea had to pursue a new development strategy in order to scope with these new changes. Korea's economic policy has shifted from cost-oriented to efficiency-oriented policies. The Korean government has made consistent efforts to provide the necessary infrastructure and an IT friendly business environment. As a result, the Korean government has successfully established the telecommunication infrastructure. However, its efforts to attract foreign high-tech companies to stimulate its internal software development and e-commerce industries have been slow due to the bad timing (most of these efforts made by the Korean government were after the Asian Crisis) and piracy issues. The following are the initiatives done by the Korean government.
The Korean government's efforts to create an information-based society were strengthened with the announcement of Cyber Korea 21. The purpose of Cyber Korea 21 is to realize the vision of becoming a knowledge-based economy under the guidance of the government-led information promotion committee. The first initiative is to improve the quality of life for the general public. To do this, the government is providing PC units to schools. The second initiative involves general steps to ensure the competitiveness of Korean industries as a whole, such as support for the construction of e-commerce system in steel, shipbuilding and other traditional industries. The third initiative is to establish an electronic document distribution system to be used by administrative bodies.
The Korean government is implementing a five year plan for the development of information technology. By the end of 2004, approximately USD 918 million will be invested in six major areas: Next generation Internet, optical communications, digital broadcasting, wireless communication, software and computers [11].
Since 1997, the Korean government initiated tax cuts for high tech businesses and businesses in foreign investment zones (10 years for national taxes and 15 years for local taxes) [11]. The rent reduction measures are also under way in industrial complexes for foreign companies (100% free for high-tech and 75% reduction for general manufacturing industries) [11]. Finally, the limitation on foreign investments in the telecommunications services market has been lifted. There is no ceiling on the foreign ownership of special and value added telecommunication service providers, while the ceiling on the foreign ownership of facilities-based service providers is set at 49% [11].
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