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Web economy overtakes automotive sector: report

Korea’s Internet industry has surpassed automotives and electric and electronic manufacturing in size, an industry report found Monday.

According to the Korea Internet Corporations Association, the Internet economy amounted to 63 trillion won ($55 billion), or 5.94 percent of the gross domestic product, in 2009.

The GDP figure puts the industry ahead of electric and electronic equipment manufacturing and automobiles at 5.71 percent and 4.23 percent, respectively, according to the industry lobby representing 150 Internet firms including NHN, Daum and Google Korea.

Individual consumption led the growth along with corporate investment, while government spending was limited to electronic procurement.

The Internet industry’s contribution to economic growth was lower than expected.

The report found the contribution rate to be 6 percent over the past five years, far below the 16 percent estimated previously by global consulting firm McKinsey and company.

“The low contribution rate is largely driven by the industry’s slowing growth since related regulations were toughened starting in the mid-2000s,” the report said.

The total consumer surplus from the industry amounted to about 3.2 trillion won per year, 1.9 trillion won from Internet use and 1.3 trillion won from saved time due to Internet searches.

Local companies also saw growth in productivity worth 2 to 3 trillion won annually.

“We have built up data for economic benefits of the Internet industry so that it can be used in the economic and IT policy sectors. Regarding concerns about slowing growth, we will try to improve the regulative environment,” said a Korea Internet Corporations Association official.

By Lee Ji-yoon (