Corporate governance and investment in R&D in South Korea

Abstract

Prior to the Asian crisis of 1997, Korea's impressive growth performance was part of what has been described as the East Asian miracle. Three consecutive decades of extraordinary growth has transformed Korea from one of the poorest agrarian economies to one of the largest industrial economies in the world.1 Korea's rapid development was driven by very high rates of savings and investment2 and a strong emphasis on education. Over these years investments in capital equipment have been accompanied by an increase in investments in RandD. Table 1 documents the fact that Korea has increased its R&D expenditures at a very high rate of almost 16.5 percent each year from 1977 to 2000. This growth rate ranks Korea top in an international comparison with leading industrial economies of the world. This spectacular record has continued after year 2000. The countrys annual growth in R&D investment stood at 40% in 2004. Big companies, such as Samsung Electronics, Hyundai Motor and LG Electronics, were major contributors to this growth. © Physica-Verlag Heidelberg 2007.