Innovation and technology policy in Korea (2/2)

This argumentative essay presents the process of voracious development in South Korea and the primary role of the State in its fulfillment, focusing mainly on the governmental policy of innovation and technology. The theory used is about the National Innovation Systems, which explains how the interaction among the different national institutions and companies facilitates technological changes and the emergence and diffusion of innovation, as it occurred in South Korea.

Keywords: South Korea, Governmental Policy, Innovation and Technology, National Innovation Systems.

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Scientific and technological policy

   One of the essential characteristics of South Korean industrialization was the rapid acquisition of technological capacity, a decisive aspect for the transformation of a practically agricultural nation. During the 1960s, characterized by the stimulation of exports and the first phases of import substitution, South Korean focused on the consolidation of legal and institutional infrastructure to promote the technological development that would serve as a basis for future phases of industrialization (Bonilla, 2012).

   The establishment of the Ministry of Science and Technology in 1967 and its work demonstrates the clear relevance that the South Korean government conferred on technological development. Additionally, the government created institutional support networks mainly through the Korean Institute of Science and Technology (KIST) and other specialized institutions to evaluate, negotiate, adapt, assimilate and innovate technologies; in addition, it implanted the technological infrastructure for consultancies, technical assistance and other support services (Bekerman and Sirlin, 1996).

   In the 1970s, the industrial strategy was oriented to the progress of the heavy and chemical industry, improving the process of technological exploitation and promoting research to meet the industrial needs. Thus, the government created 10 public research centers in the areas of machinery, chemistry, electronics, shipbuilding, etc. These centers focused on the development and expansion of industrial technology.

   In the 1980s, the government sought mechanisms to strengthen the transformation that had begun in the previous decade and ran South Korean productive sector to different sectors of high technology. During this time, evident tendencies of techno-industrial autonomy are registered, with the construction of a scientific infrastructure, accompanied by the concession of fiscal and financial incentives for the technological assimilation of the firms.

   At that time, one of the drastic measures assumed by the South Korean government was the one implemented during the military dictatorship of Chun Doo Hwan (1980-1988) who held totalitarian control of the economy. The government imposed on the industry what products should manufactured; besides, it decided to reform the manufacturing industry of transport vehicles and conferred the production of automobiles on two chaebols. The World Bank rejected this measure and recommended the government to desist and focus on the manufacture of spare parts to be exported. The South Korean authorities ignored this recommendation and continued with their project. By the mid-1980s, the South Korean company Hyundai managed to export its vehicles to the United States and conquered a considerable portion of the market (Kim, Byung-kook and Vogel, 2011).

   It is worth mentioning that the decade of the 1980s was distinguished by the execution of structural adjustments and intensive industrial development in the technological sector; likewise, due to an accelerated increase in real wages and labor disputes that forced companies to seek technological innovations. The national Research and Development (R&D) program, which began in 1982, was one of the most ambitious undertaken by the government. In addition, the latter tried to promote the most advanced technology through foreign direct investment (FDI) by liberalizing the FDI policy, and granted incentives to large firms to implement at least one research center, and to small and medium-sized enterprises in order to constitute research and development consortia. As a result, the number of private research institutes increased from 52 in 1980 to 749 in 1990 (Bekerman and Sirlin, 1996).

   During the 1990s, the efforts towards technological advancement were oriented to strengthen the R&D projects, to reinforce the technological development system conducted by the demand and an institutional reform.

   On the other hand, since 2000, efforts have been made to strengthen the systems of national and regional innovation, internationalize information networks and R&D systems and increase these systems in information technology, communication, among other actions. The training of human resources in Science and Technology is an essential factor in the Republic of Korea, since it enables the learning required for technological assimilation, through the Institute of Advanced Studies, aimed at satisfying certain demands of the private and public sector. By 2001, the number of researchers had increased to 159,973 (Kim, Ki-wan, 2006). In this context, South Korea has significantly accelerated its investments in the R&D sector, especially since 2008, of which increase exceeds 3% of GDP (See Graph 1).

   Finally, it is necessary to emphasize that the South Korean case is considered extraordinary, not surprisingly, since the private sector contributes about 80% of total R&D spending, while the government concentrates only on strategic projects (Nava, 1997). In the same way, the actions carried out were possible thanks to the strong investment in training and reinforcement of human capital, which has been a key factor in the sustainability of its economic potential. Additionally, the government had a very close relationship with the higher education sector of the country in such a way that the former operated as a claimant to promote higher education and produce human capital and scientific technology, while the latter served as a human resource provider that works for the development of the national economy.

 Final considerations

   The government director of the South Korean economy used the conglomerate industries to achieve its objectives. This is how a reciprocal cooperation between the government and the chaebols was possible, since the companies grew thanks to the political decisions of the government, and these in turn benefited the economy of the country. In addition, the government spared no effort to achieve its objectives, gave cheap loans, supported risk operations, favored large companies, creating a virtuous circle: only large companies obtained loans and only these reached new businesses with high risk.

   This is how it can be concluded that the aggressive, and many of them, successful decisions made by the government, were necessary to achieve the accelerated technological innovation and spectacular economic growth. It is also worth noting the close relationship that the government maintained with the private sector, which enabled to agree on policies that directly affected the nation’s innovation process, as explained by the theory of the National Innovation Systems. Likewise, the counterfactual argument presented in this essay is proved since the current development achieved by the country would not have been possible with the speed achieved if the government had not directly and drastically intervened in the implementation of innovation and technology policies.

References

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Authors

Ivonne Bonilla and Ana Figueroa