UNIVERSITY OF WESTMINSTER

WESTMINSTER BUSINESS SCHOOL

DEPARTMENT OF ECONOMICS AND QUANTITATIVE METHODS

Analytical Report on:

South Korea’s National Innovation System:

Student Name: Andre R. Charles

Abstract:

Does Government play a vital role in developing a country’s innovative capacity? Is a systematic approach to national innovation useful? Recent research on National Innovation Systems has shown it to be a useful framework through which economies may assess their innovative capacity, and thereby leverage points of strength, and buttress areas of weakness. This was certainly the case with South Korea.

Although impoverished just 50 years ago, Korea identified its main strengths (human resources), core weaknesses (lack of natural resources and technology), and thereafter chose a path of government-led science and technology development. Korea’s development of technical and innovative capacity through increased graduate research, technical training, Research and Development institutes, and nurturing select businesses for global competition; facilitated a radical transformation - from being a technology imitator, to becoming a leading innovative economy.

Through technical progress, Korea evolved from an impoverished agrarian economy in the 1960’s; to become a developed knowledge economy. However, this success story has limitations and negative fallouts (on society, basic research, wages, and smaller businesses, inter alia), which still pervade today. Yet, Korea’s story bears powerful testimony to the vital role of a government-supported National Innovation System, to economic growth and development.

1

1. Introduction

2. The National Innovation System (NIS) Theoretical Framework

a. The Triple Helix Model

b. The Simple Innovation Policy Model

3. Korea’s NIS

a. The Historical Context

b. The Initial Limitations of Firms

c. The Initial Limitations of Universities

d. The Innovative Role of Government

4. The Strengths and Weaknesses of Korea’s NIS

5. Conclusion

6. Bibliography

7. Appendices

2

1. Introduction

Research into the causes of economic growth by modern economists (such as Robert Solow);

have found technical progress to be a very critical determinant (Tisdell and Hartley, 2008).

Therefore, the future sustainability of an economy’s growth and development lies in its capacity

to innovate, and successfully bring such innovations to the market (OECD, 2007).

Productive innovation does not occur in isolation, but through the dynamic interactions of firms,

organizations and institutions at the sectoral, regional, national and global levels. Policy-makers

may therefore seek to nurture the economic, social, political, organizational, institutional and

other factors that influence the development, diffusion, and use of innovations (Fagerberg et al.,

2006). These factors and the framework they provide for the interaction of knowledge, invention

and innovation at a national level, may be referred to as a National Innovation System (NIS)

(Greenhalgh and Rogers, 2010).

Accordingly, an understanding of NISs may aid policy-makers in identifying strategic leverage

points, and developing key approaches to improve innovative performance, global

competitiveness and economic growth (OECD, 1997). This was certainly the case with South

Korea (hereafter: Korea).

In the space of a few decades, Korea grew from an impoverished agrarian economy to become a

developed technology power, (radically outstripping the growth and development of other

developing economies). During the 1960’s Korea was one the world’s poorest countries, with a

per capita GNP of $79, (less than that of Sudan’s and even less than one-third of Mexico’s)

(Soon Yim and Dong Kim, 2005).

Yet, during the following 3 decades, Korea experienced phenomenal growth (Figure 1 refers),

joining the OECD in 1994 (Gupta et al., 2013), and rising to become the world’s 12th largest

economy by 1995 (Campbell, 2012).

3

Figure 1: Korea’s Growth in GDP per Capita

19611964

19671970

19731976

19791982

19851988

19911994

19972000

20032006

20092012

0

5000

10000

15000

20000

25000

South Korea GDP per capita (current US$)

Mexico GDP per capita (current US$)

Sudan GDP per capita (current US$)

Argentina GDP per capita (current US$)

Turkey GDP per capita (current US$)

Ghana GDP per capita (current US$)

Venezuela, RB GDP per capita (current US$)

Source: World Bank Country Data (The World Bank)

Korea’s rapid economic expansion was accompanied by global innovative prowess, making it a

major technology power among developed countries. As indicated in the below charts, the latest

( 2013 ) Organization for Economic Co-operation and Development (OECD) Factbook Report

ranks Korea as number 3 in: both Gross Domestic Expenditure on Research and Development

(R&D) [Figure 2], and Exports of ICT Goods [Figure 3]; number 2 in Education Spending

[Figure 4]; and number 1 in: Educational Attainment [Figure 5], Performance in Reading and

Mathematics [Figure 6], Contribution of Productivity to GDP growth [Figure 7], and Share of

ICT in Value-added [Figure 8].

4

Figure 2: Gross Domestic Expenditure on Research and Development

Figure 3: Exports of ICT Goods

5

Figure 4: Education Spending

Figure 5: Educational Attainment

6

Figure 6: Performance in Reading and Mathematics

Figure 7: Contribution of Productivity to GDP growth

7

Figure 8: Share of ICT in Value-added

Underpinning Korea’s exceptional growth and development was a strategic government policy

thrust to build science and technology capacity and global competitiveness (Campbell, 2012).

This innovation thrust was championed by the government in the 1960’s and reflects the vital

importance of technical progress to economic growth. As such, this report examines the NIS

framework and the vital role played by Korea’s government in stimulating technical progress

and economic expansion.

2. The NIS Theoretical Framework

Whilst perspectives on the precise definition of a NIS differ (Table 1 refers), NIS viewpoints

may be generally categorized as being broad or narrow. The narrower, ‘triple helix’ NIS

viewpoint postulates that the main elements of the NIS are universities, firms and the government

(Goto, 2000), (Leydesdorff and Zawdie, 2010).

8

Table 1: Definitions of the NIS

Authors and Date Definition

1 Freeman, 1987 "The network of institutions in the public- and private-sectors whose activities and interactions initiate, import, modify and diffuse new technologies"

2 Lundvall, 1992"The elements and relationships which interact in the production, diffusion and use of new, and economically useful knowledge… and are either located within or rooted inside the borders of a nation state"

3Nelson and

Rosenberg, 1993"The set of institutions whose interactions determine the innovative performance of national firms"

4Edquist and

Lundvall, 1993

"The national system of innovation is constituted by the institutions and economic structures affecting the rate and direction of technical change in the society"

5 Niosi et al., 1993

"A national system of innovation is the system of interacting private and public firms (either large or small), universities, and government agencies aiming at the production of science and technology within national borders. Interaction among these units may be technical, commercial, legal, social, and financial, in as much as the goal of the interaction is the development, protection, financing or regulation of new science and technology"

6Patel and Pavitt,

1994

"The national institutions, their incentive structures and their competencies, that determine the rate and direction of technological learning (or the volume and composition of change generating activities) in a country"

7 Metcalfe, 1995

"That set of distinct institutions which jointly and individually contribute to the development and diffusion of new technologies and which provides the framwork within which governments form and implement policies to influence the innovation process. As such, it is a system of interconnected institutions to create, store and transfer the knowledge, skills and artefacts which define new technologies"

DEFINITIONS OF NATIONAL INNOVATION SYSTEMS

Source: Derived from Handbook of Innovation Systems and Developing Countries (Lundvall et

al., 2009)

The broader NIS viewpoint however, builds on the narrower approach to also encapsulate all

social, economic and political and factors which influence exploring, learning and searching

activities. These factors include the financial system, monetary policies, the pre-university

educational system, and labor markets, inter alia (Feinson, 2003).

9

(2a) The Triple Helix Model – Main Actors, Functions and Interactions:

What is common to both perspectives is the fact that the NIS encapsulates all the dynamic

interactions between universities, government and firms which buttress the economy’s ability to

innovate and bring these innovations to the market (Greenhalgh and Rogers, 2010). As illustrated

in Table 2 below, each element of the NIS plays an important role within the NIS.

Table 2: Core Elements and Functions within the NIS (Triple Helix Approach)

The Role of Universities The Role of Governments The Role of Businesses

1. Undertake basic science and technology research,

1. Design Intellectual Property Right (IPR) systems for business and universities,

1. Conduct R&D to develop commercial products,

2. Educate the scientists and technologists needed by business and government

2. Commission science research, 2. Launch innovative products

3. Finance universities, 3. start up new firms to exploit new science

4. Subsidise Business R&D

Source: Derived from Innovation, Intellectual Property, and Economic Growth (Greenhalgh and

Rogers, 2010)

Using a human body analogy; government may be considered to be the skeleton/ backbone of

the NIS, providing the essential policy and legislative framework for it to operate. Universities

and Research Institutes may be considered to be the brain of the NIS, providing the research

foundation and innovative capacity within the economy. Firms may be considered to be the arms

and legs of the NIS, harnessing the capacities of the spine and the brain to bring innovations to

the market.

Additionally, just as in the human body, the brain, limbs and skeleton are held together by

muscles, ligaments, and tissues; each element of the NIS is supported by vital linkages and

dynamic interactions. Government funding and research labs provide a vital linkage between

10

government and universities, whilst university research joint ventures and spin out companies,

provide a valuable connection between universities and firms.

Government also provides an essential link to businesses through fiscal incentives, competition

policy and enforcing intellectual property rights (IPR). These dynamic linkages and their

applications to Korea are illustrated in Tables 3 and 4 below:

Table 3: Interactions among the Three Axes of the NIS

The Government-University Axis The University-Business Axis The Government-Business Axis

1. Government funding of university research, 1. IPR's held by university 1. The enforcement of IPR's

2. Government research labs 2. Research joint ventures 2. Tax policy

3. Spin-outs, Start-ups, Science Parks 3. Competition policy

4. Personnel pooling

Interactions among the Three Axes of the National Innovation System

Source: Derived from Innovation, Intellectual Property, and Economic Growth (Greenhalgh and

Rogers, 2010)

11

Table 4: Interactions among the Three Axes of Korea’s NIS

The Government-University Axis The University-Business Axis The Government-Business AxisThe Ministry of Education, Science and Technology - responsible for formulating policies for S&T development and R&D investment and supporting the nation’s universities and research institutes (both government and private)

Supply of skilled labour force (Human Capital formation through higher education and vocational training)

The Ministry of Knowledge Economy - Established to work primarily with industry

Government Research Institutes seeking to re-establish their relevance by specializing in basic science areas and long-term research undertakings

Institutions include: 1. The Korea Advanced Institute of Science & Technology (KAIST), a graduate school of applied science and engineering; 2. Kyungpook National University for electronic engineering ; 3. Pusan National University for mechanical engineering ; 4. Chonnam National University for chemistry ; 5. Chonbuk National University for metal and precision mechanical engineering ; 6. Chungbuk National University for civil engineering and architecture ; and 7. Chungnam National University for engineering education .

Government Research Institutes (GRIs), both at the national and state levels. Provides strong R&D support to domestic companies

Institutions established to guide knowledge creation and knowledge transfer - [the Presidential Advisory Council on Science & Technology (PACST), the South Korean National Science and Technology Council (NSTC), and the Korea Institute of Science and Technology (KIST)]

A significant contribution to knowledge creation and knowledge transfer made through the research activities conducted at the universities

The government spends extensively on research infrastructure. Investment in Infrastructure, IT, Communication, Broadband

Daedeok Science Valley established - A massive industrial science park linking R&D and Business

The state provdes extensive financial incentives to encourage private investment in R&D. Many government departments have set up funds for direct financial support to small and medium enterprises (SMEs). Large and small corporations both benefit from tax deductions to not only research activities but also human development cost (including a 50% income tax reduction for foreign experts )

Industrial policy - nurturing strategic industry sectors like shipping,refining, and semiconductors [government focus on export orientation and competitiveness in S&T-related sectors ]

Protection of intellectual property

Interactions among Korea's Three NIS Axes

Source: Derived from: Innovation and Technology in Korea: Challenges of a Newly Advanced Economy, Building an IT Economy: South Korean Science and Technology Policy, and Innovation Policies of South Korea

12

(2b) The Simple Innovation Policy Model

Theoretically, the NIS may also be viewed from a knowledge flow view point. As such, the NIS

is made up of 4 inter-related sectors divided according to whether they create or use knowledge,

and belong to the public/private sector. Each of the 4 segments plays a key role in the flow of

knowledge, from the capacity to create [Research Capacity, and Technical/Innovative

Performance]; to their capacity to utilize [Social/Human Capital, and Absorptive Capacity], as

illustrated in Figure 9 below (Guy and Nauwelaers):

Figure 9: A Simple Science, Technology and Innovation Model

Source: European Commission/ Institute for Prospective Technology Studies (Guy and

Nauwelaers)

13

3. Korea’s National Innovation System (KNIS)

Given government’s critical role in building Korea’s NIS, this report will peruse the evolution of

Korea’s NIS using the triple helix model. This approach will clearly highlight how the state

facilitated Korea’s stunning economic transformation.

(3a) Historical Context

Historically an agrarian economy, Korea underwent significant socio-economic challenges and

reformations during the last century (Appendices I, III and Table 5 refer). Following the

Japanese invasion of 1910 and World War II; Korea was officially made a republic in 1948,

inheriting an impoverished, politically fragile economy (Gupta et al., 2013).

14

Table 5: Korea’s Socio-Economic Time-line: 1948 – Present

Time Period Major Political Activity Innovation Policy/ Development ActivityFirst Republic (1948 - 1960)

The first South Korean Government Tumultous birth of South Korea followed by war with North Korea (1950 - 1953), and then political instability.

Second Republic(1960 - 1963)

Political instability leading to a student uprising, subsequently followed by a

military coup.

South Korea's impoverished economy on par with Sub-Saharan Africa

Third Republic(1963−1972)

Military coup. Park Chung-hee takes power

1. State led innovation development. The Ministry of Science and Technology established (MoST) - one of the first ministries in the developing world dedicated to technological development,2. Established the Korean Institute of Science and Technology (KIST) dedicated to applied technology,3. Established the Korean Advanced Institute of Science (KAIS - Korea’s leading technical university today)

Fourth Republic(1972 - 1980)

Another Military coup. Chun Doo-huan takes power.

1. Policy decisions delegated to the MoST (instead of the President) and the Economic Planning Board (EPB),2. The private sector begins playing an active role,3. Groundwork set up for the Daedok Science Town (later called Daedok Science Valley)

Fifth Republic(1980 - 1987)

Military rule followed by first direct presidential elections (1987).

1. Korea becomes a leading exporter and technology power,2. Chaebol became partners with the state

Sixth Republic(1987 - Present)

Democracy established and continues. 1. The private sector (chaebol/conglomerates) started taking the lead in technology development,2. Creation of the Presidential Advisory Council on Science and Technoloy (PACST),3. OECD Membership,4. Creation of the National Science and Technology Council (NSTC),5. Nanotechnology Development plan rolled out,6. 577 initiative unveiled,7. Consolidation of Ministry functions with the creation of the Ministry of Knowledge Economy (MKE) and the Ministry of Education, Science and Technology (MEST), 8. Global Green Growth Initiative,9. Samsung approved to build a US$822 million R&D Centre in Seoul10. South Korea ranked as the 12th largest economy by the World Bank (2004). Latest ranking [as at March 2014] is the 15th largest (2012)

Source: Derived from Innovation Policies of South Korea (Gupta et al., 2013) and the World

Bank (World Bank)

15

Government’s major policy thrust during Korea’s early years was poverty eradication through

the abolition of the centuries-old agrarian landlord class and the advancement of state-led

industrialization. The passage of the Land Reform Act in 1949, and the subsequent Korean War

(1950 – 1953) both combined to facilitate the eventual transformation of agrarian capital into

industrial capital.

This policy action provided the foundation for future technological industrialization (Yang et

al., 2006). However, as illustrated in Table 5, political instability led to Korea’s third republic. It

was under this military regime that significant innovation policy thrusts were initiated.

Thus, government’s strategy thereafter, was to forego foreign direct investment, pursue

industrialization by import substitution, expand light industries and increase exports. However, at

this time, both firms and universities had very limited technological competency to utilize or

build upon foreign technologies (Soon Yim and Dong Kim, 2005).

The Initial Limitations of Firms

During the 1960’s businesses not only lacked the ability to adopt overseas technologies, but their

R&D investment was also minimal, only accounting for 2% of national R&D expenditure in

1963. This hamstrung Korea’s ability to adopt or compete with foreign mature innovations.

Moreover, private R&D institutes were non-existent (Soon Yim and Dong Kim, 2005).

The Initial limitations of Universities

Further to initially having relatively low rates of student enrolment, universities were also not

research-oriented. Tertiary education tended to focus on undergraduate teaching. Moreover,

technical training was mainly carried out by vocational and junior colleges (Soon Yim and Dong

Kim, 2005). This left government with the responsibility to initiate the building Korea’s NIS as

illustrated in Table 6.

16

Table 6: A Summary of the Innovative Role of the Government

Time Activity Purpose1949 Agricultural Land Reform State-led Industrialization1962 Military Regime Policy mandate for

state-led research and educational capacity development

Economic Growth and Development Leveraging Human Capital. First Five-Year Economic Development Plan launched in 1962.

1966 The Korea Institute of Science and Technology (KIST) established

A state research and development (R&D) centre, focused on applied technology

1967 The Ministry of Science and Technology (MOST) established

A pioneer institution (first of its kind among developing counties) with responsibility for research and development, science and technology, human resource development, international technology cooperation, and science and technology improvement.

1973 The Council of National Science and Technology Advisors was established

To coordinate the policies, previously divided among many different government offices

1975 The Korean Advanced Institute of Science (KAIS) was created (now called KAIST)

One of the first science and engineering universities established among developing countries, and stands today as one of Korea’s top technical institutions. Established to improve both the quality and quantity of tertiary education for innovation

Ongoing Establishement of multiple specialized government research institutions

Set up to fill the industrial technological capability gaps. Focused on areas such as shipbuilding, geo-science, electronics, telecommunications, machinery, energy, and chemicals

Ongoing Creation of Technical and Policy Institutions

To support Science, Technology, Innovation and Korea's Knowledge Economy [includes the Presidential Advisory Council on Science & Technology (PACST); the Ministry of Education, Science, and Technology (MEST); the Ministry of Knowledge Economy (MKE) and Korea's Educational/Vocational Institutions].

Ongoing Establishment of Industrial Science Parks (in particular the Daedeok Science Town)

Strengthen University-Industry linkages and build global competitiveness. Daedeok is a dedicated industrial science park, in Taejeon (in the late 1990s, it was renamed Daedeok Science Valley, or DSV, to suggest a Korean equivalent of Silicon Valley). There are now thirty government-supported research institutes, many of them located at DSV. Daedeok now hosts 242 research organizations with 24,000 employees, including 6,200 Ph.D. researchers, and is divided into four sectors: IT, biotechnology, nuclear technology, and nanotechnology

Ongoing Supporting multiple highly funded National Research Projects

To deepen Korea's R&D Capacity

Ongoing Prestige programs, such as the G-7 Project

To improve Korea's international status and rankings

Ongoing Protection of intellectual property To protect and ensure sustainable commercial innovationsOngoing Basic Research Over time, government policies have increasingly focused on

strengthening Korea's fundamental science base (as opposed to furthering its strong historical emphasis on technology development)

Ongoing Financial support to businesses and Universities

To provide incentives that would support Korea's innovative capacity and global competitiveness

The Innovative Role of the Korea's Government

Source : Derived from Building an IT Economy: South Korean Science and Technology Policy and Innovation Policies of South Korea

Source: Derived from Innovation Policies of South Korea (Gupta et al., 2013) and Building an

IT Economy: South Korean Science and Technology Policy (Campbell, 2012)17

The Innovative Role of the Government

Government identified labor as an industrial leverage point, and sought to develop human capital

(Yang et al., 2006). Tertiary education enrolment was very low during this period but

government’s thrust to develop innovative capacity and human capital, saw illiteracy eradicated

and tertiary level enrolment skyrocket in ensuing years (Figures 10 and 11 refer).

Figure 10: Tertiary Level Education Enrolment

Source: World Bank Country Data (The World Bank)

18

19611964

19671970

19731976

19791982

19851988

19911994

19972000

20032006

20092012

0

20

40

60

80

100

120

Korea, Rep. School en-rollment, tertiary (% gross)

Figure 11: Korea’s Public Expenditure on Education as a % of GDP

19611965

19691973

19771981

19851989

19931997

20012005

20092013

0

1

2

3

4

5

6

7

Korea, Rep. Public spending on education, total (% of GDP)

Korea, Rep. Public spending on education, total (% of GDP)

Source:

World Bank Country Data (The World Bank)

The state pursued the development of basic institutions to buttress Korea’s acquisition of foreign

technology (Campbell, 2012). This investment strengthened Korea’s absorptive capacity,

allowing technicians, engineers and scientists to understand and improve upon imported

technology (Feinson, 2003).

Thus government, set up specialized research institutions (30), created an industrial science parks

and provided incentives for commercial R&D (Campbell, 2012). This helped Korea develop into

one the leading innovative nations in the world (Figures 12 - 15 refer)

19

Figure 12: Full-time Researchers per thousand employed

Source: OECD Factbook Report 2013 (The OECD, )

Figure 13: Triadic Patent Families (Patents Registered in Europe, Japan and the US)

Source: OECD Factbook Report 2013 (The OECD, )

20

Figure 14: Scientific and Technical Journal Article Publication Trends for Korea

compared to Japan and Selected Other Countries, 1985–2010

Source: Innovation Policies of South Korea (Gupta et al., 2013)

Figure 15: Researchers and Technicians in R&D (per million people)

19901992

19941996

19982000

20022004

20062008

20102012

0

1000

2000

3000

4000

5000

6000

Korea, Rep. Re-searchers in R&D (per million people)

Korea, Rep. Technicians in R&D (per million people)

Source: World Bank Country Data (The World Bank)21

Government’s R&D thrust paved the foundation for Korea’s phenomenal export-drive (Feinson,

2003). As such, the state nurtured large family businesses (called Chaebols) towards becoming

globally competitive (Gupta et al., 2013). However, this policy focus left smaller and medium

businesses at a disadvantage to compete locally and internationally (Feinson, 2003).

Notwithstanding, Chaebol exports buttressed Korea’s economic expansion, and further deepened

national innovation capacity (Figures 16 – 20 refer). Korea’s four biggest Chaebols: Samsung,

Hyundai, LG, and SK2 are strong global competitors today (Gupta et al., 2013).

Figure 16: Korea’s High-Technology Exports ($US)

19801983

19861989

19921995

19982001

20042007

20102013

0

20000000000

40000000000

60000000000

80000000000

100000000000

120000000000

140000000000

Korea, Rep. High-technology exports (current US$)

Korea, Rep. High-technology exports (current US$)

Source: World Bank Country Data (The World Bank)

22

Figure 17: Korea High-Technology Exports (as a % of Manufactured Exports)

19801982

19841986

19881990

19921994

19961998

20002002

20042006

20082010

20120

5

10

15

20

25

30

35

40

Korea High-technology exports (% of manu-factured exports)

Korea High-technology exports (% of manufactured exports)

Source: World Bank Country Data (The World Bank)

Figure 18: Growth in GDP per hour Worked

Source: OECD Factbook Report 2013 (The OECD)

23

Figure 19: Business Bio-Tech R&D spending

Source: OECD Factbook Report 2013 (The OECD)

Figure 20: Value added in Industry

Source: OECD Factbook Report 2013 (The OECD)

24

Strengths and Weaknesses of Korea’s NIS

Notwithstanding these achievements, Korea’s rapid technological development incurred some

notable imbalances, especially concerning multi-sectoral development, basic research and SME’s

(Mahlich and Pascha, 2007) [Table 7 refers].

Table 7: Strengths and Weaknesses of Korea’s NIS

Strengths WeaknessesStrong and Growing Annual Expenditure on R&D buttressing a high level of R&D intensity.

High labour costs (esp. wages associated with high-tech industries)

Innovation-oriented firms. 75% of R&D done by businesses The State Chaebol thrust resulted in a relatively Weak Small and Medium Enterprise (SME) sector

High levels of educational attainment (tertiary level), as well as record performances in mathematics and reading

A weak basic research base which limits Korea's technical progress and potential

Global technological leadership achieved by Chaebols in some R&D-intensive industries, such as microelectronics and telecommunications

Shortage of of highly skilled technical specialists.

Strong knowledge base in engineering well supported by the large number public R&D labs

Low research capability found among universities

Trained labour force. Korea's general education level has become one of the highest in the world on account of a very strong national propensity for education and learning.

Underutilized knowledge stock on account of underdevelopedlinkages between businesses, government labs and universities

Strong government support for science, technology, and innovation

High Concentration of R&D among a few large firms and the resultant R&D vulnerability to business cycles.

Strong manufacturing base; control over verticallyintegrated supply-chain allows for rapidincremental innovation

Significant gender gap in workforce

Chaebol culture results in lack of transparency, corrupt business practices

Heavy societal cost of rapid transformation resulting in high levels of stress in society, [starting at high school]. There is also the marginalization of the elderly and high suicide rates

Strengths and Weanesses of Korea's National Innovation System

Source : Extracted from Innovation Policies of South Korea, Innovation, Competitiveness, and Growth: Korean Experiences, and Innovation and Technology in Korea: Challenges of a Newly Advanced Economy

Source: Extracted from Innovation Policies of South Korea (Gupta et al., 2013), Innovation,

Competitiveness, and Growth: Korean Experiences (Chung, 2011), and Innovation and

Technology in Korea: Challenges of a Newly Advanced Economy (Mahlich and Pascha, 2007).

25

Government’s Chaebol thrust precipitated a locally and globally weak Small and Medium

Enterprise sector. It also resulted in a high concentration of R&D spending among a few large

firms, making Korea’s R&D base highly vulnerable (Mahlich and Pascha, 2007). Korea’s rapid

high-tech industrialization also precipitated high wages (Feinson, 2003) and societal challenges,

such as severe stress and high suicide rates [Appendices II, IV and Table 7 refer] (Gupta et al.,

2013).

Conclusion

Just as in agriculture, a farmer is needed to nurture the soil, water the crops, remove weeds, fight

pests, and reap harvests. Even so, government has a critical role in developing human capital,

nurturing competitive businesses, supporting R&D and addressing systemic challenges; towards

developing an efficient NIS.

In this regard, Korea’s experience stands as a shining example of government’s key role in

assessing a country’s innovative capacity, and leveraging identified strengths towards achieving

technical progress and economic growth.

26

Appendix I: The Evolution of Korea’s NIS

Source: The Evolutionary Responses of Korean Government Research Institutes in a Changing

National Innovation System (Soon Yim and Dong Kim, 2005)27

Appendix II - An Assessment of Korea’s NIS

Source: Innovation and Technology in Korea: Challenges of a Newly Advanced Economy

(Mahlich and Pascha, 2007)

28

Appendix III: Evolution of Korea’s Technological Policies and Capabilities

Source: Derived from Innovation and Technology in Korea: Challenges of a Newly Advanced

Economy (Mahlich and Pascha, 2007)

29

Appendix IV: OECD Suicide Rates/ Country Rankings

Source: OECD Factbook Report 2013 (The OECD, )

30

Bibliography

Campbell, J.R., (2012). Building an IT Economy: South Korean Science and Technology Policy.

1775 Massachusetts Ave., NW Washington, DC 20036: Center for Technology Innovation, The

Brookings Institution. Issues in Technology Innovation Report No. 19.

Chung, S., (2011). Innovation, Competitiveness, and Growth: Korean Experiences. The World

Bank. Anonymous . Annual World Bank Conference on Development Economics 2010.

Fagerberg, J. et al., (2006). The Oxford Handbook of Innovation. OUP Oxford.

Feinson, S., (2003). National Innovation Systems: Overview and Country Cases. Center for

Science, Policy, and Outcomes at Arizona State University.

Goto, A., (2000). Japan's National Innovation System: Current Status and Problems. Oxford

Review of Economic Policy. 16 (No. 2), 103-113.

Greenhalgh, C. and Rogers, M., (2010). Innovation, Intellectual Property, and Economic

Growth. 41 William Street, Princeton, New Jersey 08540: Princeton University Press.

Gupta, N. et al., (2013). Innovation Policies of South Korea. Institute for Defense Analyses. D-

4984.

Guy, K. and Nauwelaers, C., IPTS Report issue 71 [online] Institute for Prospective Technology

Studies. Available from:

<http://ipts.jrc.ec.europa.eu/home/report/english/articles/vol71/TEC2E716.htm> 2014].

Leydesdorff, L. and Zawdie, G., (2010). The Triple Helix Perspective of Innovation Systems.

Technology Analysis & Strategic Management. 22 (7).

Lundvall, B.A. et al., (2009). Handbook of Innovation Systems and Developing Countries:

Building Domestic Capabilities in a Global Setting. Edward Elgar.

31

Mahlich, J. and Pascha, W., (2007). Innovation and Technology in Korea: Challenges of a Newly

Advanced Economy. Physica-Verlag.

OECD, (2007). Innovation and Growth: Rationale for an Innovation Strategy. OECD.

OECD, (1997). National Innovation System.

Soon Yim, D. and Dong Kim, W., (2005). The Evolutionary Responses of Korean Government

Research Institutes in a Changing National Innovation System. Sage Journals - Science,

Technology and Society. 10 (1), 31-55.

South Korean Flags (South Korea) from The World Flag Database [online] Available from:

<http://www.flags.net/SKOR.htm> 2014].

The OECD, OECD Factbook 2013 - Statistics - OECD iLibrary. [online] Available from:

<http://www.oecd-ilibrary.org/economics/oecd-factbook_18147364> 2014].

The World Bank, World Bank Country Data. [online] World Bank. Available from:

<http://data.worldbank.org/country> 2014].

Tisdell, C.A. and Hartley, K., (2008). Microeconomic Policy: A New Perspective. Edward Elgar.

World Bank, Country Ranking by GDP 2012 (GDP.pdf). [online] Available from:

<http://databank.worldbank.org/data/download/GDP.pdf> 2014].

Yang, J. et al., (2006). Understanding the economic development of Korea from a co-

evolutionary perspective. Journal of Asian Economics. 17 (4), 601-621.

<http://www.sciencedirect.com/science/article/pii/S1049007806000935> .

32