"Korea is above the OECD average for some types of usage, such as news reading and content creation, but could improve regarding more sophisticated online activities by individuals, such as cloud computing and job searches," the OECD said in the Digital Economy Outlook 2017 on South Korea.
South Korea is a member of the Paris-based body that is composed of a group of 35 mostly rich nations.
Although nearly 100 percent of companies in Korea have a broadband connection, their use of more advanced and productivity enhancing technologies, such as customer relationship management and big data analysis, has significant potential to increase, the latest report said.
Digital transformation brings a wealth of opportunities but also policy challenges. The government needs to step up efforts to cope with such transformations so it can promote growth and the well-being of the people, it said.
"Korea has solid foundations to enable the digital transformation and leverage its potential given it outperforms many OECD countries in fixed and mobile broadband networks with very high penetration of fiber (74 percent) in fixed networks and well-developed mobile broadband," the report said.
South Korea has 40 fixed and 110 mobile broadband subscriptions per 100 inhabitants, according to the report.
The Paris-based body said in the report that on average 90 percent of all South Koreans are using the Internet and their usage exceeds the OECD average for news reading and content creation.
The report illustrates high penetration of fiber in fixed networks and mobile broadband coverage in a country where many people, especially young people, access the Internet through their smartphones.
The OECD said it expects South Korea to lead 5G developments with the trials of the telecommunication system at the 2018 Winter Olympics set to be held in the country's eastern alpine city of PyeongChang in February.
The OECD also said digital security and privacy risk management have to be secured to earn consumer trust, among other things. Companies need to implement digital security measures, such as information security products and services, the report said.
South Korea has the lowest share of enterprises experiencing security incidents at 4 percent, but individuals are facing significant digital privacy risks.
The share of individuals who experienced privacy violations in Korea decreased by 10 percentage points between 2015 and 2010, but it was still high at 7 percent in 2015 compared with other OECD countries, the report said.
"Korea has a world class position in the digital economy, but as we embark on the next phase of the digital transformation, what worked well in 2015 may not be sufficient going forward," said Andrew Wyckoff, director for Science, Technology and Innovation at the OECD.
"The biggest future challenge will not be the technology but public policies that are well suited for the digital era."
Meanwhile, the OECD said that the ICT sector is a resilient pillar of South Korea's economy.
The ICT sector accounted for 10.4 percent of the value added sector in South Korea in 2015, which is by far the largest share among OECD members. South Korea's strong ICT sector also makes the country one of the world's top 10 exporters of ICT goods. (Yonhap)