The present study analyzes the recent evolution of industrial policy in South Korea, a country that is a notable success in the catch-up strategy and is now part of the IEDI series of studies on Industry 4.0.

Experiences already covered in other Letters IEDI include Germany's ("Industrial policy for the future – Germany's INDUSTRIE 4.0 Initiative", Letter No. 807, Sep 29, 2017), the USA's ("Industry 4.0: The US Strategic Plan for Advanced Manufacturing", Letter No. 820, Dec 11, 2017) and China's ("Industry 4.0 - The 'Made in China 2025' Initiative", Letter No. 827 of Jan 26, 2018). The challenges and opportunities that the advent of Industry 4.0 brings to Brazil were analyzed in the Letter No. 797, Jul 21, 2017.

In South Korea, active industrial policy was a key part of its rapid and continuous economic development; in less than fifty years the country has gone from a rural economy to one of the most important industrial centers in the world and is among the advanced industrialized nations. Its strategy gave rise to a group of very strong private companies, known as chaebols, with support from government loans and subsidies and preferential access to capital and technology.

Since the turn of the century, South Korean industrial policy has focused on promoting future industries based on state-of-the-art cutting-edge technologies, stimulating entrepreneurship and innovative technology application. The strategy of supporting the emergence of Industry 4.0 can thus be seen as a continuation of its industrial policy, making the country one of the precursors of this movement.

In this sense, it is worth mentioning that, although the policies continue to focus on manufacturing, high value-added services and knowledge economy activities gained increasing prominence and gradually strengthened their position in the South Korean economy in the first decade of the 21st century. Comprehensive measures were adopted to improve the competitiveness of the services sector and reduce the development gap in relation to manufacturing.

Among the most recent South Korean industrial policy initiatives, the highlight is the 'Industry Innovation Movement 3.0' (IIM 3.0). Launched in 2014 under the Strategic Plan for the Creative Economy, its aim is to disseminate the use of intelligent factories and the development of basic technologies related to IoT, 3-D printing and Big Data (data processing, data collection and data sharing that can be used for analysis and forecasting).

The first results of the IIM 3.0 initiative were very positive. After receiving financial support, companies that operate smart factories registered a 25% productivity gain, while the proportion of shortcomings decreased by 27%. Likewise, reflecting the policy impacts, the share of R&D investments for small and medium-sized enterprises increased from 12.4% in 2011 to 18.0% in 2015.

Given the initial success of the initiative and the rapid evolution of complete digitalization and automation in the era of the Fourth Industrial Revolution, South Korea's private and public sectors have agreed to expand the project of smart domestic factories. The previous target of 10,000 smart factories by 2020 was recently raised to 30,000 by 2025, operating with the latest digital and analytical technologies.

In order to prepare the country for Industry 4.0, in December 2016 the South Korean government launched the ‘Mid- to Long-Term Master Plan in Preparation for the Intelligent Information Society’, which prioritizes sectors and domains related to Intelligent Information Technology (Intelligent IT). As a result, it is estimated that by 2030 the manufacturing industry will gain 95 trillion won (about US$ 88 billion) through new revenues and cost reduction associated with the use of Intelligent IT in the production process.

The full text is available in Portuguese.