The Korean innovation system: From industrial catch-up to technological leadership?

Abstract

South Korea (subsequently: Korea) has achieved unprecedented economic growth and development throughout the last four decades. As a result, the country has been transformed from an underdeveloped economy dominated by agriculture into a full-fledged industrial economy. Most of the countrys stunning economic growth and development, particularly in the early stage of transformation, has been achieved through a rapid industrialization process. This industrialization was enabled by the mobilization of domestic resources (labor and, increasingly, capital) combined with the introduction of foreign technology. In other words, Korea relied to a very high extent on imported technology, including technology embodied in production facilities, during the early stage of its industrialization. International competitiveness was secured by producing commodities as well as increasingly sophisticated goods at a reasonable quality and low cost. However, the internal and external conditions under which the Korean economy operates have changed drastically throughout the last two decades. Since the country has entered the group of high income countries, low labor cost cannot work any more as a competitive weapon. Moreover, as a highly industrialized economy with an increasingly large high tech sector, Korea apparently cannot rely any more predominantly on imported technology. Rather, the internal generation and development of cuttingedge technology has become increasingly important for Korean firms to stay competitive in the world markets for such complex and sophisticated goods as semiconductors, digital displays, mobile phones, or automobiles. This chapter assesses Koreas current technological competitiveness as well as the countrys long term perspectives regarding technology and in novation in a systemic way by analyzing its national innovation system. Thereby, a comprehensive view of the conditions for the generation and diffusion of technology in Korea is provided, and strengths and weaknesses are discussed and evaluated in this overall context. This chapter is organized as follows: First, I will briefly discuss the concept of national innovation systems and explain how it is applied here. Thereafter, the Korean innovation system will be analyzed through a brief historical review and analysis of aggregated indicators, followed by a discussion of its different parts and an overall evaluation. Finally, some implications from the Korean as well as from the non-Korean perspective are briefly outlined. © Physica-Verlag Heidelberg 2007.