Knowledge-based trade deep in deficit

Koreans used over $150 billion of knowledge-based services from overseas in 2009, driving the account deeper into the red, the Bank of Korea said yesterday.

The central bank report lists patent royalties, medical services, study-abroad programs, computer services, legal, accounting and R&D services for the use of $151.83 billion. This, an 8.2 percent increase from $140.3 billion in 2008, is counteracted by $5.2 billion of knowledge-based service exports in 2009.

The export was a 9 percent increase from the previous year's $4.8 billion.

The overall account showed an 7.8 percent added loss of 2008, which neared $9.9 billion.

Ffees paid to study abroad, the biggest deficit-causing factor, accounted for nearly $3.9 billion. Trade deficit for legal, accounting and management consulting services nearly doubled from $632.3 million in 2008 to $1,22 billion in 2009.

Fees paid for patent royalties surged 24.6 percent from $5.6 billion in 2008 to $7.04 billion in 2009. Profits from receiving patent royalty increased 33.7 percent to $3.1 billion, but it made a little difference to the account balance due to its small volume.

Health-related services sold better.

The account for health care services, which provide long distance services such as tissue biopsies, narrowly escaped from running a deficit, with a surplus of $1.9 million.

Although still in deficit, profits from performing surgeries to foreigners-on-visit increased by 18.5 percent from 2008 to $82.7 million in the following year.

Korea is looking to attract more foreigners to Korea for medical services such as cosmetic surgery.

Korean's medical spending abroad, on the other hand, decreased to $95.9 million in 2009, a 25.7 percent less of $129 million from the previous year.

As part of a larger effort to reduce the deficit, the Small and Medium Business Administration decided to invest $25.8 to Small-to-Medium Enterprises founding ventures on knowledge-based businesses. The SMBA will select about 100 start-up ideas to support SMEs running businesses in the animation, movie and e-learning industries.

By Cynthia J. Kim