DRAFT: PLEASE DO NOT CITE WITHOUT PERMISSION OF THE AUTHOR

COPYRIGHT@JONGWOO HAN

Information Technology and Social Changes

Jongwoo Han

There are three different views on the impacts of the current information technology revolution upon society, economy, politics, and culture: the Continuists’, the Transformists’, and the Structuralists’. The Continuist School (Schement and Lievrouw, 1987; Schiller, 1983, 1984; Robins and Webster 1988; Hepworth and Robins, 1988) argues that information technology, despite its wide applications in economy and society, has not affected the very foundation of the socio-economic structure. It acknowledges IT’s contribution to productivity increases in industry. However, it denounces the actual impacts of IT as a tool of industrialists who aptly deploy IT for the maintenance and consolidation of their power over labor. Transformists (Machlup, 1962; Bell, 1973, 1980; Martin, 1981; Williams, 1982; Naisbitt, 1984; Dizard, 1984; Forester, 1987) view the current challenge as a revolution following the agricultural and the industrial ones. It is not clear whether they see the information technology revolution as resulting in all-pervasive and far-reaching changes to civilization or not. However, they point out that the IT development speed is fast and pervasive enough to bring forth a fundamental leap forward in everyday life. Structuralists (Mattelart, 1979; Mosco and Hermann, 1981, Castells, 1996) generally take the view of Continuists but differ from the Transformist in their view that it will take more time to witness the eventual changes brought about by information technology in our life

Despite such divergent assessments on the ongoing changes brought about by information technology, many agree that rapid development in information technology has a tremendous effect in restructuring economy and industry. The main focus of social scientists is on how information technology affects the socio-political system and to what extent this effects have proceeded The debates on the impacts of information technology upon the socio-political system ought to wait for more convincing and structural evidence to support opposing arguments. This article takes Structuralists view and finds that the Internet, as a direct outcome of information technology development, plays a significant catalytic role in the socio-political system in Korea. The recent twenty-year period in Korean society has demonstrated that the Internet, when combined with human networks, can be an explosive tool in both the political and social context. In the 2000 Korean general election, highlighted by world news media, the ‘Defeat Movement’, proved the power of information technology in political campaign and election processes as well as in political party structure. This unprecedented event traumatized the conventional political system and existing power groups but was ruled unconstitutional by the Supreme Court. The Internet-based negative campaign was launched by citizen alliances and the result was reflected as an earthquake-like reshuffling in the seats of the National Assembly. Another good example can be found in the recent 2002 Korea/Japan World Cup championship. Soccer fans of the world were amazed not only by the successful operations of the competition co-hosted by two countries but also by the Red Devils, the fans of Korea’s team, that filled the streets.

These two revolutionary examples share two important facts. First of all, these two seemingly discreet socio-political phenomena would have not been possible without the rapid and wide application of information technology. More specifically, such socio-political changes were ignited by the technical networks mediated by the byproduct of the information technology revolution, the Internet. Second, they were possible due to the density of human networks established prior to the advent of the advanced use of information technology. These two events establish an equation that information technology is relationship technology. Conclusively, the human density accumulated in diverse environments of Korean society was successfully combined by the connectivity provided by Internet. This article shows how these two elements, technology and human social capital, can produce synergic effects and result in the structural changes in socio-political system. These cases prove the explosive potential of the network effect observed by Robert Metcalf, Metcalf’s Law[1]. The social network theory, that human networks can be measured by two variables, density and distance among human resources.

In this article, these Korean cases aptly demonstrate that the analytical tool of this theory can be successfully applied. “Bates (1984)[2] pointed out that any information society is a complex web consisting not only of a technological infrastructure, but also an economic structure, a pattern of social relations, organizational patterns, and perhaps other facets of social organizations.” The social capital formed prior to the era of Internet is the density as distance can be narrowed down by the Internet connectivity. Korean people with characteristics of being gregarious, hyper-socialized, and group-oriented reduced the physical distance among themselves by means of PC Cafés woven together by Internet.

This article argues that among the factors affecting the process of informatization, social capital is one of the most critical dimensions to consider. Technology alone cannot explain such a dynamic picture of Korea’s informatization. “Technology always takes place in a social matrix and interacts with society. (Kranzberg, 1985:37)” This article specifically addresses the factors contributing to the dynamic application of IT and its impacts upon society. It was a perfect combination of rapid diffusion of Internet in society and the newly grown civic organization that revolutionized the political campaign and election in 2000.

Korea and Informatization: Explosive Usage of the Internet

Korea’s Informatization effort, reforming and reinventing the public and private sectors with information technology, has been speedy enough to attract world attention mainly because government initiative was very effective and strong. However, in overall rankings of the Informatization index[3] among 50 countries, it is not as impressive as the two cases above. According to the White Paper of the National Computerization Agency of Korea based on the data released by the International Telecommunications Union, Korea has ranked in the middle group among 50 nations. From 1995 to 1998, Korea was 21^st, 19^th in 1999, and 17^th in 2000. Changes in its somewhat progressive but not top-ranking Informatization index do not literally explain the two phenomenal social events introduced above. The overall level of information technology development and infrastructure do not definitely place Korean society and people in the context of such active use of IT by people.

However, careful study on Korea’s Informatization would reveal very interesting statistical facts, differentiating Korea from other leading countries in Informatization. The first relates to increasing rates in the overall index. As in Table 1, the growth rate in personal computer use, mobile phone subscriptions, Internet usage and provider capacity has been dramatically increased. Especially, the increases in the total number of Internet users, hosts, and ISPs in Korea has been substantial in the last four years. The Korean government directed its central focus on the expansion of Internet infrastructure and its actual usage by people. Without incredible growth in Internet infrastructure, capabilities, and in actual usage, neither the phenomenon of the ‘Defeat Movement’ in 2000 nor that of the ‘Red Devils’ would have been realizable.

[Table 1] Indicators of ICT infrastructure

	1997	1998	1999	2000	2001	Annual Growth
PCs owned per 100 persons	15.0	17.8	24.6			29.4
Mobile phone subscribers per 100 persons	15.0	30.2	50.0	55.2		59.1
Internet users aged 7 years and over per 100 persons	4.0	7.5	25.9	45.0	52.0	136.2
Internet hosts per 1,000 persons	2.8	4.4	9.8	10.2		60.9
ISPs (unit)	23	25	54	83	89	59.5

Source: 1) http://stat.nic.or.kr for data on Internet (Korean Network Information Center, 2001)

2) National informatization White Paper and Informatization Statistics Yearbook for data on the

number of PCs and mobile phone subscribers (National Computerization Agency, 2001)

3) Population Projection for data on population (KNSO, 1996)

Table 2 supports this argument. The hours spent on PC communication and Internet per week has almost tripled in July 2000 compared to that of three years before, April 1997. Also, computer ownership is equated with the Internet by showing the main purpose of having one in year 2000 to be 5 times that of 1997.

[Table 2] ICT access and opportunity of individuals and households

	Proportions of households with computers (%)	PC literacy rate of aged 6 years and more (%)	Hours spent on computer use per week (hours)	Individuals whose purpose of computer use is PC comm. & Internet (%)	Hours spent on PC comm.& Internet per week
April 1997	29.0	39.9	5.9	7.9	4.2
July 2000	46.4	51.6	17.2	40.4	10.4
Increase	17.4%	11.7%	11.3 hrs	32.5%	6.2 hrs

Source: 2000 Social Statistical Survey (KNSO, 2001)

A more interesting finding lies in the population composition of the computer and Internet generations in Korea. The current population of Korea is 47,639,618. That number by age gives another picture when considered in the context of Internet users and literacy. As in Table 3, Population by Age, population in the range of five to nineteen is 10,150,888, twenties 8,061,785, thirties 8,564,652, forties 7,598,827, and fifties 4,534,603. Each age-range counts for 21.3, 16.9, 18, 16, and 9.5 percent of the total population, respectively. Those who are very active in Internet use fall into in the age group from students in elementary school to forties and they count for 72.2 percent of the total population.[4]

[Table 3] Population in Korea by Age

Age Range	Total	Percent	Accumulative Percentage
0-4	3,048,362	6.4%	6.4%
5-19	10,150,888	21.3%	27.6%
20s	8,061,785	16.9%	44.6%
30s	8,564,652	18%	62.6%
40s	7,598,827	16%	78.6%
50s	4,534,603	9.5%	88.1%
Over 60s	5,680,501	12%	100.1%

Source: Korean National Statistical Office, numbers current

In fact, the numbers of Internet users are heavily concentrated in the range from age seven, the age of an entering elementary school student, to nineteen, the age of a high school senior. According to Table 4, the penetration rate of frequent Internet user, the Netizen from age 7 to 30s in 1999 was 31.3 percent, 64.1 in 2000, and 79.8 in 2001. By December of 2001, based on the two statistical data above, Koreans in the age from 7 to 40s, approximately 70 percent of the total population, counts for round 69 percent of the total Internet users.

[Table 4] Internet Penetration Rate in Korea by Age (%)

Age Range Time	7-19	20s	30s	40s	50s
Oct. ‘99	33.6	41.9	18.5	12.8	2.9
Mar. ‘00	51.5	59.1	29.2	8.6	3.3
Aug. ‘00	65.9	65.9	35.4	18.5	4.3
Dec. ‘00	74.1	74.6	43.6	22.7	5.7
Mar. ‘01	81.6	78.4	48.4	29	6.3
Jun. ‘01	87.6	80.3	54.1	32.2	7.3
Sep. ‘01	91.1	84	61.3	36.6	8.3
Dec. ‘01	93.3	84.6	61.6	35.6	8.7

Source: Korea Network Information Center (KRNIC: http://stat.nic.or.kr/), December 2001.

Also, according to KRNIC, 96.85 percent of elementary, 99.8 percent of junior high school, 99.9 percent of senior high school, and 99.3 percent of college students regularly use the Internet. This vividly demonstrates that the new generation is overwhelmingly leading the whole population in terms of Internet usage and is also very different from other generations. The R generation[5] approximately corresponds to two age groups from teens to 20s. The 386 Generation roughly overlaps from age group late 30s and early 40s. Heavy concentration in the young generation in the age composition of Internet users has directed the picture of the information society in Korea producing new socio-political power groups or generations such as the ‘386’ and ‘R generation.’

In early 1990s, Internet users in Korean society were not recognizable. It was in the very late 1990s that Internet infrastructure and usage dramatically expanded. A great leap forward in this category took place from 1998 to 1999. Since 1999, every year almost one fourth of the total population has been newly added to this category. In 2001, two years after, Korea becomes an Internet society where more than half of total population has accessed and used the Internet. Table 5 clearly demonstrates that growth rate of the number of Internet users doubled from 1995 until 1997 tripled in 1998 and held steady in 1999. Table 6 on the monthly increasing number of Internet Protocol Addresses also supports this argument. It is well reflected in the world statistics among leading countries in Informatization. In terms of the number of Internet users per 100 persons, Korea is ranked fifth among thirty OECD countries, led by Iceland, Norway, Sweden, Canada. (Source: Ministry of Information and Communication). In terms of on-line stock transactions, Korea is leading world. By June of 2000, 56.9 percent of total stock transactions were executed online in comparison to other countries: Japan 1.8%, Taiwan 4.5%, Sweden 7.2%, France 28%, Canada 33-40%, the US around 40%. (MIC) According to OECD Outlook 2001, Korea ranked third in the rate of investment in Knowledge R&D following number one Sweden and number two the United States among 24 countries. (MIC)

[Table 5] Number of Internet Users in Korea (1,000 persons)

Year	‘95	‘96	‘97	‘98	‘99	‘00	‘01
#s	366	731	1,634	3,103	10,860	19,040	24,380

Source: Korean Network Information Center (KRNIC)

[Table 6] Number of IP Address

Feb ‘95	Feb. ‘96	Apr. ‘97	Feb. ‘98	Feb. ‘99	Dec. ‘99	Feb ‘00	Dec. ‘00	Feb. ‘01	Feb. ‘02	June ‘02
3,745	7,329	13,885	16,285	19,613	28,342	11,188,736		18,921,984	22,985,216	23,509,504

Source: Korean Network Information Center (KRNIC)

It is not only the speed of the development of Internet environment but also the timing of such unprecedented expansions in Internet environments that deserves scholarly attention. Such a rapidly increasing rate in the penetration of Internet usage into the total population resulted in the formation of powerful political forces. In the 2000 general election, such empowered citizens and their alliance defeated corrupt politicians from the National Assembly. Taking Diani’s (2001) argument that the social capital is an outcome of social movement, this article argues that the 386 Generation is a social capital as an outcome of democratization movements since the 1960s and this social capital combined with the Internet can produce unprecedented political power affecting election outcome. While the 386 Generation was born as a fairly coherent group across university campus in the 1980s, the World Cup Game in 2002 has demonstrated that the Internet can facilitate social capital creating many and unspecified mass into a well-coordinated resources carrying out the public goods mobilizing .

Other Environments for Informatization

In terms of overall indicators in information technology (IT) infrastructure, Korea is ranked in the second group of countries but is rapidly catching up with leading countries mostly in Western Europe. In many ways, Korea is a late starter in the informatization race. In order to achieve the full status of an information society, not only technology infrastructure but also socio-political infrastructure is necessary. The United States is the best example of a most advanced information society not only because it leads the technology revolution but also because its socio-political infrastructure has been mature enough to keep up with technological inventions in the fields of information and telecommunications technology. Liberal political culture and legal resources such as the First Amendment and the Freedom of Information Act that guarantee the freedom of speech have served as the best soil for the information society.

In this perspective, Korean society lacks such generic legal infrastructure and political culture. Due to its miraculous but very late economic development, information technology industry in Korea joined world competitions in the 1980s. Partly because of military dictatorship and partly because of authoritarian political culture originating from Confucianism and Japanese colonialism, Korean society has never been properly exposed to liberal democratic political culture until the late 1980s. It was the June Resistance in 1986 that overthrew the military regime and brought forth the first civilian democratic regime.

However, in its actual usage of the Internet and the impacts of the information and telecommunications technology upon society, economy, and politics, Korea deserves scholarly analysis. In terms of high-speed broad bandwidth connectivity and Internet game market size, Korea is the world leader. Its actual Internet usage is also phenomenal. Korea is ranked number five in the world in terms of Internet users per one hundred persons in the world (OECD, 2001) Korea with 69.3 percent is far advanced in online stock transactions outrunning the United States and Canada with their online transactions of around 40 percent. (MIC, 2001)

However, what really makes Korea’s informatization unique is not only some leading indicators in these areas but its impacts upon society in general. The 2002 Korea/Japan World Cup illuminated a very different picture of Korea for the world soccer fans. major world news organizations and media (New York Times, June 30; ???) highlighted the 120,000 strong official fan club of the national soccer team, the Red Devils, [quoting citing] the explosive but positive energy it produced. It was the Internet that mobilized such social capital [of among] Korean fans. In Internet voting, the power of Korean Netizen has been demonstrated in ICANN and World Cup voting and also in worldwide Internet polls. In the 2000 general election, the power of the alliance of civic organizations that defeated half of the incumbents in the National Assembly would have been impossible without Internet. These are the good examples illustrating that informatization is completed not only by the establishment information and telecommunications technology infrastructure but also by the presence of social capital utilizing technological infrastructure.

IT Policy

Obviously, government policy is the first to be recognized. The role of the state and bureaucracy in its miraculous economic development during the 1960s – 1980s in Korea has well been documented and evaluated. A series of “The Five-Year Economic Development Plan” was an internationally well-known example of how an industrial policy can make real differences in a country’s economic fate. In many indicators, Korea is also leading in informatization in the world. In its efforts to take initiatives for informatization, the role of the state and bureaucracy has been one of the most important factors. The strong developmental state tradition has remained intact in the course of the Information Technology revolution.

The essential feature of the developmental state and industrial policy is that the state acts as an entrepreneur, targeting national strategic industries and nurturing them. The light industry of the 1960s, heavy industry in 1970s and 1980s and the restructuring of industry to electronics in the late 1980s were the winners in Korean economic development processes. Once targeted, R&D, financing, and marketing also benefited from government involvement. While it is not identical to the previous role of the developmental state in the miracle of Han River, information technology policy resembles many aspects of past industrial policy.

It was a different kind of crisis that [has driven drove] government into another stage of economic system. Chronic economic poverty since the Yi dynasty in 1392 drove President Park to a war of export. However, it was the financial crisis of 1997 that drove the Kim Dae Jung government toward information technology policy. In the late 1990s, the free flow of money across the territorial boundaries was strongly supported by the global financial information technology infrastructure. ??? It was described as an ‘electronic herd’ [Lexus and Olive Tree] Also, such an electronic stampede swept around the Asian countries of Thailand, Malaysia, and finally Korea. Not only did the violence of the international free flow of finance destabilize the stock markets in Asia but also differences between global and local standards in accounting systems, degrees of market liberalization, and relationships between state and economy. The famous arguments between the Prime Minister Mahartyr ??? and the Clinton administration [demonstrate highlight] such conflicts.

The Korean government, barely surviving by means of an infusion from the IMF’s crisis managing fund, took this crisis as an opportunity to restructure heavy reliance on second industry (especially corporate restructuring)[6], to deregulate[7] customary practices of heavy government intervention in the market, to privatize public corporations[8], and to liberalize the market[9].

In order to stimulate economic recovery, Kim Dae Jung’s government specifically focused on IT industry, providing tax incentives and liberal environments especially to foreign companies and foreign direct investment. After the financial crisis in 1997, the Korean government initiated various incentives for foreign high-tech companies: tax reduction for high-tech businesses, especially ones in foreign investment zones and service businesses in assistance of advanced industries (national tax for 10 years, local tax for 15 years); a rent reduction policy in industrial complexes for foreign companies (Kwang-ju, Chon-an), 25 national industrial complexes, and foreign investment zones (100% of reduction for high-tech businesses and 75% of reduction for general manufacturing industries). M&A activities (hostile takeovers) were also allowed in May 1998. Table ??? clearly shows the relative importance of IT industry in foreign direct investment in the Korean economy. In 1997, FDI in Korean IT industry stood at 0.4 billion US dollars. ????

[Table 7] Foreign Direct Investment (unit: USD billion)

Category	1997	1998	1999	2000	2001. 1/4
IT sector	0.4	2.0	2.3	2.7	3.3
IT share of total economy(%)	5.4	22.8	14.8	17.5	72.6
Equipment	0.2	1.4	1.1	1.9	0.1
Service	0.2	0.6	1.0