Overseas R&D by Corporations and Personal OTT Subscriptions Widen Knowledge Services Trade Deficit in First Half

Knowledge Services Trade Deficit Reaches 4.53 Billion Dollars in First Half
Expansion of Overseas R&D Investment in Manufacturing and Rise in Personal OTT Subscriptions
Information and Communications Services Post Record Half-Year Surplus
Boost from Pre-Installed Apps on Samsung Phones and Introduction of Gemini

In the first half of this year, South Korea’s knowledge services trade balance recorded a deficit of 4.53 billion dollars. This marks a widening of the deficit compared to the second half of last year, when the deficit stood at 3.76 billion dollars. This increase is the result of a surge in the use of industrial property rights related to overseas research and development (R&D) and professional business services within the manufacturing sector, as well as a rise in global application platform purchases and online video service (OTT) subscriptions by individuals. Consequently, imports of intellectual property royalties and professional business services grew more than exports. The information and communications services balance posted a record half-year surplus, driven by a significant increase in exports from the electrical and electronics manufacturing sector.

Knowledge services trade statistics reflect international transactions in the services sector that are based on knowledge and information. These statistics encompass the sale and use of intellectual property rights, as well as related derivative services and contract work.

Expansion of Overseas R&D Investment in Manufacturing... Increase in Personal App Purchases and OTT Subscriptions

According to the “Provisional Knowledge Services Trade Statistics for the First Half of 2025” released by the Bank of Korea on September 17, knowledge services exports reached 19.71 billion dollars and imports 24.24 billion dollars in the first half of this year, resulting in a deficit of 4.53 billion dollars. Compared to the second half of last year, the deficit widened by 770 million dollars. While exports increased in areas such as copyrights, information provision, and platform services, imports rose even more, particularly in R&D industrial property rights, R&D services, and payments for multimedia and software copyrights.

By category, information and communications services and cultural and leisure services recorded surpluses of 1.96 billion dollars and 440 million dollars, respectively. Information and communications services, led by strong performance in information provision and platform services (1.4 billion dollars), posted the largest half-year surplus on record. Information provision and platform services saw their surplus increase by 660 million dollars compared to the previous half (750 million dollars), mainly due to expanded exports of pre-installed app services on Samsung Electronics smartphones following the introduction of Google’s generative artificial intelligence (AI) “Gemini.”

In contrast, professional and business services posted a deficit of 4.48 billion dollars, and intellectual property royalties recorded a deficit of 2.45 billion dollars. Within intellectual property royalties, computer and mobile software copyrights saw the deficit widen to 1.07 billion dollars, compared to 610 million dollars in the previous half, due to increased payments related to the Apple App Store and Google Play Store, as well as rising demand for generative AI-related subscription services. Compared to the previous half, the surplus in information and communications services grew, but the deficits in intellectual property royalties and professional business services expanded even more.

By industry, the information and communications sector posted a surplus of 1.64 billion dollars, while manufacturing, led by electrical and electronics products, recorded a deficit of 2.47 billion dollars. Digital intermediary platforms also posted a deficit of 2.2 billion dollars. Compared to the previous half, the surplus in the information and communications sector increased, but the deficits in manufacturing and digital intermediary platforms widened.

By type of institution, mid-sized enterprises posted a surplus of 930 million dollars, while large corporations and digital intermediary platforms recorded deficits of 3.75 billion dollars and 2.2 billion dollars, respectively. By region, Asia posted a surplus of 3.57 billion dollars, while North America and Europe recorded deficits of 3.77 billion dollars and 2.18 billion dollars, respectively.

The main surplus contributors were, by category, information and communications services; by industry, the information and communications sector; by institution type, mid-sized enterprises; and by trading partner region, Asia. On the other hand, the main deficit contributors were intellectual property and professional business services by category, manufacturing and large corporations by industry and institution type, and North America and Europe by trading partner region.

Park Sungkon, head of the International Balance of Payments Team at the Economic Statistics Department 1 of the Bank of Korea, said, “The significant increase in the introduction of overseas R&D-related industrial property rights and R&D professional business services is an essential and inevitable step to expand production and investment in line with improvements in the manufacturing sector and to strengthen the global competitiveness of our companies.” He explained that leading exporters of electrical and electronics products and automobiles in South Korea are adopting overseas patented technologies for advanced product design and manufacturing, and are actively collaborating with global R&D centers, as well as conducting overseas advertising and promotional activities to achieve localization, technological innovation, secure top talent, and enter new markets.

Promising Service Industries: ICT and Content... Surpluses of 1.57 Billion Dollars and 2.51 Billion Dollars, Respectively

Although there is no separate classification in the standard industrial categories, statistics on the special classifications of the information and communications technology (ICT) industry and the content industry, which are considered promising service industries from a policy perspective, show the following: First, the knowledge services trade balance for the ICT industry recorded exports of 6.37 billion dollars and imports of 4.8 billion dollars, resulting in a surplus of 1.57 billion dollars. While the information services sector posted a deficit of 560 million dollars, the surplus was driven by game software development and production (2.16 billion dollars).

In the first half of this year, the knowledge services trade balance for the content industry recorded exports of 5.78 billion dollars and imports of 3.28 billion dollars, resulting in a surplus of 2.51 billion dollars. While the knowledge information industry posted a deficit of 830 million dollars, surpluses were recorded mainly in the game industry (2.26 billion dollars) and the music industry (590 million dollars). Park explained, “Game exports are particularly active in China and Southeast Asia.”