World Bank Group Korea Office Innovation and Technology Note Series JUNE 2024, NOTE SERIES NUMBER 12 Data Vouchers: Korea case study for revitalizing the data ecosystem PAGE | 2 DATA VOUCHERS: KOREA CASE STUDY Acknowledgements This policy note was made possible by the support of the Korea Digital Development Program (KoDi) of the Digital Development Global Practice at the World Bank. The team authoring the report comprised Zaki B. Khoury (Senior Digital Development Specialist and Task Team Leader, Korea Digital Development Program); Byungkon Kim (Team Manager, Strategic Business Enhancement Team, K-DATA), Yoonkee Kim (Principal Manager, Strategic Business Enhancement Team, K-DATA), Dongjin Kim (Consultant, World Bank), and Hyundo Jo (Consultant, World Bank). The authors are grateful to the Ministry of Science and ICT of the government of Korea for providing valuable input and information for this case study, as well as the valuable contribution received from the Korea Data Agency (K-DATA). The authors also appreciate the guidance and support received from Jason Allford, Special Representative to Korea at the World Bank, and Mahesh Uttamchandani, Practice Manager, East Asia Pacific region, Digital Development at the World Bank. Special thanks also go to Hea-Jeang Yun, the President of K-DATA, for valuable comments. The authors are also thankful to Sunny Kaplan, Yulia Lesnichaya, and Ahyoung Shin for providing editorial guidance, and to the Korea Digital Development Program (KoDi) team and the World Bank’s Korea Office for overall support. Rights and Permissions The material in this work is subject to copyright. Because the World Bank encourages the dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes if full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street, NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. The Korea Office Innovation and Technology Note Series is intended to summarize Korea’s good practices and key policy findings on topics related to innovation and technology. They are produced by the Korea Office of the World Bank. The views expressed here are those of the authors and do not necessarily reflect those of the World Bank. The notes are available at: https://www.worldbank.org/en/country/korea. Cover image © Shutterstock/ lefthanderman and Liudmyla Matviiets. KOREA OFFICE INNOVATION & TECHNOLOGY NOTE SERIES PAGE | 3 Table of Contents Executive Summary 4 I. Data Industry Ecosystem in Korea 6 1. The Present Status and Future Direction of the Data Market 6 2. The Policy Framework of Korea’s Data Industry 7 3. The Evolution of Korea’s Data Ecosystem 9 II. Data Voucher Program 12 1. K-DATA and the Data Voucher Program 12 2. Overview of the Data Voucher Program 13 3. Accomplishments in Nurturing the Data Ecosystem 16 4. Virtuous Cycle Effects of Data Ecosystem 19 III. Use Cases: Harnessing Data Vouchers for Industrial Progress and Addressing Social Challenges 21 1. Digital Transformation of Traditional Industries 21 2. Enhanced Productivity in Manufacturing 22 3. Addressing Social Challenges: Safety and Healthcare 24 IV. A Way Forward 27 1. The Data+Hub Initiative 27 2. Next Steps 28 3. Recommendations for Developing Countries 28 Appendix31 References32 PAGE | 4 DATA VOUCHERS: KOREA CASE STUDY Executive Summary The rapid evolution of machine learning and artificial intelligence (AI) is propelling us into the era of data economy, highlighting the urgent need for governments to establish robust national-level data industry ecosystems. This report delves into The Republic of Korea’s data voucher program, a shining example of success in shaping such an ecosystem, examining the current state of the country’s data industry and the policy landscape that influences the program. Korea’s data industry, primarily centered on data sales and provision services, has seen steady growth, reaching a value of 25.527 trillion Korean won by the end of 2022, with an impressive compound annual growth rate of 11.9 percent since early 2020. Notably, the public sector leads in big data adoption at 56.9 percent, followed by finance (40.2 percent), and telecommunications and media (33.6 percent). While data utilization in Korea gained momentum in the 2010s with the Open Government Data initiative, it did not immediately translate into widespread use despite active government interventions until 2017. Consequently, since the late 2010s, the Korean government has been rolling out specific measures to strengthen the national data ecosystem. These measures encompass establishing policy and legal frameworks for data distribution (2018–2020), overhauling the data trading environment (2021–2022), and policies to boost the value of data-based industries (2023–present). In this trajectory, the Korea Data Agency’s (K-DATA) data voucher program has transitioned from supply-oriented policies to fostering the data industry, playing a crucial role in creating a virtuous cycle of supply and demand by directly linking private data collection and processing firms with data consumers. The data voucher program supports small and medium-sized enterprises (SMEs) and startups through cashless vouchers for data acquisition and processing services. It aims to cultivate a self-sustaining data ecosystem by identifying data demand, distributing diverse, high-quality data, and fostering stakeholder collaboration. On the demand side, outcomes include increased consumer company numbers, bridging data utilization gaps among regions and industries, and enterprise-level economic benefits. On the supply side, increased participation from data suppliers has led to expanded data supply, product diversification, and enhanced capabilities to deliver high-value data services leveraging machine learning and AI technologies. Consequently, the program energizes the entire data value chain, strengthening connections between upstream and downstream segments and promoting mutual growth. The data voucher program is generating various best practices for industrial enhancement and addressing social challenges. Examples include applying data technology in traditional sectors like agriculture and fisheries, leading to advancements such as autonomous agricultural robots and fish disease analysis. In manufacturing, AI-driven solutions enhance labor efficiency and productivity, while in healthcare, data-driven approaches aid in accident prevention, dementia management, COVID-19 response, and healthcare pollution control. Korea’s introduction of the voucher program coincided with a period of significant data openness in the public sector and ongoing policy discussions regarding private data utilization. This initiative played a crucial role in establishing a symbiotic relationship between data suppliers and consumers, leveraging diverse, high-quality data from both public and private sources. The success of this initiative in Korea was bolstered by existing technological, legal, and institutional infrastructure developed since the 2010s, including high-quality data provision and robust big data and AI processing capabilities. This underscores the importance of technical infrastructure, accessibility, and institutional frameworks related to data openness and utilization as prerequisites for effective data voucher projects. Korea’s persistent policy efforts in this regard have been pivotal in the program’s achievements. KOREA OFFICE INNOVATION & TECHNOLOGY NOTE SERIES PAGE | 5 Drawing from these insights, developing countries embarking on data voucher programs are recommended to consider several key factors. First, prioritizing a demand-driven ecosystem is essential, as traditional focus on supplier companies often overlooks the importance of stimulating actual demand, hindering ecosystem growth. Second, identifying and targeting sectors with unique demand characteristics tailored to each country’s industrial and cultural context is recommended. This entails investing in the development of data supply companies within these sectors and formulating detailed policies to enhance consumer companies’ utilization capabilities. Third, measures should be implemented to prevent the concentration of demand on specific suppliers, ensuring a balanced and diverse data ecosystem. Fourth, enhancing the data literacy and utilization capabilities of consumer companies is crucial for maximizing the effectiveness of data voucher programs. Finally, leveraging data voucher programs to bridge the digital divide and foster inclusion is paramount. Furthermore, private sector entities need to raise awareness of the value of data utilization, recognizing its pivotal role in improving operational efficiency and fostering innovation. International organizations can contribute by sharing their expertise and experiences with developing countries, facilitating knowledge transfer and collaboration. Korea’s experience underscores the importance of continuously refining data policy initiatives based on market dynamics and feedback, emphasizing the need for ongoing cooperation and exchange between countries and organizations to address emerging challenges and promote sustainable data ecosystems. PAGE | 6 DATA VOUCHERS: KOREA CASE STUDY I. Data Industry Ecosystem in Korea This section on the data industry ecosystem in Korea provides a comprehensive overview of the country’s evolving landscape in data utilization and innovation. As the government continues to make significant strides in technology and digital transformation, understanding the dynamics of its data industry becomes increasingly crucial. The section delves into various aspects, including the growth trajectory of the data industry, adoption trends across different sectors, emerging technologies, regulatory frameworks, and ecosystem stakeholders. By examining the current state and prospects of Korea’s data industry, this introductory section aims to offer valuable insights into the opportunities, challenges, and implications for stakeholders in both the public and private sectors. 1. The Present Status and Future Direction of the Data Market In recent years, the formation of data and AI ecosystems in the global market has been accelerating as enterprises of all sizes recognize the value of utilizing data. Across various sectors, including finance, healthcare, retail, manufacturing, and telecommunications, industries are leveraging big alongside analytical tools like machine learning algorithms and AI applications to extract actionable insights from vast amounts of information that drive operational efficiency, innovation, and growth. This trend is propelled by the growing volume and diversity of generated data, technological advancements, and a heightened appreciation for the strategic importance of data-driven decision-making. The global big data market is experiencing rapid growth and innovation, with projections indicating a substantial increase in market size from $196.3 billion in 2024 to $358.7 billion in 2029, boasting a compound annual growth rate of 12.44 percent.1 Figure 1: Trends in the domestic data industry market size (Unit: billion Korean won) 271,513 259,664 228,986 133,352 128,041 113,869 Data Sales and Provision Services Data Integrating and Consulting Services 90,305 93,268 85,274 Data Processing and Management Solutions Development & Supply 41,318 44,894 29,843 2021 2022 2023 Source: Korea Data Agency, 2023 Data Industry White Paper (May 2024). 1  Market Data Forecast, Big Data Market, 2024.1 KOREA OFFICE INNOVATION & TECHNOLOGY NOTE SERIES PAGE | 7 In Korea, the data industry is experiencing steady growth, primarily driven by data sales and service provision. By the end of 2022, it had reached 25,964 trillion Korean won, exhibiting a compound annual growth rate of 11.9 percent since 2020. In terms of industry sectors, the public sector entities lead with the highest adoption rate at 56.9 percent, followed by finance at 40.2 percent, and telecommunications and media at 33.6 percent. Sectors like healthcare, logistics, and construction show considerable adoption or consideration rates, suggesting a promising trajectory for big data utilization in Korea. However, a notable disparity in data utilization exists between large and small organizations concerning annual sales size. While nearly half of enterprises with annual sales exceeding 100 billion Korean won (49.7 percent) had adopted big data by the end of 2023, only 20.1 percent of companies with sales below 100 billion Korean won had done so. Additionally, a significant 70.3 percent of small businesses had no immediate plans for big data adoption, underscoring the substantial gap in data adoption between large and small enterprises. To gain insight into this disparity, the big data adoption rate measures how widely and effectively organizations implement and use big data technologies (i.e., analysis of significant amount of data sets). It includes the extent of adoption, usage frequency, integration into business functions, investment levels, maturity of initiatives, and their impact on business performance. Understanding this rate helps assess the effectiveness of big data strategies in a country like Korea and identify areas for improvement, particularly in specific sectors. Figure 2: Big data adoption rate of domestic companies in 2023 123 105 41 8 24 27 93 15 77 9 8 13 21 8 4 62 50 45 16 39 5 17 11 5 Services Manufacturing Telecom & Education Public Construction Media Already adopted Adoption in progress Considering adoption No current plans Source: Korea Data Agency, 2023 Data Industry Status Survey (May 2024). 2. The Policy Framework of Korea’s Data Industry The inception of data utilization in Korea gained momentum in the 2010s with the initiation of the Open Government Data initiative. Launched in 2011, the Open Government Data Portal served as a central platform for aggregating and disseminating open data from various government agencies. In tandem, the Korean government introduced several initiatives to promote education and foster private sector adoption of open data. These efforts included providing data openness training for public institutions, organizing private app development competitions utilizing open data, and implementing startup support programs. PAGE | 8 DATA VOUCHERS: KOREA CASE STUDY Despite the government’s proactive interventions leading up to 2017, the quantitative expansion of open government data did not immediately translate into active data utilization. While the government successfully consolidated diverse and extensive data from across government entities into a unified portal2, stimulating actual transactions among data consumers solely by opening public data proved challenging. A report3 released by the Korea Information Society Development Institute emphasized the need for government and public institutions, as open data providers, to prioritize practical data utilization and ensure a consumer-centric approach to open data provision, thereby facilitating widespread adoption and utilization in the market. Consequently, since the late 2010s, the Korean government has progressively announced targeted implementation measures to bolster the growth of the national data ecosystem. These measures encompass establishing policy and legal frameworks related to data distribution (2018–2020), revamping the data trading environment (2021–2022), and formulating policies to enhance the added value of data-driven industries (2023–present).4 Figure 3: Korea’s data industry policy by phase Phase I Phase II Growth of Data Ecosystem Creating Foundation for Data Supply Policy/Legal Data Trade Industry (2013-2017) Environment Environment Value-added (2018-2020) (2021-2022) (2023-) • Open government data • Developing a • Establishing a • Enabling the data • Creating the foundation policy and legal data exchange economy Policy for big data environment to environment • Increasing focus • Guiding ways to use foster the birth of • Direction for industrial value public big data a data ecosystem advanced data added utilization • Open data (2013) • Open Data • Strategy for • The First Basic • Legislation to enable the Innovation advancing a Plan for the provision and use of Strategy (2018.2) public-private Promotion of the open data (2013.10) • Data Industry partnership-based Data Industry Key • Plan to promote public Visualization data platform 2023-2025 policies/ big data use (2016.2) Strategy (2018.6) (2021.6) (2023.1) legislation • Data AI • South Korea • Tasks for Economic Digital Strategy Vitalizing the Vitalization Plan (2022.9) Data Economy (2019.1) (2023.11) • Three Data Laws (2020.3) Source: Authors Looking closely at the Korean government’s endeavors to cultivate the data industry since 2018, a comprehensive strategy for revitalizing the data industry was unveiled in June 2018. This strategy positioned the data industry as a key driver of national growth, with the government directing its policy efforts towards energizing the data economy and enhancing industrial value through the establishment of a robust data ecosystem. 2  The number of open government data has increased 4.7 times from 5,272 in 2013 to 24,588 in 2017, and the number of national priority data openings has increased from 11 in 2015 to 48 in 2017 (Open Government Data Strategy Committee, Open Government Data Innovation Strategy, 2018.2) 3  Korea Information Society Development Institute, Analysis of Open Government Data Openness and Utilization Status, 2023.9 4  See Appendix 1 & 2 KOREA OFFICE INNOVATION & TECHNOLOGY NOTE SERIES PAGE | 9 Building upon the foundation laid by the Data Industry Act, effective since April 2022, the First Basic Plan for the Promotion of the Data Industry (2023–2025), introduced in January 2023, outlined strategies aimed at fostering the growth of the data ecosystem. These strategies encompassed various aspects such as data production, openness, sharing, distribution, trading, protection, and utilization, with the overarching goal of positioning Korea as a leading global data powerhouse. Subsequently, in November 2023, the Tasks for Vitalizing the Data Economy initiative was launched to invigorate the data economy by establishing a comprehensive data industry ecosystem. This initiative outlined detailed tasks tailored to specific fields such as autonomous driving, robotics, AI, bio-health, MyData, and data economy infrastructure, with refined policies designed to accelerate the realization of direct economic and industrial benefits derived from data. Moreover, the AI Everyday Life and Industrial Advancement Plan, introduced in January 2023, prioritized data as a key strategy to support the advancement of the AI sector, central to digital transformation. This strategy involved initiatives such as building and opening data for learning, expanding data trading and analysis companies, and creating a national data infrastructure to facilitate the discovery and utilization of data. This commitment to data and AI technologies was further reinforced through the Korea Digital 2.0 Strategy in February 2024, reaffirming the policy’s focus on the direct application of AI and data technologies across industrial and administrative sectors, as well as in everyday life, within an AI coexistence society. Additionally, the data voucher program emerged as a pivotal policy measure stemming from the 2018 Data Industry Revitalization Strategy, acting as a catalyst for the growth of Korea’s data ecosystem. Introduced in 2019, K-DATA’s data voucher program aimed to overcome the limitations of the government’s supply-oriented policy and foster the data industry by directly connecting private data collection and processing companies with data consumers. Since its inception, the program has played a crucial role in creating a virtuous cycle of supply and demand, shifting the perception of data efficacy among small and medium-sized enterprises (SMEs), and bridging the data capability gap between SMEs and large enterprises. Evaluated as a valuable policy tool, the data voucher program has facilitated the application of AI and data in various sectors, aligning with the objectives outlined in the Tasks for Vitalizing the Data Economy initiative in 2023 and the Korea Digital 2.0 Strategy framework in 2024. 3. The Evolution of Korea’s Data Ecosystem 1) Overview of the Domestic Ecosystem A data ecosystem consists of all stakeholders engaged in the process of data creation (including both internet of things (IoT) and non-IoT data), collection and processing, distribution (trading), demand (utilization), and final use. Data within this framework compromises both IoT data generated by objects and non-IoT data generated by human or organizational activities. IoT data originates from IoT home appliances and factory IoT devices, while non-IoT data is sourced from diverse channels such as point-of-sale systems, mobile phones, traffic data, and other activities of individuals and organizations. Following collection, this data undergoes storage and processing by specialized data processing and AI analytics entities, which may be companies or organizations serving consumers or businesses. These entities function as data providers within the data ecosystem, offering data for sale or processing. Data consumers, in turn, utilize a variety of datasets supplied by these providers, along with data processing and AI analysis, to enhance existing business processes, devise sophisticated marketing strategies, boost productivity, and address various societal challenges. To facilitate seamless market matching between data consumers and suppliers, data exchanges, brokers, and operators of big data platforms handle data distribution. Ultimately, customers, who are the ultimate targets of data utilization, contribute various personal information, such as shopping habits, transportation patterns, and location data, while IoT devices continually feedback data to the production and collection stage, perpetuating the cyclical nature of the data ecosystem. PAGE | 10 DATA VOUCHERS: KOREA CASE STUDY Figure 4: Data ecosystem lifecycle End Users/ Data Data Providers Creators (Collection/ (Organizations/ Process) Consumers/ IoT) Data Data Consumers Distributors (Data Platforms/ (Data Use) Brokers) Source: Authors 2) Shifting Dynamics in the Data Ecosystem Factors Driving Change in the Data Ecosystem AI Influence Progress in AI technology is revolutionizing operations along the data value chain, instigating dynamic shifts within the data ecosystem. AI advancements, including computer vision and natural language processing, facilitate automated data collection and preprocessing, simplifying data acquisition and cleansing. In data processing and analysis stages, AI enables the generation of comprehensive insights and added value from data, addressing diverse data requirements and catalyzing the emergence of novel data-driven business models. The perceived value of data is escalating, leading to rapid growth in the data exchange market as companies leveraging real-world data achieve cost savings and various industries witness increased efficiency and success through innovative business models. The burgeoning market valuation and demand for AI models trained on extensive data, exemplified by the rapid expansion of large language models like OpenAI and Anthropic, underscore the rising importance of high-quality data, fueling the virtuous cycle within the data ecosystem. Policy Impacts The proactive policies of the Korean government have played a pivotal role in establishing and expanding the country’s data ecosystem. The First Basic Plan for the Promotion of the Data Industry (2023–2025) introduced a comprehensive framework for a national strategy aimed at invigorating the data distribution ecosystem, encompassing aspects such as data production, openness and sharing, distribution and trading, and data protection and utilization. Additionally, the plan proposed detailed measures to fortify the data ecosystem, underpinned by the regulatory framework of the Data Industry Act. The National MyData Innovation Promotion Strategy, initiated in August 2023, laid the groundwork for a data subject-oriented distribution structure by enhancing individuals’ rights to self-determination over personal information. Notably, policy reinforcement for demand- supply matching projects through data voucher programs has bolstered business references and enhanced the capabilities of data suppliers across various sectors, catalyzing the outward expansion of the data ecosystem. KOREA OFFICE INNOVATION & TECHNOLOGY NOTE SERIES PAGE | 11 Evolution of the domestic data ecosystem The development of Korea’s data ecosystem, spearheaded by government initiatives, initially centered on supply-related players, primarily data providers and distributors. However, with the proliferation of AI technology and government policies aimed at identifying and addressing demand companies’ needs, the scope and activity of demand companies have broadened significantly. Non-ICT companies, in addition to traditional ICT firms, are emerging as pivotal data demanders, expanding the base of data demand within the ecosystem5. Consequently, the role of demand companies in Korea’s domestic data ecosystem is poised for further growth6. Moreover, existing data providers are diversifying their offerings and expanding their presence across various vertical industries, both within the ICT and non-ICT sectors, enhancing their data supply capabilities and anticipating sustained growth. The escalating demand for high-quality data for AI applications and the expansion of AI data processing and analytics companies are set to drive the proliferation of supply-demand trading platforms, which serve as marketplaces for data distribution. Government-led initiatives to integrate big data platforms are fostering convergence among public and private data sources, as well as government- sector data, accelerating the sophistication of Korea’s domestic data distribution infrastructure. 5  Contribution to revenue of data voucher consumers: 330 billion Korean won (2019) → 12,636 billion Korean won (2023), data voucher support competition ratio 1.7:1 (2019) → 3.7:1 (2023) 6  Non-ICT participation among data voucher consumers: 38 percent (2019) > 74.6 percent (2023) PAGE | 12 DATA VOUCHERS: KOREA CASE STUDY II. Data Voucher Program This section explores the data voucher program, a cornerstone initiative within Korea’s data industry, administered by K-DATA under the Ministry of Science and ICT. Established in 1993, K-DATA has spearheaded efforts to foster data industry development through various support projects. At the heart of these endeavors lies the data voucher program, which has played a pivotal role in fostering synergy between data consumers and suppliers. With significant policy funding since 2019, the program has catalyzed growth across the data ecosystem. Through an in-depth analysis, this section aims to offer insights into the program’s evolution and its impact on Korea’s data economy, providing valuable policy implications for similar initiatives worldwide. 1. K-DATA and the Data Voucher Program 1) About the Korea Data Agency (K-DATA) K-DATA, a specialized data fostering agency under the Ministry of Science and ICT, is a government-funded organization established in 1993 to foster and develop the data industry. K-DATA has been promoting various support projects for data utilization across industries. As mentioned in the previous chapter, K-DATA’s data voucher program has been playing a leading role in creating a virtuous ecosystem in which supply and demand can grow together by matching data consumers with data suppliers through policy funding worth tens of billions of won every year since 2019. K-DATA has become a driving force for the data economy by fostering the data industry and contributing to the creation of new data-based industries and quality jobs. It is also making various efforts to build data trust, including data ethics, security, and quality management. Table 1: Key roles and activities of K-DATA • Supporting the establishment of data industry policies and institutional improvements • Help foster data companies and train data professionals • Facilitate data trading and distribution • Promote research and development to promote data standardization and utilization • Support data usage through data voucher programs, etc. Source: K-DATA. 2) Purpose of the Data Voucher Program The data voucher program aims to build a sustainable data ecosystem of data-based innovation and supply and demand by supporting SMEs and startups that lack data purchasing power. To support private companies that need data but lack purchasing power, the project provides a variety of quality-verified, demand-oriented data and supports the establishment of a sustainable data ecosystem through mutual growth between consumers and suppliers. KOREA OFFICE INNOVATION & TECHNOLOGY NOTE SERIES PAGE | 13 Table 2: Goals of the data voucher program Interconnections among Scale up Data Diversification Players Actively pursue SME demand Supply various data products Revitalize the data ecosystem to acquire and utilize data to with high value-added and by creating an environment create innovative services that diversified data by finding where data can be traded will drive digital transformation, competent processing securely and seamlessly such as artificial intelligence companies and diversifying and where companies are and smart industries. sales companies. interested in utilizing data. Source: K-DATA. The following sections examine the operation, status, and performance of the data voucher program, which has served as an essential policy tool for establishing the foundation of domestic data ecosystems. This analysis aims to assess the maturity of these ecosystems and provide policy implications for countries considering the implementation of similar programs. 2. Overview of the Data Voucher Program The data voucher program is a policy initiative aimed at promoting data-driven business innovation and the development of new products and services for SMEs and startups. Rather than providing direct cash subsidies, this program supports these companies by offering vouchers that can be used to purchase data and access data processing services. By incentivizing suppliers through the voucher system, the program stimulates active demand discovery by companies within the data ecosystem, facilitating the influx of demand-side firms. Consequently, this measure contributes to strengthening and expanding a private sector-led data ecosystem. Figure 5: Key players in the data voucher program’s ecosystem Data Request-Use Consumer Company Supplier Company (Data Utilization) (Data Sales/Processing) Providing Data Product-Processing Payments for Data Voucher Services Application Selecting and Monitoring Supplier Companies PAGE | 14 DATA VOUCHERS: KOREA CASE STUDY Table 3: Roles of key players in the data voucher program’s ecosystem Player Roles 1. Request data from suppliers Data Consumers 2. Leverage data products and processing services 3. Provide required data for consumers Data Suppliers 4. Provide data products and processing services 5. Select and guide data sales and processing companies Korea Data Agency (K-DATA) 6. Financial support for data sales and processing companies Source: K-DATA. 1. Eligibility – Eligible applicants include SMEs, microenterprises, and budding entrepreneurs. However, government agencies and local governments (including their affiliated organizations), public and research institutions, university research teams, hospitals, etc., are also eligible to apply. 2. Application – The data voucher program is categorized into purchase, general processing, and AI processing vouchers. The voucher support limit varies across different sectors, allowing applicants to tailor the service offerings to meet the specific requirements of companies based on their respective sizes. Table 4: Features of data voucher business support by sector Voucher Tracks Support Support for the cost of purchasing data (including application programming Purchasing interface) for data utilization purposes such as marketing strategy and business model development. General Support for data processing service costs for business promotion, such as Processing service development, sophistication, and data analysis. Support for data processing service costs for business promotion, such as AI Processing product development utilizing AI technology. 3. Program Procedure – Potential data consumers apply to participate in the data voucher program by establishing a data utilization (purchase or processing) plan for new development or upgrading of existing services/products. The Ministry of Science and ICT and K-DATA then select data consumers and facilitate matching them with designated suppliers. These suppliers provide the requested data products or processing services to the matched data consumers. K-DATA pays the suppliers for delivering these data products/processing services, while strictly managing and supervising the process. Throughout this process, K-DATA evaluates each case and selects the best ones. KOREA OFFICE INNOVATION & TECHNOLOGY NOTE SERIES PAGE | 15 Figure 6: Overall procedure of data voucher program 2. Recruiting Suppliers 3. Tender Announcement 1. Program Planning Designating suppliers after Tender announcement on the Budgeting and business planning screening applicant companies, K-DATA website for data following the announcement on consumer companies the K-DATA website 4. Application 5. Selecting Consumers 6. Players Matching Online application on the Prioritizing companies for On/offline matching and Program Management System of negotiation based on the evaluations between suppliers Data Voucher application evaluation and consumers 7. Contract 8. Program Management 9. Evaluation/dissemination Reviewong voucher expenses Reviewing consumers’ data Indentifying deliverables and and multilateral agreements usage and suppliers/ obligations evaluate results, and recognizing between consumers/ suppliers/ fulfilment and promoting successful cases K-DATA 4. (Ecosystem effect) The data voucher program is characterized by introducing markets and diverse support and management approaches aimed at fostering balanced growth of demand and supply companies within the data ecosystem. First, on the demand side, the program stimulates market vitalization through voucher-based support, collaboration with government agencies and local governments, and operational activities in sectors addressing social issues. Secondly, on the supply side, the program promotes market vitalization through program management activities such as demand forecasting, supplier screening processes, and supervision and monitoring. Table 5: Expected outcomes of the data voucher program Data Policy Measures Expected Outcomes Ecosystem Voucherized subsidies encourage co-growth of Voucher support supply companies and consumers Collaborating among Collaboration governance among central and local Nurturing data government agencies/ governments to identify demand across industries demand local governments and regions Dealing with social Handling social problem-solving issues to enhance challenges the social value of data utilization Data demand research to proactively deal with new Demand forecasting data supply Nurturing data Managing supplier Identifying and managing capable vendors for data supply screening sales and processing services Data supervision and fulfillment checks to ensure Program management high-quality data and transparency in its use Source: K-DATA. PAGE | 16 DATA VOUCHERS: KOREA CASE STUDY 3. Accomplishments in Nurturing the Data Ecosystem 1) Demand Side (Consumers) 1. Increase in demand – The data voucher program has attracted a wide range of data and AI analytics companies, and the number of participants has grown significantly each year. The number of voucher applications increased from 2,795 at the start of the program to 7,376 in 2023, and the competition ratio increased from 1.7:1 to 3.7:1. The average competition rate, which is the number of applications compared to the number of supports, has increased by 21.5 percent per year on average over the past five years as a result of the demand generated by collaboration with local governments and government partners. As the competition for data consumers from the demand side intensifies, the scale and quality of data supplied naturally increases. Figure 7: Data voucher application and support status trends 12,000 4.5 3.9 4 10,000 3.7 3.5 3 8,000 3 2.3 2.5 6,000 1.7 10,466 2 4,000 1.5 7,376 6,164 6,179 1 2,000 2,795 2,637 2,680 0.5 1,640 2,040 2,010 0 0 2019 2020 2021 2022 2023 Number of applications Number of supports Competition rate Source: K-DATA. 2. Mitigating the regional gap – The data voucher program has been shown to improve the inclusiveness of the domestic data ecosystem, which was highly concentrated in regions and industries. Over the course of the program, the number of non-capital region data companies increased from 27.8 percent to 40.6 percent, contributing to the reduction of regional concentration in the capital region. Figure 8: Participating companies from non-capital regions in the data voucher program 2020 2023 27.8% 40.6% 59.4% 72.2% Non-capital region Capital region Capital region Non-capital region Source: K-DATA. KOREA OFFICE INNOVATION & TECHNOLOGY NOTE SERIES PAGE | 17 3. Overcoming industry bias – Non-ICT companies, which accounted for only 38 percent in 2019, increased to 74.6 percent in 2023, indicating that the effects of the data economy are being experienced evenly across industries and the value of data-driven digital transformation is being shared. Figure 9: Trends in data voucher program participation by non-ICT companies 2019 2023 25.4% 38.0% 62.0% 74.6% ICT Non-ICT ICT Non-ICT Source: K-DATA. 4. Creating economic effects – The data voucher program has shown various economic effects, such as increasing sales, creating jobs, and attracting investment. The revenue contribution of data consumers participating in the data voucher program increased from 330 billion Korean won in 2019 to 1,262.6 billion Korean won in 2023 as they developed and advanced innovative services based on data. In addition, the companies participating in the program have created 28,748 new jobs since 2023. The creation of data businesses and innovative technologies attracted about 269 billion Korean won in domestic and foreign investment funds, the acquisition of 1,526 intellectual property rights, and the listing of 53 companies. Figure 10: Revenue contribution and job creation by data voucher consumers 2,659 786 1,443 393 2019 2023 Number of companies Number of products Source: K-DATA. PAGE | 18 DATA VOUCHERS: KOREA CASE STUDY Table 6: Investments, intellectual property, and listing records of data voucher beneficiaries Publicly traded companies Type Funding (Korean won) Intellectual property (cumulative) 2021 319 billion 2,106 17 2022 3,920 billion 2,262 30 2023 269 billion 1,526 53 Source: K-DATA. 2) Supply Side 1. Growth in the scale of supply data and diversification of products – The number of companies on the supply side grew significantly from 393 in 2019, when the program was first launched, to 1,443 in 2023—an increase of more than 3.5 times, making it an important pillar of the domestic data ecosystem. The program has witnessed a significant increase in the number of products, growing by more than 3.3 times from 786 to 2,659. Data accumulation has primarily occurred in the fields of agri-food, retail consumption, digital industrial innovation, environment, and lifelog7. Moreover, companies from diverse sectors are joining the provider pool, resulting in a wider range of data products, including quantitative data, text data, images, video data, and voice data. Figure 11: Change in the number of data products and providers: 2019 vs. 2023 28,748 12,636 2,304 3,330 2019 2023 Revenue contribution Job creation Source: K-DATA. Table 7: Data examples by type Types Examples Key Suppliers • Foot traffic data, data related to local festivals • SK Telecom Foot traffic • Foot traffic by tourist attraction, sales forecast data • KT • Product orders by region/product category, product orders • CJ Olive by brand, social data Networks • Distribution knowledge bank, distribution product Distribution • Daesang information data Holdings • Order peak time by industry, average order rate by industry/ • BizSpring cost per mile visit peak time by industry 7  Lifelog is personal record data related with day-to-day activities collected from digital devices such as smartphones, smartwatches, tablets, laptops, etc. These data may include personal locations, health status, physical activities, etc. KOREA OFFICE INNOVATION & TECHNOLOGY NOTE SERIES PAGE | 19 Types Examples Key Suppliers • Consumer information by region, shopping district characteristics by region, foreign consumption information by region, domestic consumption information by foreigners • Card sales data, consumption characteristics information by region, sales estimation data by region • Shinhan Card • Consumption information by industry, location and • KB Card shopping district analysis, and statistical data by region • BC Card • Statistics on products purchased at convenience stores, • NICE Zini Consumption estimated residential/working households, vehicle Data ownership statistics, commercial office rental rates, sales • KCB status by industry • L.POINT • Regional debt information, regional income information, • Nielsen regional consumption information, and credit rating information • Consumer price index, loyalty point data • Retail indicators, e-commerce indicators Source: K-DATA. 2. Increase supplier engagement – Alongside the growth in the scale of data supply, the data voucher program has witnessed continued participation from data supply companies across a wide range of industries. Notably, the program has attracted large companies with extensive big data resources, such as major telecommunications companies and commercial banks in the private sector. This has created an environment for the provision of high-quality data products that cater to various data utilization demands, such as mobile population, distribution, and consumption patterns. Prominent companies like SK Telecom, KT, Naver, BC Card, and Ahnlab, which possess large customer data sets and are leading innovators in industries like telecommunications, internet, finance, and security, are actively participating, forming a strong foundation for quality data supply. 3. Advanced data technology – The quality and quantity of data supplied across industries are significantly improving, creating a more reliable service usage environment for data consumers with diverse requirements. Additionally, the spectrum of data processing and AI analysis companies is expanding to meet the needs of data consumers across various industries. Furthermore, the development of AI-related technologies, such as AI/machine learning model development, data mining, and visualization, is expected to further drive the demand for high value-added data processing services. 4. Virtuous Cycle Effects of Data Ecosystem Domestic policies aimed at invigorating the data industry, along with the evolving trends in AI technology, are strengthening the foundation of the domestic data ecosystem. The data voucher business acts as a catalyst for a virtuous cycle in this ecosystem by providing appropriate incentives for demand and supply companies, expanding their respective market shares, and offering a trading platform with various partnership options for both sides. 1. Closing the data gap on the demand side The voucher program, designed to support SMEs in utilizing data, can help these businesses bridge the data gap with large enterprises and strengthen their market competitiveness by leveraging data and AI for business process innovation and diversification. PAGE | 20 DATA VOUCHERS: KOREA CASE STUDY The program is also accelerating digital transformation in sectors that traditionally lack data utilization, such as manufacturing and construction. With nearly 75 percent participation from non-ICT companies, the data voucher program is playing a positive role in closing the data utilization gap between industries. 2. Quantitative and qualitative growth of the supplier companies The environment for data processing companies participating in the program is improving, enabling them to acquire domain knowledge and develop field-specific data processing capabilities. In other words, data processing technologies and practices in sectors like manufacturing, finance, and healthcare have advanced, leading to more sophisticated and widespread industry-specific data utilization. This phenomenon is likely to promote the growth of industry-specific data processing companies by securing business references in each industry. 3. Virtuous cycle of data ecosystem In recent years, a virtuous cycle has emerged within the ecosystem, where data consumers are becoming suppliers by generating new data in fields such as health, environment, agriculture, and fisheries8. Figure 12: Cases of data consumers that transitioned to data suppliers Transitioned to Data Support for Data Consumers Data Generated Suppliers Advanced AI-powered skin analysis and Skin analysis data: personalized product redness, acne, recommendation pigmentations, etc. Healthcare Data algorithms Developing AI-based Recycling images recycling sorting system, environmental classification labeled data Environment Data robot Advanced AI fish Fish disease farming solutions to identify fish diseases classification data Agriculture/Fisheries Data Source: K-DATA. The data voucher program is invigorating the entire value chain of data generation, collection, processing, distribution, and utilization. This dynamic is expected to strengthen the linkages between the upstream and downstream components, fostering mutual growth. The establishment of this virtuous cycle across the data ecosystem is anticipated to accelerate the creation of domestic data-based businesses and enhance the global competitiveness of data companies. 8  According to K-DATA, as of 2023, there were 38 cases in which data consumers were transitioned to supply companies across all industries, including health, environment, and agriculture. KOREA OFFICE INNOVATION & TECHNOLOGY NOTE SERIES PAGE | 21 III. Use Cases: Harnessing Data Vouchers for Industrial Progress and Addressing Social Challenges The integration of data-driven technologies into traditional industries is paramount for fostering innovation and addressing societal challenges. In Korea, where certain sectors like agriculture and manufacturing face digitalization gaps, initiatives like the data voucher program play a crucial role in facilitating this transition. By providing support to companies eager to harness the power of data, this program has become instrumental in driving digital transformation and efficiency improvements across various sectors. This section explores the transformative impact of data vouchers through real-world use cases, demonstrating how industries are leveraging data to enhance productivity, tackle social issues, and propel economic growth. From empowering farmers with AI-driven agricultural robots to enhancing safety measures in construction sites, these examples showcase the diverse applications and promising outcomes of the data voucher program in advancing industries and addressing pressing societal concerns. 1. Digital Transformation of Traditional Industries According to the 2022 Digital Information Gap Report, farmers and fishermen are among the major vulnerable groups in Korea in terms of digital informatization, with a national average score of 78.9 out of 100. In this context, companies participating in the domestic data voucher program are taking important steps to address the labor shortage in rural areas and upgrade the industries with a lack of data capabilities. In the last two years, data consumer companies participating in data voucher programs have significantly improved their productivity and efficiency by integrating new technologies such as AI, robots, and platforms into primary industries. For example, Labxiid, a developer of autonomous agricultural robots, used the voucher program to outsource data labeling and training for quality, provenance, and distribution traceability, enhancing the performance of its robots. The company is also developing a machine to determine crop defects using a sophisticated data sorter through the program. Blue Ocean, which operates an AI-enabled smart aquaculture management platform, used the voucher program to analyze data on fish diseases, improving its fish disease learning model and diversifying its aquaculture varieties. Narma, a developer of delivery drones and platforms, outsourced AI processing of its fish bloom data to a vendor. As a result, the company improved its fish detection algorithm and increased the accuracy of recognizing ‘boiling sea’ from 30 percent to 90.4 percent. With the rise in success stories of data voucher consumers, data sales and processing companies like Infoboss, Superb AI, and Gaion are also actively participating in the data ecosystem. They utilize crops, fish, and farm data for labeling, algorithm development, and analysis. These trends contribute to the vitality and sophistication of the domestic data circulation ecosystem, driving digital transformation and efficiency in non-ICT industries, traditionally lagging in digital and data applications. PAGE | 22 DATA VOUCHERS: KOREA CASE STUDY Table 8: Data use cases and outcomes: Traditional industries Fields Ways to Use Data Results/Achievements Company • Utilized AI data processing technology to discover domestic • Increase the likelihood of substitutes for import-dependent material commercialization medicinal herbs that are highly success by targeting active effective in skin regeneration, ingredients in market- wound healing, and skin soothing. leading materials that are Agriculture • Identified more than 120 species already validated. Rokya of domestic and cultivated plants • Free up resources to that can be produced based on ensure active ingredients data such as plant morphology, and reduce wasted genome ID, genome size, etc., experimentation with AI for prediction analysis of similar analytics. materials to the targeted species. • Worked and trained on labeling data for quality, origin, and traceability. • Get data on crops to • Connected full-cycle data-driven improve autonomous robot agricultural distribution using performance. Agriculture Labseed autonomous agricultural robots • Develop a machine to (data collection, pest control, determine crop defects harvesting, etc.) through data sifters. • Open data on crops helped streamline robot behavior. • Applied for a patent for a fish disease detection device that can determine • Improved a fish disease learning whether a fish is sick and model by training a snapper capture it. Blue disease algorithm using images • Leveraging AI to help an Ocean of red snapper in addition to aging fishery increase traditional stone snapper images. production by minimizing Fishing manpower and reducing fish mortality. • Developed an AI technology to • Business diversification assist fishing fleets with offshore success (pelagic fish fishing: Advanced fish detection detection): Increased the algorithms using vendor AI accuracy of recognizing Narma processing of 420,000 photos of ‘boiling sea’ used to detect fish phenomenon data to improve fish schools from 30 fish detection algorithms. percent to 90.4 percent. Source: Best practices of data voucher programs (2021, 2022), data provided by K-DATA. 2. Enhanced Productivity in Manufacturing Korea’s SMEs account for more than 80 percent of employment, a much higher percentage than in other advanced economies such as Japan (53 percent) and the United States (42 percent). However, the productivity gap between large and small firms in Korea’s manufacturing sector remains one of the widest in OECD countries, with the exception of Ireland9. This productivity gap significantly hinders economic growth and contributes to wage inequality. The data voucher program provides an opportunity for SMEs to improve productivity, reduce costs, and diversify their business by utilizing data, thereby helping to bridge the gap between companies within the domestic industry. 9  OECD, Labour Productivity in SMEs and large firms, manufacturing KOREA OFFICE INNOVATION & TECHNOLOGY NOTE SERIES PAGE | 23 Sije, a developer of an AI-based apparel supply chain management platform, improved its AI model performance by amplifying data through AI training on existing data via its voucher business, showcasing how AI can overcome data limitations and shortages faced by SMEs. TMS(티엠에스), an auto parts company, and GSPM(지에스피엠), a metal powder metallurgy company, achieved cost savings and increased sales by standardizing production and reducing defect rates through process data collection and analysis. In the pharmaceutical sector, AI was used to process and analyze pill counting in pharmacies. ‘Pilleye,’ an AI-based pill counting app service developed by Medility, enabled automation and enhanced high accuracy, leading to a significant increase of the number of subscribers to the service. In the renewable energy sector, Thoth and TurbineCrew significantly improved operational efficiency and productivity through automation. Thoth established an AI-powered patent database, while TurbineCrew applied AI data modeling for real-time power generation prediction and fault diagnosis. Table 9: Data use cases and best practices: Manufacturing Fields Ways to Use Data Results/Achievements Company • Data augmentation with AI learning from existing • Recognized as a 2022 Best apparel process data. Utilizer of Data Voucher • Amplifying apparel process Program by the Ministry of data to improve process Science and ICT. Apparel prediction accuracy: Sije • Enhanced ESG performance 700,000 apparel process in apparel by reducing medical data points collected from waste and producing more 800 overseas factories varieties in smaller batches. were amplified to 28 million with AI learning. • Partial automation of defect • Developed an object reading with data collection. detection AI model (Yolo Automotive • Reduced labor costs and TMS v5) to identify defective improved accuracy of defect vehicle parts. detention. • Processing collected pill • 10x improvement in pill photos with AI. counting accuracy (99.99 • Digital transformation percent → 99.999 percent). Pharmaceuticals Medility of pharmacy operations • 110 percent increase in with automation of AI pill average weekly subscribers counting tasks. for fill-in apps (158 to 333). • Standardize and streamline production and reduce • Digitize existing process rejects. handwritten process • Analyze and process control data and train production data for each internal staff to use it. molding facility to calculate • Drive smart factory optimal utilization rates based operations with plastic on product standardization. Machine machining data. GSPM • Increased customer • Monitoring data on satisfaction, resulting in defective parts by additional orders for nearly 60 employees and setting items and a revenue increase working conditions and of more than 200 million predicting outcomes based Korean won year-over-year on data analytics. without increasing production capacity. Source: Best practices of data voucher programs (2021, 2022), data provided by K-DATA. PAGE | 24 DATA VOUCHERS: KOREA CASE STUDY SMEs, which are relatively underutilized in terms of digital and data utilization, are now undergoing a transformation. The data voucher program is spreading examples of productivity gains and cost savings through AI-based automation and digital transformation across various industries. On the supply side, the environment for SMEs to meet their data needs is improving, with an increasing number of data and AI processing companies specializing in different industries. 3. Addressing Social Challenges: Safety and Healthcare 1) Safety Construction Korea has a fatality rate of 3.61 per 100,000 workers, far exceeding the OECD average of 2.43.10 There is a growing social awareness of safety accidents at industrial sites, and the Act on the Punishment of Serious Accidents, which has been in effect since January 2022, is a legal measure to mitigate the risk of such accidents. The technology industry is also actively developing industrial safety solutions through field data analysis. Collecting and analyzing high-quality data on accidents plays a crucial role in accurately predicting and judging dangerous situations such as collisions between workers and work vehicles. In the case of Kyungwoo Systech, AI analysis of high-quality video data acquired through the data voucher program has been used to reflect the safety characteristics of various workplaces, improving the detection rate to 97 percent and expanding the coverage of customers. Transportation Meanwhile, Korea’s traffic fatality rate was 6.5 per 100,000 people in 2019, ranking 27th among 36 OECD countries.11 Since then, the number of traffic accident fatalities has been declining every year, but as of 2022, it was still more than twice that of the United Kingdom and Japan, ranking second only to the United States among comparable countries12. While this trend is expected to gradually ease as cars are equipped with safe driving and autonomous driving functions, Korea’s Moveawheel is contributing to the prevention of car accidents in winter. The company can significantly improve the existing road surface detection sensor function through the sound wave dataset acquired via the data voucher program and reduce the possibility of accidents caused by black ice, which has caused more than 200 fatal accidents in the past five years. The company plans to collaborate with car manufacturers and navigation developers to secure vast amounts of road surface data to provide real-time road risk information and dramatically reduce slippery road accidents in winter. Table 10: Data use cases and performance examples: Incident prevention Fields Ways to Use Data Results/Achievements Company • Minimized false positives • AI training and validation in industrial safety based on new datasets, incidents by collecting resulting in a 97 percent true and processing tens of positive rate and 0.8 percent thousands of high-quality false positive rate. Kyungwoo Construction videos. • Achieved 165 percent of Systech • Improved performance domestic annual revenue goal of the Heavy Machinery after voucher program, with Approach Warning Safety over $12,000 in international System (IVIEW+). sales. 10  Yonhap News, [Fact Check] Korea’s Industrial Accident Deaths Are Higher than Major Developed Countries, 2021.5.12 11  KoROAD, OECD releases results comparing road accidents in OECD countries, 2021.12.14 12  https://www.index.go.kr/unify/idx-info.do?idxCd=4261 KOREA OFFICE INNOVATION & TECHNOLOGY NOTE SERIES PAGE | 25 Fields Ways to Use Data Results/Achievements Company • Increased road surface • Securing big data and detection accuracy developing AI to classify road Transportation Movawheel with additional acoustic conditions to prevent slipping datasets. accidents due to black ice, etc. Source: Best practices of data voucher programs (2021, 2022), data provided by K-DATA. 2) Healthcare In the field of healthcare, data is playing an increasingly important role in stress management, early diagnosis and prevention of disease, healthcare resource management, development of new treatments, market strategy, and epidemic management. A growing number of success stories in the healthcare space have been reported with the help of this program. In the process of improving the efficiency of voice data analysis for dementia disease testing, SevenPointOne has significantly reduced the time and cost of research and development by using the data voucher business to support the labeling of voice data. In the healthcare sector, there are also examples of data being utilized for market targeting and marketing purposes. OceansBio, a developer of wearable healthcare devices for stress reduction, used data vouchers to analyze existing patent data, helping build its patent portfolio and develop products optimized for market demand. Based on the analysis, the company plans to upgrade its existing business model and develop new services. Digital Nutrition, a company that develops digital therapeutics based on customized sound solutions, also used the voucher program to process data for competitor analysis to differentiate its strategies and create targeted advertising content. Digital Nutrition was able to expand its domestic sales network and quickly enter the global app market based on market data analysis. Daegu Catholic University Medical Center received support through the voucher program for chest computed tomography scan dataset and image preprocessing labeling of COVID-19 pneumonia patients. By inferring tens of thousands of shapes through AI learning, the medical center developed an AI model for lesion segmentation beyond simple lesion detection. By predicting acute respiratory distress syndrome based on the dataset, the medical center could efficiently manage medical resources, such as allocating ventilators in the hospital or coordinating with other medical centers during ventilator shortages. Yellow and fine dust, concentrated in spring and fall in Korea, are causing serious problems for air quality and people’s health. Daegu Catholic University has developed a fine dust management system using mobile phone traffic data. By purchasing mobile population data from SK Telecom, Korea’s largest mobile company, the university was able to analyze demographic groups (age, occupation) and their activities throughout the day. This data, obtained through the voucher program, helped advance the fine dust exposure assessment system at the regional level. The technology is set to be implemented in city environmental health centers nationwide. As social awareness of safety grows and the demand for wellness and well-being increases with an aging society, government interest in addressing these issues has also risen. Recently, the data voucher program has seen a significant increase in the number of companies tackling social issues related to safety and health, leading to market success. As a government-led public interest initiative, data vouchers are promoting the growth of companies solving real social problems, it is expected that policy support in this field will be further strengthened in the future. PAGE | 26 DATA VOUCHERS: KOREA CASE STUDY Table 11: Examples of how data can be utilized and outcomes: Healthcare Fields Ways to Use Data Results/Achievements Company • Reduce the burden of data transcription and labeling for • Globalization of a voice data analytics with tens developing dementia risk of thousands of quality data screening solution. points. Wellness • Collecting and processing SevenPointOne • Improving the accuracy of voice data to develop a early dementia diagnosis depression screening with speech data labeling. solution. • Presidential Recognition Award. • Analyze existing patent data to build an efficient • Identify areas for research patent portfolio. and development. Wellness • Identify patent applicants • Advance business models OceansBio and government task and identify new applicable forces for wearable service model candidates. healthcare devices. • Collect and analyze competitor app reviews • Simultaneous global launch and technical test data of SoundPill, a wellness to improve the digital version of a digital nutritional nutritional supplement app supplement (October 2023). services. • Secure additional intellectual • Create designs based on properties through new user feedback on pain patent applications. point keywords and user • Signed a sound supply interface refinements. Wellness contract with Bumin Hospital Digital Nutrition • Plan an A/B test for initial Seoul, which owns four customer discovery among general hospitals in Korea three key audiences (April 2023). derived from the data. • Expected to reach $30 • Create audience-specific million in revenue by 2023 ad content based on and rapidly grow revenue dataset analytics. by collecting full version • Enhance service content subscription fees. and improve AI algorithm performance. • Purchase and analyze mobile population data such as demographic • Establish localized fine groups (age, occupation) particulate matter control and their activities measures. Daegu Catholic Health throughout the day • Signed supply contracts with University from telecommunication municipal environmental companies to upgrade health centers nationwide. the fine dust exposure assessment system. Source: Best practices of data voucher programs (2021, 2022), data provided by K-DATA. KOREA OFFICE INNOVATION & TECHNOLOGY NOTE SERIES PAGE | 27 IV. A Way Forward Building on the accomplishments of the data voucher program, this section introduces the Data+Hub as a forward-looking initiative launched by Korea in 2024 to enhance the efficient utilization of data resources. It also explores the strategic efforts of the Data+Hub in establishing an independent platform tailored to deliver customized case search capabilities and automated analysis of corporate data. Through these initiatives, the Korean government aims to establish a comprehensive range of diverse data instances, encouraging benchmarking activities and amplifying the intrinsic value of data utilization for all stakeholders. In conclusion, this section provides insights and recommendations for developing countries aspiring to adopt the lessons gleaned from Korea’s data voucher program in building resilient data ecosystems. It underscores the importance of demand-driven approaches, targeted interventions in specific sectors, and collaborative engagement among stakeholders to drive socio-economic progress and innovation in the digital era. 1. The Data+Hub Initiative The full potential of the data ecosystem is realized when there is a harmonious match between the demand from data suppliers and consumers. In Korea, the dissemination of diverse success stories and the recognition of the value of data utilization are gradually permeating among data consumers. However, the effective utilization of data by SMEs and startups remains a significant challenge. To capitalize on the achievements of the data voucher program and further enhance the Korean data ecosystem, the Data+Hub was launched as a flagship project in 2024, following a successful pilot in 2023. This initiative is designed to facilitate data analysis and utilization customized to the specific needs of consumer companies, thereby enabling SMEs and startups to leverage real-world examples of data-AI utilization more effectively. Currently, SMEs and startups exhibit a reluctance to invest in data, partly due to a limited understanding of its value. Even when they acknowledge its significance, insufficient data literacy often results in inadequate planning for data, technology, and human resources. Moreover, they frequently lack concrete ideas on how to harness data to improve business productivity. As of 2024, Data+Hub is tackling these challenges through tailored assistance provided to 360 companies, considering the volume and availability of data they possess. To achieve this, Data+Hub utilizes real-world examples and various use cases, analyzing and leveraging the companies’ own data. Through the “Data Recipe Service,” companies receive a comprehensive package comprising data, use cases, analysis models, usage procedures, and results, focusing on scenarios that align with their specific challenges. These initiatives ensure comprehensive and practical support for addressing data-related issues. Table 12: Data+Hub: Contextualized support Applicants without data Applicants with data Provide visualized analysis results through Develop customized data recipes through demonstration and practice (application of analysis of existing data (consistency, quality, analysis models, etc.) using reproduction data, etc.) and support troubleshooting through data recipes, etc. demonstration and hands-on practice. PAGE | 28 DATA VOUCHERS: KOREA CASE STUDY At the same time, the Data+Hub is strategizing to construct and manage an independent platform aimed at offering tailored case search capabilities and automated analysis of corporate data. Looking ahead, the government anticipates that the Data+Hub program will establish a comprehensive matrix comprising diverse cases gathered through data vouchers. This initiative is expected to facilitate benchmarking exercises, thereby enhancing the intrinsic value of data utilization for participating entities. 2. Next Steps The Korean government’s initiatives in fostering the data industry, including the implementation of the data voucher program, have effectively laid the foundation for a robust data ecosystem. By offering appropriate incentives to all stakeholders, these policies have facilitated significant productivity enhancements for beneficiary companies. However, further advancement of the Korean data ecosystem requires the development of comprehensive policies aimed at increasing awareness of data’s value among consumer companies, enhancing transaction efficiency among ecosystem participants, and promoting data application across various industries. Firstly, enhancing the data/AI literacy of consumer companies is paramount. A survey conducted by the Korea Federation of Small and Medium Enterprises revealed that the digital maturity level of SMEs in Korea is only 41.9 out of 100, indicating a lack of readiness for digital transformation. To stimulate data demand, it is essential to improve SMEs’ understanding of the value of data and provide concrete measures for its application. This can be achieved through expanding data utilization training programs, sharing best practices, and bolstering customized consulting support, thereby assisting SMEs and micro-enterprises in establishing digital transformation processes through data adoption. Secondly, there is a need to promote the utilization of data tailored for addressing social issues and fostering growth in promising industries. By identifying sectors facing significant social challenges and offering high potential for industrial innovation through digital transformation, the government can enhance efforts to support data collection, processing, and utilization specific to these sectors. This may involve implementing intensive fostering measures such as operating specialized data platforms, organizing data hackathons, and providing additional incentives for data processing and utilization within targeted fields. 3. Recommendations for Developing Countries Korea’s data voucher program was introduced at a time when the public sector was opening vast amounts of data, and policy considerations regarding the utilization of private data were in full swing. The data voucher program played a crucial role in successfully establishing a virtuous cycle between data supply and demand within the ecosystem by supporting the use of various high-quality data from both the public and private sectors. It is worth noting that the success of the data voucher program in Korea was made possible by the existing technological, legal, and institutional environment, which had been developed since the 2010s. The provision of high-quality data across various fields and the supply-side capabilities such as big data/AI processing and analysis made it possible to discover the needs of data consumers and encourage their participation in the data utilization ecosystem. The technical infrastructure, accessibility, and institutional environment related to data opening and utilization are essential prerequisites for implementing data voucher projects. Korea’s consistent policy efforts to achieve these prerequisites have been fundamental to the program’s success. Based on these premises, developing countries need to consider the following points when implementing data voucher programs. KOREA OFFICE INNOVATION & TECHNOLOGY NOTE SERIES PAGE | 29 First, it is desirable to build a demand-driven ecosystem. Many government-promoted research and development or development support programs tend to focus on supplier companies due to their higher knowledge and familiarity with technologies. In the case of data voucher programs, especially when the data ecosystem is in its early stages, suppliers may pre-select demand companies that interest them to strengthen their data supply capabilities or business references. This approach prioritizes suppliers over consumers, making it difficult to achieve a virtuous cycle of actual demand promotion and data ecosystem growth. Korea’s stagnation following its supply-driven data policy with open government data can also be partly attributed to the lack of appropriate measures for discovering and promoting demand. Second, it is recommended to identify and focus on sectors of demand that are unique to each country. Different nations may have different industrial structures, growth stages, and key industries. As success stories from the early stages of data voucher programs are shared and disseminated, data vouchers can facilitate the natural entry of both demand and supply companies into the ecosystem. Therefore, a country introducing a data voucher program should concentrate on areas with high demand and strong receptivity to data utilization, considering its specific industrial and cultural contexts. To support this, it is recommended to invest in the development of data supply companies within these fields. Additionally, establishing detailed policies to enhance the utilization capabilities of consumer companies from the demand side is crucial. In this process, it is important to strategically select industries that are expected to have significant spillover effects on neighboring industries in the upstream and downstream through data modernization. Third, while fostering supply companies, policy measures should be implemented to prevent excessive concentration of demand on specific suppliers. In the early stages of introducing the voucher program, it is necessary to actively identify and foster data supply companies. However, once the supply market reaches a certain size and basic demand is met, measures should be taken to avoid excessive concentration of demand on suppliers. Typically, consumer companies are more inclined to match with well-known suppliers, which can lead to a market bias toward a small number of data suppliers, which is not in line with the goal of expanding the data ecosystem. To address this, Korea has implemented a matching restriction system to prevent this side effect. For instance, in 2023, Korea set the upper limit for matching demand companies per supplier at 4 percent of the support scale (30 purchases) for the purchasing sector and 5 percent of the support scale (13 general cases and 50 AI processing cases) for the processing sector. These limits should be appropriately set based on each country’s supply market and ecosystem conditions. Fourth, to maximize the effectiveness of data voucher programs, it is essential to strengthen the data literacy and utilization capabilities of demand companies. In Korea, the Open Government Data portal provides customized data utilization services such as public data utilization guidance, counseling, and expert matching consulting, catering to the needs of pre-founders, early- stage companies, and general users. Additionally, it provides hands-on data utilization training courses for various users. Furthermore, it develops guidelines for diagnosing data analysis utilization capabilities to raise awareness of the value of data utilization and provide means to enhance capabilities. It is also desirable to expand data utilization support for young companies with technical skills and creativity and develop and support subsequent growth programs. Fifth, data voucher programs should be used to bridge the digital divide and enhance inclusion in host countries. In Korea, a key outcome of the program has been the significant reduction of the data access gap between the capital and non-capital regions, as well as between ICT and non-ICT companies. The current data voucher program is making a real contribution to closing this gap by implementing preferential policies for young businesses, including budding entrepreneurs and rural businesses. This includes designating youth quotas (30 percent) and regional quotas (40 percent) and giving preferential points to vulnerable groups. Meanwhile, there are also considerations for the private sector and international organizations/ non-governmental organizations in fostering a robust data ecosystem. PAGE | 30 DATA VOUCHERS: KOREA CASE STUDY Initially, private enterprises must heighten their awareness of the importance of data utilization. In Korea, a majority of successful companies on the demand side, pivotal in the data ecosystem, acknowledge the significance of data in enhancing operational efficiency, productivity, and the identification of novel business models. Data stands as a fundamental infrastructure of the digital economy, which is evident from the proliferation of data consumer companies in Korea. The private sector’s engagement and investment in data are pivotal for thriving in intense global competition. Secondly, international organizations and non-governmental entities should assume a coordinating role in sharing their experiences and expertise with developing nations. Drawing from research and analyses of successful data policy initiatives, these organizations can offer valuable insights. Since 2019, Korea has been actively advocating the data voucher program, refining it annually based on previous outcomes and lessons learned. Sensitivity to market dynamics, particularly supply and demand fluctuations, is crucial for the success of such policy measures. Developing nations interested in implementing similar programs may encounter challenges due to market specificity and initial capacity constraints. Collaboration with the Korean government, which has been proactive in promoting the project, can be advantageous. This collaborative effort can expedite problem-solving by transferring invaluable knowledge and facilitating the involvement of local supply companies experienced in data provisioning and analysis. Opportunities for cooperation between countries can be explored through Official Development Assistance and partnerships with international organizations such as the World Bank and the Asian Development Bank. In conclusion, the evolution of Korea’s data ecosystem, spearheaded by initiatives such as the data voucher program and the subsequent Data+Hub, signifies a significant stride towards unlocking the full potential of data utilization. These programs have not only facilitated the matching of data suppliers and consumers but have also fostered a culture of innovation and problem-solving across various industries. Looking ahead, it is evident that further advancements are necessary to sustain the momentum and drive continued growth in the data ecosystem. Cross-cutting policies aimed at enhancing data literacy among consumer companies, promoting the utilization of data for addressing social challenges, and fostering inclusion will be instrumental in shaping the future landscape of data-driven innovation. Moreover, the experiences and insights gained from Korea’s journey can serve as valuable lessons for developing countries embarking on similar initiatives. By prioritizing demand-driven approaches, identifying sector-specific needs, and fostering collaboration between stakeholders, countries can accelerate their efforts towards building robust data ecosystems that drive socio-economic progress and innovation. As we navigate the complexities of the digital age, the continued evolution of data ecosystems will play a pivotal role in shaping the future of industries, societies, and economies worldwide. With concerted efforts and strategic initiatives, we can harness the power of data to address pressing challenges, drive innovation, and create a more prosperous and inclusive future for all. KOREA OFFICE INNOVATION & TECHNOLOGY NOTE SERIES PAGE | 31 Appendix Progress of Major Data-Related Policies and Legislation in Korea Related Ministries and Time Key policies and legislation Agencies June 2018 Data Industry Revitalization Strategy Interministerial Joint January 2019 Data-AI Economic Vitalization Plan Interministerial Joint Enactment of the Act on Enabling Data-Driven June 2020 National Assembly Administration July 2020 Digital New Deal 1.0 Initiative Interministerial Joint August 2020 Amendments to the Three Data Acts National Assembly Presidential Committee February 2021 National Data Policy Directions on the Fourth Industrial Revolution The First Basic Plan for Revitalizing Data- Ministry of the Interior and February 2021 Driven Administration Safety Strategy for advancing public/private June 2021 Ministry of Science and ICT partnership-based data platforms Presidential Committee June 2021 My Data Evolution Overarching Policy on the Fourth Industrial Revolution Enactment of the Basic Act on the Promotion October 2021 National Assembly and Utilization of Data Industry September 2022 Korea Digital Strategy Ministry of Science and ICT Digital Platforms Government Commission September 2022 Direct to the President launched September 2022 Launch of the National Data Policy Council Direct to the Prime Minister The First (2023–2025) Basic Plan for the National Data Policy January 2023 Promotion of the Data Industry Committee National Data Policy January 2023 Plan to make AI commonplace and industrialize Committee Announced plans to expand the use of Personal Information July 2023 pseudonymized information, including the pilot Protection Commission introduction of privacy safe zones August 2023 National Data Transformation Strategy Interministerial Joint November 2023 Driving the Data Economy Interministerial Joint February 2024 Korea Digital 2.0 Strategy Ministry of Science and ICT PAGE | 32 DATA VOUCHERS: KOREA CASE STUDY References 1. K-DATA, 2022 The Korean Data Industry Status Survey Report, 2023.4 2. K-DATA, Best practices of data voucher programs 2021, 2022.11 3. K-DATA, Best practices of data voucher programs 2022, 2023.8 4. Korea Data Agency, 2023 Data Industry White Paper, 2024.5 5. KoROAD, OECD releases results comparing road accidents in OECD countries, 2021.12.14 6. Market Data Forecast, Big Data Market, 2024.1 7. Yonhap News, [Fact Check] Korea’s Industrial Accident Deaths Are Higher than Major Developed Countries, 2021.5.12 8. Various data sources provided by K-DATA 9. https://www.index.go.kr/unify/idx-info.do?idxCd=4261 This page was intentionally left blank. This page was intentionally left blank. This page was intentionally left blank.