The plan was disclosed at talks between Mr Ballmer and President Lee Myung-Bak, the president's office said.

The Ministry of Knowledge Economy said Microsoft agreed to train software designers, support venture firms and establish a technology centre in South Korea over three years.

Microsoft, which has been hit by a string of costly disputes with industry rivals, is expanding its investment in South Korea and other countries.

Mr Ballmer earlier told Korean businessmen that growth through investment is the key for companies struggling to ride out an economic slowdown.

'The best solution for tough business times is growth, not contraction,' he said, adding that 'now is not the time to forget that lesson'. He said the US software company would not cut back on investment despite an expected slowdown in the global economy.

'We may grow our investment slightly less, but we're not cutting our investment,' he told a breakfast meeting in Seoul, according to Yonhap news agency.

For years, Microsoft has been trying to expand its software dominance beyond offices and homes.

Last month it unveiled its new software Windows Azure, which can store and run user programmes and data on a remote server on the Internet. The move came as the firm tries to compete with similar services from search engine Google.

'Some people will say is this in Microsoft's best interest, I'll say it's inevitable, so it had better be in our best interest. That's why you see us embracing this future, not resisting this future,' Mr Ballmer said.

He said Microsoft is also focused on investing 'broadly' in various fields, underscoring that what a company learns in one business can be applied to another.

Also Monday Microsoft and South Korea's Hyundai auto group opened a research centre to develop new IT products and services for automotive application.

The firms 'share a similar vision for the role that information technology will play in connecting people to information, communications and entertainment while they are in their cars', Mr Ballmer said in a statement.

Hyundai said technologies developed at the centre would be applied in its cars from the second half of 2010.

In May the two forged a deal to develop a new in-vehicle music and entertainment system, which will be voice-controlled and linked to other handheld devices.

Microsoft forged a separate deal Monday with LG Electronics for strategic collaboration in mobile convergence. -- AFP