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National Innovation System of South Korea

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Since its founding in 1948, the Republic of South Korea has enjoyed a rapid economic upturn and is now the world’s largest economy in terms of gross domestic product and the fourth largest in Asia. Prudent state research, technology, and innovation policy played a key role in this. However, less well-known is the fact that South Korea has largely outperformed the paradigm of catch-up imitation and is poised to play a key role among innovative countries. With a steadily growing number of technologies and their applications, South Korea has advanced to the top of the world.

In LCD TFT screens, mobile-based services, and microchips. As a result, many catch-up institutions have become obsolete and are now being replaced by new organizational models that give South Korea a global image of performance and competitiveness. Many African and Latin American countries see South Korea as a role model because it is an independent and successful Development path. However, South Korea has unique social and cultural conditions that allow such growth.

This paper traces the development of South Korea’s National Innovation System (NIS), highlights its strengths and weaknesses, and concludes with an outlook for further development that takes into account current science and technology policy discussions in the country.

Development of the national innovation system in South Korea

National innovation systems have been treated in the literature since the late 1980s. Meanwhile, it has resulted in a considerable number of publications that have significantly improved understanding of the genesis, diffusion, and absorption of innovation in an economy. At the same time, however, a comprehensive ‘theory of innovation’ is still a long way off. Metcalfe defines a NIS as follows:

A system of innovation is a set of distinct institutions which jointly and individually contributes to the development and diffusion of new technologies and which provide the framework 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 artifacts which define new technologies”.

Unlike older linear models of innovation, NIS approaches focus on a systemic, networked approach to analyzing the ‘black box’ of complex social, operational, macroeconomic, and cultural backgrounds and conditions that affect innovation. Fundamental to this is the insight that organizations usually do not produce innovations in isolation but are in complex, direct, and indirect relationships with other regional, national or international organizations.

Research on NIS has significantly improved understanding of innovative activities and processes, redefining the role of public research and technology policy. While in the ‘linear logic’ until the mid-1980s, mainly about financial assistance for research institutes, universities, etc. was discussed, the role of the state in NIS is changing from an exogenous to an endogenous size. The state becomes part of the innovation system, with the task of ensuring, in addition to funding, the efficient and efficient interaction of different organizations. Close cooperation between different ministries is necessary in this new environment of ‘3rd generation innovation policy’.

South Korea has already made some institutional reforms. Thinking in terms of a ‘National Innovation System’ is well known in administration and research. Despite the benefits of the NIS concept, many open questions remain. Literature on the topic shows the lack of delineation and the vague boundaries of NIS, as well as an insufficient theoretical foundation. Nonetheless, research on NIS is well suited to categorizing the major upheavals in South Korea and drawing conclusions for the future.

NIS South Korea is referred to in the literature as a medium-sized catch-up system that has successfully completed the transformation from importing technologies to a degree of self-contained technological innovation and diffusion. The development of the South Korean NIS began in the early 1960s under President Park Chung Hee, who reduced the strong dependence on American development aid through an active export policy from 1964 and created the Ministry of Science and Technology (MOST) in May 1967.

This made South Korea the world’s first developing country with a ministry of science. Despite modest financial resources, it was possible to lay the foundations for a functioning NIS and, as a first step, to promote the training of scientists as a prerequisite for understanding imported technologies. The following development since the 1970s is characterized by strong growth of virtually all indicators of economic growth and research and development (R & D).

This period also includes the emergence of large conglomerates such as Samsung, LG, and Hyundai, the creation of the scientific city of Daedeok, and the specialization and growth of non-university research institutes. Technological and sectoral specialization patterns have been created that continue to have an impact today (e.g. in shipbuilding and in information and communication technology).

The 1980s were all about building R & D in the private sector. This was substantially promoted by the first national R & D program of the MOST 1982; further ministries initiated their own programs with some years’ distance. In the 1990s, South Korea’s science policy debate focused on focusing national R & D programs and, since 1995, on building regional innovation systems. The balance of payments crisis of 1997/98 had no lasting impact on innovation and R & D budgets of the state and companies; It even encouraged companies to abolish traditional forms of work organization and raised political awareness of the complexities of the global economy and its impact on South Korea

. Over the past 10 years, South Korea has witnessed a strong professionalization of state actors in innovation and double-digit growth in public research budgets. This prudent science policy has played a key role in South Korea’s economic boom, which has never been repeated in its length and intensity worldwide. Between 1960 and 2006, gross national income per capita grew from $ 80 to $ 17,690. This development was supported by a progression of the primary production factors that have contributed to and contributed to South Korea’s economic growth (Schlossstein and Yun, 2008).

Research and development in South Korea

Development of the r&d indicators

South Korea’s R & D indicators are characterized by sustained dynamic growth for nearly two decades. In 2005, the public and private enterprises in South Korea invested a total of 24.15 trillion South Korea won in government and private R & D expenditure. Of these, 24% come from public sources and 76% from private sources. With R & D spending relative to the gross domestic product of 3.23% in 2006, South Korea occupies a leading position among OECD countries. After Japan, it ranks second in comparison to the East Asian countries. By 2030, R & D intensity is to be increased to 5.3%. R & D of the economy is very strongly concentrated on the conglomerates.

In 1970 there were only 5,628 researchers in South Korea, compared to 461 000 in 2018. The number of patents and scientific publications has also risen sharply. According to the Science Citation Index (SCI), South Korean researchers published 85,725 scientific articles in 2018, about 10 times as many as in 1996. Since 1996, South Korean researchers have produced a total of 1,105,110 science citation indexed publications. For comparison: German researchers published 3,019,959 articles during the same period. However, South Korea’s relative position only improved from 20th place in 1996 to 12th in 2018, as other countries have also made great progress in this area. Most publications relate to materials science, chemistry, and physics.

For patents, South Korea’s international position is much better. The country claims 2,554 patents granted per million of population. This is the highest value worldwide. The South Korean Patent Office granted a total of 119,012 patents to nationals and foreigners in 2018. South Korea thus takes fourth place behind, China (432,147 patents), the US (307,759), and Japan (194,525).

Innovation at the corporate level

National surveys of corporate innovation in South Korea were conducted in 1996, 1998, 2002, and 2003. 80% of R&D investment is attributable to two industrial sectors, the electrical industry (63.4%) and the vehicle industry (16.2%). The ten largest companies by turnover spent 75% of total private research investment. The top 30 companies account for 87.4% of total R&D expenditure in the economy. Samsung Electronics alone mobilized R & D expenditures of KRW 4.8 trillion. Together with LG Electronics, this accounts for almost half of all private R&D spending in South Korea. R & D intensity rose from 2.34 in the previous year to 2.47.

The average R&D intensity of the top 30 companies was 3.84. 33 of the South Korean manufacturing companies had at least one successful innovation in the previous two years. In the 2019 Bloomberg Index, South Korea stands at the top for the sixth time in a row since 2013 with Germany almost catching up on the strength of added value from manufacturing and research intensity, much of it built around industrial giants such as Volkswagen AG, Robert Bosch GmbH and Daimler AG. Although South Korea extended its winning streak, its lead narrowed in part because of lower scores in patent activity

Development of universities

Colleges and universities are among the core components of a NIS. They are also in a process of profound change in South Korea. In this case, roughly three phases can be distinguished. Prior to 1990, universities in South Korea were essentially limited to the provision of knowledge and education. It was not until the beginning of the 1990s that universities began to assume their role as research institutions.

To date, more funds are spent on R & D in government research organizations than in universities, even if the gap has narrowed. This new self-understanding led to a surge in both the publications of universities and research institutes in the Science Citation Index as well as the South Korean patent applications. Since the beginning of this decade, one can speak of the existence of research-oriented universities in South Korea.

Foreign-trained Korean scientists, as well as active government support, played a crucial role in this development. This was accompanied by a significant increase in R&D expenditure for universities. The transition from imitation to innovation creates a growing need for research results that are not based on what is available but describe the ‘limits of the possible’. Here, South Korean universities will compete for a while with the research institutes, but in the long term, as in other OECD countries, they will specialize in basic research.

Despite positive changes in the South Korean university system, there is also criticism. In essence, it concerns the inadequate internationalization of lecture content, lack of student preparation for the needs of the modern workplace, annual growth rates of tuition fees, sometimes in the double-digit percentage range, over-bidding in construction or acquisition of new real estate, a strong quality gap between the capital and the provinces, and deficit in the application of the standards of good scientific work.

Foresight studies

In South Korea, technology foresight studies have since 1994 been an important tool in technology policy. On the road from imitation to innovation, foresight studies are a sign of growing forward thinking beyond existing capabilities and capabilities. The current study, conducted on the basis of Article 13 of the R&D Fundamental Law and published in May 2005, is one of the third generations of foresight studies. The goals were:

  • Survey of strengths and weaknesses of South Korean R&D in terms of international benchmarking across various industries by 2030.
  • Identify social needs and associate those needs with specific technologies to fulfill them.
  • Evaluation of each technology studied (time of realization, position of South Korea relative to the world market leader, possible obstacles on the way to realization)
  • Development of creative scenarios as a basis for prioritization of R&D projects and support for enterprise R&D planning.

In line with the eighth Japanese foresight study, the focus in South Korea was on the technology fields of space, new materials, information and communication, food and biological resources, life and health, security, infrared, management, and science communication and culture. At the methodological level, expert panels, population surveys, and a two-stage Delphi study with 32,411 experts (in the first round) were used.

Overall, the Delphi study included questions on 761 technologies that, according to the surveyed experts, are mostly realized by 2015. The entire investigation period lasts until 2030. On average of all technologies, South Korea is 3 to 5 years behind the respective world market leader. In the area of information and communication technology, the country is in the lead, while in the area of space research it lags behind 10 years.

Overall, the results of the third Foresight study were interpreted as a warning to the government to provide more resources for basic research. Currently, about 25% of the public R&D budget is used for this purpose. The findings of the study feed into the development of education, employment, health care, and safety systems scenarios and a new R&D program. The “Future Strategic Technologies Initiative” replaced the “New Growth Engines” in 2010. According to the criteria “influences on the quality of life”, “influences on economic growth” and “societal benefits”, 21 fields of technology were selected, which should receive preferential support in-state R&D programs.

In South Korea, a foresight culture has been established over the past 15 years, with the results now being picked up by politics. Since 2006, the individual ministries have been required to prepare their own focused foresight studies in their business area; every 5 years a nationwide study is carried out. This is defined in the ‘R&D Basic Law’.

Changes in the governance of research and development technology policy

South Korea, like other advanced countries, also has a complex institutional mind responsible for the emergence and implementation of research and technology policies. Over the past decades, this has been reformed time and again in order to meet newer environmental conditions.

The relatively new research area Governance of Research and Technology Policy (innovation governance) analyses these institutional conditions and their development. Innovation governance includes ‘the formal and informal rules of the game, incentives, and constraints that influence the interaction of high-level state actors in NIS. This particularly addresses instruments and mechanisms for prioritizing public R & D projects, policy coherence, and institutional learning ‘. The blatant deficits in this area in the mid-1990s were enabled by several factors:

  • Although the prime minister was responsible for R D policy, he was unable to develop much activity, as the primary decision-making authority in South Korea lays (and continues to lie) with the president.
  • R&D statistics and indicators were underdeveloped and inaccurate.
  • Ministries were inexperienced in using modern R&D control tools.
  • Weak evaluation of R&D institutes.
  • Overlaps in the fields of activity of public research institutions.

In 1999, the National Science and Technology Council (NSTC) was founded under the chairmanship of the President. The NSTC is the highest body for guidelines on research and technology policy in South Korea. In detail, it is the task of the NSTC:

  • To plan and coordinate research and technology policy.
  • To allocate budgets according to the results of evaluations.
  • To plan medium and long-term public R&D programs and improve the management of public research institutes.

The three sub-committees, which are all staffed by representatives of the private and public sectors, have to manage without their own staff. They are assisted in their work by the Office of Science and Technology Innovation (OSTI), founded in 2004, which is effectively a secretariat of the NSTC. OSTI is run by a deputy minister and employs 100 civil servants, 50% from the MOST, 25% from other ministries, and 25% from the private sector. This mix, unprecedented in South Korea, links the hope for more creativity and an improved understanding of private innovation activities as the main driver of NIS.

The OSTI is advised in its activities by the Institute for R&D Evaluation and Planning, which according to the R&D Basic Law is responsible for the annual implementation of a large number of empirical surveys (e.g. annual innovation statistics, foresight studies). OSTI also controls three of the four science councils in South Korea, each responsible for about a dozen research institutes. The economic councils should essentially minimize overlaps in the fields of work of individual institutes; they contribute to the annual evaluation and filling of top positions.

So far, however, the scope for designing and sanctioning science councils has been limited, as their evaluations have no influence on the budgets of the research institutes. Budget decisions are made by the Treasury. The October 2004 reform split the MOST in two and appointed the minister to the rank of vice-prime minister. This underlines the importance of science in South Korea. In addition, the Deputy Prime Minister now has a better position in the clashes between MOST, the Ministry of Industry, and the Ministry of Information, as well as in the political coordination work with a further 18 ministries, which have a share in the R & D budget.

As part of the reform, MOST had to cede all R & D programs to other ministries with a focus on applied research and the commercial exploitation of research results. However, it remains responsible for large-scale research projects, fusion technologies, nuclear supervision, and scientific communication. State R & D has a longer-term planning horizon than R & D by private actors. Strengthening basic research is an important component of South Korean strategy.

In 2008, 25.6% of the government R & D budget will be invested in basic research. In addition, since 2003, the public research budget has increased by about 10% per year. In 2008, the government spends KRW 10.86 trillion (about 8.1 billion euros) on R & D and innovation policy. This corresponds to 0.86% of gross domestic product and 4.23% of the total budget.

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