A comparative study on industrial spillover effects among Korea, China, the USA, Germany and Japan
| Date | 08 April 2019 |
| Pages | 454-472 |
| Published date | 08 April 2019 |
| DOI | https://doi.org/10.1108/IMDS-05-2018-0215 |
| Author | Yong-Ki Min,Sang-Gun Lee,Yaichi Aoshima |
| Subject Matter | Information & knowledge management,Information systems,Data management systems,Knowledge management,Knowledge sharing,Management science & operations,Supply chain management,Supply chain information systems,Logistics,Quality management/systems |
A comparative study on industrial
spillover effects among Korea,
China, the USA, Germany
and Japan
Yong-Ki Min and Sang-Gun Lee
Business School, Sogang University,
Seoul, Korea, and
Yaichi Aoshima
Institute of Innovation Research, Hitotsubashi University,
Tokyo, Japan
Abstract
Purpose –Startingfrom industry 4.0 in Germany andfollowed by the New Strategyfor American Innovation
in the USA and the smartization strategy in Japan, developed countries are pushing nation-wide innovation
strategies. Similarly, China is pursuing the Made in China 2025, and Korea announced the Manufacturing
Industry Innovation 3.0 strategy. However, few researchers have identified the industrial structure that
establishesthe foundation of the4th Industrial Revolutionor have derived strengthsand weaknesses to provide
implications on policy formulation through quantitative comparison with developed countries. Therefore,the
purpose of this paper is to analyzethe spillover effect of the information and communication technology(ICT)
industry(the foundation of the 4th IndustrialRevolution) and machinery·equipmentindustry (the foundation of
smart manufacturingthrough convergence with ICT industry).
Design/methodology/approach –This study examines the industrial spillover effects of the ICT industry
and machinery·equipment industry in the USA, Germany, Japan, China and Korea by using the World
Input–Output Table from 2000 to 2014.
Findings –The results showed that backward linkage effect of the ICT Industry are high in the order of
Korea≑ChinaWJapan Wthe USA≑Germany, and forward linkage effect of the ICT industry are high in the order
of Japan ≑Wthe USA≑Korea ≑WChina ≑WGermany. Backward linkage effects of the machinery·equipment
industry are high in the order of ChinaWJapan≑Korea Wthe USAWGermany, and forward linkage effects of the
machinery·equipment industry are high in the order of ChinaWKorea WGermany≑Japan≑the USA.
Practical implications –China and Korea encourage active government investment in ICT and
machinery·equipment industries,especially theintentional convergencebetween ICT and machinery·equipment
industriesis expected be generate highersynergy. The “innovation in manufacturing”strategy in the USA that
utilizesits strength in ICT servicesseems appropriate, whereasGermany needs to revitalizethe ICT industry to
strengthenits manufacturing industry.Japan’s strategy is to focusits ICT capabilities on robot sector.While the
scope of innovationis limited, its synergy is worth expecting.
Originality/value –This study attemptedto provide a theoretical approach to thedetermination of national
policy strategiesand provide practicalimplications for responseto the impacts of the 4th IndustrialRevolution,
by comparing the inducement effects of ICTand machinery·equipment industriesbetween major countries.
Keywords Industry 4.0, Industrial innovation 4.0, Industrial spillover effect, ICT industry,
Machinery·equipment industry
Paper type Research paper
1. Introduction
Industry 4.0 was first used in the 2011 Hannover Expo, and assigned as a core future project
for the 4th Industrial Revolution by German Government in 2012 (Drath and Horch, 2014).
During the opening ceremony of the 2015 Hannover Exhibition Ground, Angela Merkel, the
Chancellor of Germany, emphasized integrated industry, as well as the necessity of
integrating all production processes and the close cooperation with information and
communication technology (ICT) and machinery industries. In addition, Klaus Schwab, the
Industrial Management & Data
Systems
Vol. 119 No. 3, 2019
pp. 454-472
© Emerald PublishingLimited
0263-5577
DOI 10.1108/IMDS-05-2018-0215
Received 26 May 2018
Revised 6 August 2018
Accepted 1 September 2018
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0263-5577.htm
454
IMDS
119,3
Founder and Executive Chairman of the World Economic Forum, stated the arrival of the
4th Industrial Generation, which is distinctly different from the 3rd Industrial Generation
(Schwab, 2016). Although some people argue that it is too early to call the development 4th
Industrial Generation, we are reaching an age of not only digitalization but also “digital
transition,”where the entire society utilizes digital technologies (OECD, 2017).
To respond to such changes, countries including the USA, Germany and Japan are
promoting a “nation-wide innovation”strategy that utilizes their individual strengths. The
USA developed “A Strategy for American Innovation”for creating new jobs and
strengthening ICT industry leadership, and promoted advanced manufacturing partnership
for reviving the manufacturing industry based on the private sectors’capability of Big Data,
IoT, etc. Germany contributes to “Industry 4.0,”the industrial transformation with
automation, by converging general machinery and outstanding labor in manufacturing, in
order to maintain its lead in manufacturing. Japan is the first country that set “the 4th
Industrial Revolution”as a national strategy, actively utilizing its strong robotics
technology in order to increase industrial competitiveness and accelerate the socio-economic
system. Similarly, China is promoting the “Made in China 2025 Plan”by benchmarking
Germany’s Industry 4.0 in its 13th five-year plan. Korea enforces various strategies such as
the “Mid- to Long-Term Master Plan in Preparation for the Intelligent Information Society”
and “Manufacturing Innovation 3.0.”
The cyber-physical system (CPS) is the foundation of the 4th Industrial Revolution and
refers to the convergence between ICT and other industry (Schwab, 2016), which can
increase the competitiveness of manufacturing industry by optimizing the production
process. ICT, machinery·equipment and biomedical industries are directly related to the core
technologies of 4th Industrial Revolution, including AI, IoT, Big Data, automation and
sensors. Many studies and policies are available at present, when it is necessary to develop
active strategies that utilize the 4th Industrial Revolution as a new growth and leap.
However, few studies have quantitatively compared the infrastructure of the 4th Industrial
Revolution with the “nation-wide innovative”countries that lead the 4th Industrial
Revolution, and the corresponding strategic directions.
Therefore, this study aims to use input–output (IO) analysis to analyze the spillover
effect of the ICT industry (the foundation of the 4th Industrial Revolution) and the
machinery·equipment industry (the foundation of smart manufacturing through
convergence with ICT industry), by using the World Input–Output Table (WIOT) during
2000–2014. By quantitatively comparing the forward and backward linkage effects of the
ICT industry and machinery·equipment industry between China, Korea and the three
countries that are promoting nation-wide innovation –the USA, Germany and Japan –this
study examines each country’s global strengths and weaknesses in managing the 4th
Industrial Revolution and suggests national innovation strategies for each country.
2. Literature review
2.1 Arrival of the 4th Industrial Revolution
Although JeremyRifkin and Rober Gordon argue that the statementby Klaus Schwab (2016)
on the arrival of the 4th Industrial Revolution from the perspectives of speed, scope and
system impact is untimely and inappropriate. But all countries are accelerating innovation to
respond to the new world with different management of society and human role.
Schwab (2016) defined the 4th Industrial Revolution as CPS. CPS was first suggested by
the USA in the mid-2000s, but Germany is leading in manufacturing innovation by Industry
4.0 (Drath and Horch, 2014).
The most noticeable point of the 4th Industrial Revolution is “manufacturing innovation,”
which uses the ICT technology to automate the production process and intelligently
implement inter-process communication systems, in order to achieve “digitalization of
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