South Korean business leaders also should increase spending on R&D in the service sector. Currently, service sector investments account for 7 percent of total R&D spending by South Korean firms, compared with 25 percent in the G-7 economies. The South Korean government spends only 3 percent of its total R&D budget on services. South Korea also needs to lower the barriers to competition and FDI. In the mobile-phone industry, for example, the government’s requirement that all mobile phones conform to its standard wireless platform for interoperability effectively prevented foreign phones, such as the iPhone, from entering the South Korean market. Lacking iPhone customers at home, South Korea’s otherwise formidable online-gaming companies missed the potential market for iPhone-gaming applications and now lag behind global competitors just as global demand for such services is taking off. More broadly, South Korea needs to eliminate the old rules and policies that have traditionally stymied services. This means scrapping the many fiscal, financial, and development policies that have favored manufacturing over services, prevented competition within the service sector, or held back productivity growth generally. The government, for example, should end punitive taxes and special charges on domestic services, as well as tax breaks and subsidies for manufacturing.