A nation’s innovation system is shaped by how the nation leverages its endowments—natural resources, culture, history, geography, and demographics—through policies that create a thriving market-oriented economy and accelerate the transition of new technologies, processes, and services to the market (Branscomb and Auerswald 2002). The aim of this assignment is to evaluate South Korea’s innovation policies, in light of its latest ranking as the second most innovative country in the world.
This country is of particular interest as it is one of the four Asian Tiger economies, whose rapid industrialisation and growth between the early 1960’s and 1990’s caused it to emerge as one of the most dynamic and fast-changing countries in Asia and the world. Much like Japan, its economic development was marked by heavy investments in foreign technology and imitation through reverse-engineering. By limiting FDI, South Korea maintained control over its industrial base and encouraged investments in R&D.
South Korea’s scarcity of natural resources has motivated it to look at its human capital as its biggest endowment, leading it to invest heavily in education, science and technology to create a knowledge-based economy. In doing so, it has achieved a literacy rate close to 98%, with 65% of the population under 35 having completed a university education, the highest among OECD countries.
Both government and industry play an important role in the country’s innovation system, and whilst state-led research and education have provided a robust capacity for innovation, South Korea’s economy is dominated by business conglomerates called Chaebol (E.g. Samsung, Hyundai, LG electronics, and Pohang Iron and Steel Company amongst others) through which much of its innovation is primarily driven. An average of 3.5% of its GDP is spent on R&D, (totalling $56 billion in 2013) with the industry’s share accounting for 76% of this and government covering the balance .
At the forefront of the government’s economic policy is the agenda of an improved creative economy, with the aim of deepening recognition of the importance of innovation for South Korea’s future and sustained growth amid rising social and economic inequities. It also presents the question of how to foster the innovation that will ensure its future prosperity.
The core elements of South Korea’s innovation-focused growth policies which shall be discussed hereafter include;
- Science and technology/ R&D, education, physical and regulatory infrastructure
- Actors, Government, businesses, entrepreneurs, universities, research institutes, NGO’s, consumers
- Policies, labour, tax, financial, trade and investment, Intellectual Property, standards, other business environment and interactions among them
- Partnerships and collaboration that foster innovation
Government-driven Innovation Policies –
The two ministries most responsible for setting innovation-led growth policy in South Korea are the Ministry of...