2 contents 2 major economic indicators and driving force of growth 1 13 major industrial policies...
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Contents
22Major Economic Indicators and Driving Force of GrowthMajor Economic Indicators and Driving Force of Growth11
1313Major Industrial Policies and AchievementsMajor Industrial Policies and Achievements22
2525Korea Innovative Capability in Science and TechnologyKorea Innovative Capability in Science and Technology33
3232Key Characteristics of Korean Innovation SystemKey Characteristics of Korean Innovation System44
3737Policy Lessons and Future DirectionsPolicy Lessons and Future Directions55
Major Economic Indicators and Major Economic Indicators and Driving Forces of GrowthDriving Forces of Growth
11
5
Korea’s Major Economic Indicators Current Situation
1960 1970 1980 1990 2000 2009
Population(1000) 25,012 32,241 38,124 42,869 47,008 48,747
GDP(US$, Billion) 2.0 8.1 63.8 263.7 511.8 832.5
Growth Rate of GDP(%)
1.2 8.8 -1.5 9.2 8.5 0.2
GDP per capita (US$) 79 254 1,645 6,147 10,841 17,074
Trade Balance(US$, Million)
-311 -1,149 -4,787 -4,828 11,786 40,469
Exports(US$, Million)
33 835 17,505 65,016 172,268 363,554
Imports(US$, Million)
344 1,984 22,292 69,844 160,481 323,085
6
Korea’s Economic Growth
< Trend of Korea’s Economic Growth >< Trend of Korea’s Economic Growth >
※ Source : The Bank of Korea
1971~801971~809.5%9.5%
High Growth High Growth PeriodPeriod
1981~901981~909.1%9.1%
High Growth High Growth PeriodPeriod
1991~20001991~20006.7%6.7%
2001~102001~104.3%4.3%
2011~20152011~20153%3%
Low Growth Low Growth PeriodPeriod
Potential Potential Growth RateGrowth Rate
Real Growth Real Growth RateRate
7
Growth Engine (1) : Export
2003 2004 2005 2006 2007 2008 2009
Economic Growth Rate
2.8 4.6 4.0 5.2 5.1 2.3 0.2
Export’s Contribution
Rate111.2 93.3 69.2 72.9 64.3 20.1 172.1
< Export’s Contribution Rate to Economic Growth >< Export’s Contribution Rate to Economic Growth >
(Rate : %)
8
Trade Trend Until 1980’s imports exceeded exports, but after 1990’s the situation reversed.
From 1990s, the products of heavy chemical industry exceeds those of light industry in the structure of exporting items.
※ Source : The Korea International Trade Association, The Korea National Statistical Office
Total Amount of Trade
Amount of Export
(A)
Amount of Import
(B)
B-A
Structure of Export Products(%)
Primary Industry
Light Industry
Heavy Chemical Industry
No. of Export
Countries
No. of Trading Items
1960 3 0.3(0.03) 3(0.3) -3 45.4 45.4 9.2 59 712
1970 2.8 8(0.3) 19(0.6) -11 17.5 67.9 12.8 122 1,504
1980 397 175(0.9) 222(1.1) -47 11.7 46.4 41.8 172 6,010
1990 1,348 650(1.9) 698(2.0) -48 4.9 38.5 56.6 197 7,062
2000 3,327 1,722(2.7) 1,604(2.4) 117 2.8 16.2 81.0 238 8,241
2007 7,283 3,714(2.7) 3,568(2.5) 146 1.6 6.9 91.5 227 8,641
9
Change of Major Export Item
< Change of the Five Export Items by Year >< Change of the Five Export Items by Year >
1970 1980 1990 1995 2000 2005 2009
1st Textiles(40.8%)
Textiles(28.8%)
Clothing(11.7%)
Semi-conductor(14.1%)
Semi-conductor(15.1%)
Semi-conductor(10.5%)
Ship(12.4%)
2nd Plywood(11.0%)
Electronics(11.4%)
Semi-conductors
(7.0%)
Automobile(6.7%)
Computer(8.5%)
Automobile(10.4%)
Semi-conductor
(8.5%)
3rd Wig(10.8%)
Iron & Steel(9.0%)
Footwear(6.6%)
Ship(4.5%)
Automobile(7.7%)
Mobile Phone(9.7%)
Mobile Phone (8.5%)
4th Iron Ore(5.9%)
Footwear(5.2%)
Media Equipment
(5.6%)
Artificial Fiber
(4.3%)
Petroleum Products (5.3%)
Ship(6.2%)
Display(7.0%)
5th Electronics(3.5%)
Ship(3.5%)
Ship(4.4%)
Media Equipment
(3,9%)
Ship(4,9%)
Petroleum Products (5.4%)
Automobile(7.0%)
Total 72.0% 57.9% 35.2% 33.6% 41.4% 42.2% 43.5%
10
Growth Engine (II) : Manufacturing Industry
Industry Growth Rate(2002~2007, Average)
Agriculture -1.1
Mining Industry -1.2
Manufac-turing
Industry
Manufacturing Industry 4.9
High Tech Industry 7.7
ICT Industry 5.3
Mid-High Technology Industry 3.3
Mid-low Technology Industry 1.5
Low Tech Industry -0.7
Electrics, Gas, Water Supply 2.4
Construction 2.4
Service Industry 4.0
Total 3.9
< Growth Rate of Real Value-Added by Industries (2000) >< Growth Rate of Real Value-Added by Industries (2000) >
※ Source : Korea Institute for Industrial Economics and Trade(2010)
11
Change of Industrial Structure
※ Source : Hwang, Yongsoo(2007), “Role and Performance of S&T Policy to Cope with Transitional Needs of Economic Development”, Symposium for the Forty Anniversary of S&T Administration in Korea, 2007. 10. 29, MOST & STPEI, Seoul
1960s1960s
Industry
for
Promotion
Industry
for
Promotion
1970s1970s 1980s1980s 1990s1990s 2000s2000s
Light
Industry
Light
Industry
Heavy and
Chemical
Industry
Heavy and
Chemical
Industry
Technology-
intensive
Industry
Technology-
intensive
Industry
New Industry
Including
ICT
New Industry
Including
ICT
Knowledge-
Intensive
Industry
Knowledge-
Intensive
Industry
Factors of
Competitive-
ness
Factors of
Competitive-
ness
Simple
Labor
Simple
LaborSkilled
Labor
Skilled
LaborCapitalCapital TechnologyTechnology InnovationInnovation
12
Indicators – Change of Industrial Structure
< < Change of Industrial Structure Over Times Change of Industrial Structure Over Times >>
Year \ Industries
Agri-culture/ Fishery
MiningManufac-
turing
Electrics/Gas/
Water Supply
Construc-tion Service
Structure of Manufacturing Industry
Light Industry
Heavy Industry
1960 36.8 2.1 13.8 4.1 - 43.2 76.6 23.4
1970 29.2 1.8 17.8 1.4 5.1 44.7 58.4 41.6
1980 16.2 2.0 24.4 2.2 8.0 47.3 42.5 57.5
1990 8.9 0.8 27.3 2.1 11.3 49.5 30.7 69.3
2000 4.9 0.4 29.4 2.6 8.4 54.4 22.4 77.6
2007 3.0 0.4 27.9 2.3 8.9 57.6 16.9 83.1
* Note : 1) Data before 1950 are based on the criteria of 1975, and data after 1970 are based on the 2000 & total amount of value added.
2) Data before 1960 include construction industry ※ Source : The Bank of Korea
13
Growth Engine(III) : Technology Innovation
1971-1989 1990-2004 1971-2004
Growth by (%)
Share(%)
Growth by (%)
Share(%)
Growth by (%)
Share(%)
Labor 2.22 29.1 1.17 20.4 1.75 25.9
Capital 3.24 42.5 2.58 45.0 2.95 43.4
TFP 2.16 28.4 1.98 34.6 2.08 30.7
R&D Stock
1.77 23.3 1.74 30.4 2.07 30.6
Real Growth 7.62 100 5.73 100 6.79 100
< Contributions of Factors to Growth (1971~2004) >< Contributions of Factors to Growth (1971~2004) >
14
< History of Overcoming Economic Crisis >< History of Overcoming Economic Crisis >
Economic CrisisEconomic Crisis
1st Oil Shock(Oct’73~Aut 74)
2nd Oil Shock(Oct’78~Apr’82)
Financial Crisis(Dec’97~Aug.01)
Global Financial Crisis (2008~)
Decisive InvestmentDecisive Investment• Invest in heavy industry such as petroleum chemical, steel industry etc. * Declare we enter the stage of heavy industry(’73)
• Invest in high tech industry such as automobile, and semiconduc- tor etc.
• Enlarge IT venture investment• Enlarge government R&D investment * Enact ‘Special Act on Promoting Venture Companies(’97)
• Promote new growth engine
• Green Growth
Improve Economic InfrastructureImprove Economic Infrastructure
• Move industrial emphasis from light
industry to heavy industry
• Price stabilization, open economy
• Promote high tech industry such as automobile and semiconductor as major industry
• Restructuring of large conglomerates
• Promote IT as major industry
• Knowledge, innovation driven industry
• Low carbon economic system
※ Source : Ministry of Knowledge Economy
22
Major Industrial PoliciesMajor Industrial Policies andand AchievementsAchievements
16
< Science & Technology strategy Roadmap of Korea Government >< Science & Technology strategy Roadmap of Korea Government >
CompetitiveDevelop-
mentStage
CompetitiveDevelop-
mentStage
Major direction ofIndustrial
Policy
Major direction ofIndustrial
Policy
1960s1960s 1970s1970s 1980s1980s 1990s1990s 2000s2000s
Expand export
oriented light
industries
Expand export
oriented light
industries
Expand heavy
and chemical
industries
Expand heavy
and chemical
industries
Expand
technology
Intensive
industries
Expand
technology
Intensive
industries
Promote
high-
technology
innovation
Promote
high-
technology
innovation
Technology
Commer-
cialization
Technology
Commer-
cialization
Factor Driven Stage
Investment Driven Stage
Innovation Driven Stage
Cheap laborCheap labor
Manufacturing capabilityManufacturing capability
Innovative capabilityInnovative capabilitySource of
Competition
2010s2010s
Green Growth
&
New Growth
Engines
Green Growth
&
New Growth
Engines
Convergence capabilityConvergence capability
New Growth EngineDriven Stage
17
S&TRole of
Government
S&TRole of
Government
< Science & Technology strategy Roadmap of Korea Government >< Science & Technology strategy Roadmap of Korea Government >
1960s1960s 1970s1970s 1980s1980s 1990s1990s 2000s2000s
Scientific Institution
Building
ScientificInfra-
structureSetting
R&D and Private
ResearchLab
Promotion
Leading Rolein Strategic
Area
R&BD andInvestmentPromotion
• Establishment of ministry of S&T
• S&T promotion law
• Human resource development
• Establishment of government research institutes
• R&D promotion law
• Highly qualified personnel development
• National R&D funds
• Promotion of the establish- ment of private research labs
• Promotion of industrial R&D
• Strategic program (highly advanced national project)
• Enhancing university research capability
• Linkages university- industry-govern- ment research institutes
• Strategic program for tech. Business (R&BD, TBI, NTB)
• Globalization of technology
• Pursuit newly launched technology business and investment
InnovativeCapability of
Private secret
InnovativeCapability of
Private secret
2010s2010s
Green Technology Promotion
• Strategic increase of R&D invest- ment in GT
• Promoting GT transfer and commercialization
• Strengthening incentive schemes for inducing private invest- ment in GT
18
Major AchievementsMajor Achievements Economic and Industrial Economic and Industrial PoliciesPolicies
Science and Technology Science and Technology PoliciesPolicies
• Fertilizer factories
- Chungju, Honam, and Hanbi
• Cement factories
- Hanil, Dongyang, Hyundai,
Ssangyong Yanghoe
• Build oil refinery complex
- Ulsan, Yeocheon Build refinery
complex
• Fiber factories
- Produce polyester, nylon
• Build Gyeongbu [Seoul-Busan]
Expressway
• 1st Five Year Economic Plan
(1962~1966)
- Promote industries to substitute
imported products
- Change from agricultural to
industrial economy
• 2nd Five Year Economic Plan
(1967~1971)
- Promote export-driven industry
• Enact 7 acts to promote industries
- Machinery, ship, fiber, electrics,
petrochemical, chemical, steel,
non-ferrous metal industries
• Promote to introduce foreign
technology
- Enact ‘Promotion Act of Foreign
Capital’(1962)
• Increase the need of S&T
development for economic
growth
- Establish ‘Korea Institute of
Science and Technology‘
(KIST)(1966)
- Enact ‘Science and Technology
Promotion Act’ (1966)
- Establish Ministry of Science
and Technology(1967)
Major Industrial Policies and Achievements
1960’s1960’s
19
Major AchievementsMajor Achievements Economic and Industrial Economic and Industrial PoliciesPolicies
Science and Technology Science and Technology PoliciesPolicies
• Pohang Steeler
• World-class shipyard
- Build 26o thousand ton level
oil tanker, VLCC
• Localize automobiles
- Hyundai produce ‘Pony’
• Boom in Constructing in the
Middle East
- Construct “Al-Jubayl Port” in
Saudi Arabia, Waterway in
Libya
• Declare ‘Heavy Industrialization’
(1973)
- 6 strategic area such as steel, non-
ferrous metal, machinery, ship,
electrics and chemical
• Promote defense industry
- Build 4 core factory in heavy
machinery, cast pig iron, special
steel, ship
※ Economic crisis of excess of heavy
industry in the late of 1970‘s, decline
of the economy of the Middle East, and
the 2nd oil shock
• Self reliance of private
technology and raise excellent
technology human resources
- Enact ‘Technology Development
Promotion Act’(1972)
- Promotion Act on Technology
Service(1973)
- Law of National Technique
Qualification(1973)
• Organize government-led
technology supply system
- Act on Promoting Specific
Research Institute(1973)
- Start to build Daedeok research-
academy complex (1973)
Major Industrial Policies and Achievements
1970’s1970’s
20
Major AchievementsMajor Achievements Economic and Industrial PoliciesEconomic and Industrial Policies Science and Technology PoliciesScience and Technology Policies
• Semiconductor - Develop D-RAM miconductor(1983)• Automobile - Export ‘Excel’ to the U.S. (1986)• Communication - Develop domestic calculator(TDX-1)• Machinery - Produce NS machine tool, and large excavator,• Ship - Produce LNG ship
• Privately-led economy - Prevent monopolistic, foster market structure and competitive market, enact ‘Monopoly Regulation and Fair Trade Act’• Measures to rationalize industry - Enact “The Regulation Law on Tax Reduction and Exemption”(1981) - Appoint 9 rationalization industries such as textile, fertilizer, footwear (declining industry) and automobiles • Shift from the fostering policy of individual industry to focusing on technology - Enact ‘Industrial Development Law’, Abolish 7 fostering acts• Increase freedom of import and introduction of technology - Abolish negative list of import
• Host ‘Further Meeting of Technology Promotion (1982~1987)• Launch ‘National R&D Project’ (1982)•Policies to promote private R&D - R&D Tax Support (1981) - Alternative military service for researchers (1981) - Acknowledgement system of company research center (1982) - Establish KTDC(1982) - Reduce tariffs on research materials (1983)• Make a Long term roadmap of science and technology for 2000’s (1986)• Introduce ‘Product Patent System (1986)
Major Industrial Policies and Achievements
1980’s1980’s
21
Major AchievementsMajor Achievements Economic and Industrial Economic and Industrial PoliciesPolicies
Science and Technology Science and Technology PoliciesPolicies
• Semiconductor - World-first development of 256M D-RAM (1995) - The first semiconductor memory in the world• Automobile - Firstly develop domestic engine( engine) (1991)α - World 5th Automobile Producer• Ship - Top in ship order(1993)• Home Electronics Appliances - World-first commercialization of Digital TV - World-first development of flat Display
• Five Year Plan for New Economy (1992)• Enact ‘Law of Invention Promotion’ (1994)• Globalization policy (1995)• Become a member of OECD (1995)• Policy for promoting small venture company - KOSDAQ market(1996) - Act on Special Measure for Fostering Venture Company (1997)
• National Project - G7 Project (1992) - Original Research and Development Project (1998) - 21st century Frontier Project (1999)• Establish 「 Sector Plan for Science and Technology(1993) 」 in Five Year Plan for New Economy• Enact “Special Law on Science and Technology Innovation (1997) - Five Year Plan for Science and Technology Innovation (1997) - Establish ‘Long-term Science and Technology Vision toward the Year of 2025(1999)
Major Industrial Policies and Achievements
1990’s (1)1990’s (1)
22
Major AchievementsMajor Achievements Economic and Industrial Economic and Industrial PoliciesPolicies
Science and Technology Science and Technology PoliciesPolicies
• Communication
- World-first commercialization
of CDMA
- World-first commercialization
of TDX 10
• Pharmaceutical
- Develop new substance and
new medicine in nation first
(1999)
• IMF Foreign Exchange Control
Period (1997~2000)
- Industrial restructuring and
aggressive M&A
- Special Committee of Small
Companies (1998)
• Establish Ministry of Information
and Communication (1994)
- Basic Plan for Information
Communication Research and
Development (1998)
• Liberalize introduction of
technology
• Law on Creating the Basis of
Industrial Technology (1995)
- 1st Five Year Plan for Industrial
Technology Development
Plan(1996~2000)
Major Industrial Policies and Achievements
1990’s (2)1990’s (2)
23
Major AchievementsMajor Achievements Economic and Industrial Economic and Industrial PoliciesPolicies
Science and Technology Science and Technology PoliciesPolicies
• Semiconductor
- Develop 32G RAND Flash Memory
(2006)
• Automobile
- World top 5, Reexport foreign
technology (Hyundai Motors. Mitsbishi)
• Ship
- World-first construction method on the
ground
- Icebreaker, Aegis destroyer, ocean plant
- Obtain 40 percent of all world orders
• Steel
- Build FINEX(Fine Particle Extraction)
plant
• Enact ‘Promotion Act of
Technology Transfer’(2000)
• Innovation-driven Economy
(2003)
• New Industry-Academy
Cooperation (2003)
• Balanced National
Development
- Enact ‘Promotion Act for
Regional Technology
Innovation’ (2003)
• Enact ‘Basic Law of Science
and Technology (2000)
- Establish 1st, 2nd Basic Plan of
Science and Technology
(2002, 2007)
- Current government’s basic
plan of science and technology
• Fostering New Growth Engine
(2008)
• 2nd Five Year Plan for Industrial
Technology Development
(2003~2008)
Major Industrial Policies and Achievements
2000’s (1)2000’s (1)
24
Major AchievementsMajor Achievements Economic and Industrial Economic and Industrial PoliciesPolicies Science and Technology PoliciesScience and Technology Policies
• Home Electronics Appliances
- World-first TFT-LCD (2001)
- World first Digital TV
• Components
- Secondary battery enter into
world market
• IT
- World-first development of
ground wave DMB(2002)
- Top high speed internet in the
world(2002)
- Develop portable wireless
internet ‘Wibro’ (2005)
• Northeastern Economic Hub
(2003)
• Win-win Cooperation
among large, medium, and
small sized companies
(2006)
• Create Future Food Items
- Next-Generation Growth Engine
Project (2003~2007)
- Green Technology Development
Project (2008)
• National Innovation System (NIS)
Focusing on Science and Technology
(NIS) (2003)
- Appoint Minister of Science and
Technology as a Vice Minister
• Policy to introduce global R&D Center
• National Task to reach 5% R&D of GDP
Major Industrial Policies and Achievements
2000’s (2)2000’s (2)
25
To Become the World 7th Green Power 2020,and the 5th by 2050
To Become the World 7th Green Power 2020,and the 5th by 2050
< Korean National Strategy for Green Growth >< Korean National Strategy for Green Growth >
VISIONVISION
Three Objectives, Ten Policy Directions
Mitigation of Climate Change & Energy Independence
Creating New Engines for Economic Growth
Improvement in Quality of Life &Enhanced International Standing
1. Effective mitigation of greenhouse gas emissions
2. Reduction of the use of fossil fuels and the enhancement of energy independence
3. Strengthening the capacity to adapt to climate change
4. Development of green technologies
5. The “greening” of existing industries and promotion of green industries
6. Advancement of industrial structure
8. Greening the land, water and building the green transportation infrastructure
9. Bringing green revolution into our daily lives
10. Becoming a role-model for the international community as a green growth leader
Major Industrial Policies and Achievements
2010’s (1)2010’s (1)
26
Selection of New Growth Engines
Develop 17 new driving forces in three areas Green technology industry (6) : the foundation for future growth, energy use reduction and the high potential to tackle climate change and lack of resources High tech convergence industry (6) : large world market size and high technology capability in Korea. Capable to create new industry and advance the existing industries through convergence High value added industry (5) : huge potential of job creation. Capable to create high value added by complementing service industry
Green technology industry Green technology industry High tech convergence industryHigh tech convergence industry High value added industryHigh value added industry
1. New renewable energy2. Low carbon energy3. Advanced water treatment4. LED applications5. Green transportation system6. High-tech green city
7. Broadcasting telecommunication convergence industry
8. IT convergence system9. Robot applications10. New material Nano convergence11. Bio medical medical devices12. High value added food industry
13. Global health care14. Global education service15. Green financing 16. Contents Software17. MICE Tourism
2010’s (2)2010’s (2)
Korea Innovative Capability in Korea Innovative Capability in
Science and TechnologyScience and Technology
33
28
Korea’s S&T Capability
S&T Statistics (Input)
※ Source : Ministry of Science and Technology* R&D / GNP
1970 1980 1990 2000 2009
GERD (US$, 100 million)
0.03 0.4 46.8 138.4 297.0
Gov’t-funded vs. Private-funded (%)
71 : 29 64 : 36 19 : 81 25 : 75 29 :71
R&D Expenditure / GDP (%)
0.38* 0.77* 1.87 2.39 3.57
No. of Researchers(FTE, Persons)
5,628 18,434 70,503159.973
(108,370)323,175
(244,077)
R&D Expenditure / Sales of Industry (%)
n.a.0.54
(1981)1.72 2.0 2.34
29
S&T Statistics (Output)
※ Source : Ministry of Science and Technology
1970 1980 1990 2000 2008
No. of Applications for Domestic Patents
1,846 5,070 25,820 102,136 170,632
No. of Applications for U.S. Patents
3 8 225 3,7865,908
(2006)
No. of Articles Published on SCI Journals
n.a.236
(1981)1,587 12,472 35,569
No. of Industrial Laboratories
n.a.46
(1981)966 7,110 16,719
30
Korea’s IMD Ranking(’06~’10)
Evaluation IndexEvaluation Index RankingRanking
’06 ’07 ’08 ’09 ’10
Total expenditure on R&D : US$ millions 7 7 7 7 7
Total expenditure on R&D : % of GDP 6 5 5 5 5
Business expenditure on R&D : US$ millions 7 7 7 7 7
Business expenditure on R&D : % of GDP 5 5 4 5 5
Total R&D personnel in business enterprise 7 6 6 6 6
Scientific articles 12 12 10 10 10
Nobel prizes 25 25 26 26 27
Patent applications - - - 4 4
Patents granted to residents 3 3 3 3 3
Number of patents in force 13 7 5 5 5
Total ranking 10 7 5 3 4
31
Technological Needs / Efforts
1960s1960s
Tech-
nological
Needs
Tech-
nological
Needs
Tech-
nological
Efforts
Tech-
nological
Efforts
1970s1970s 1980s1980s 1990s1990s 2000s2000s
Operation
Technology
Operation
Technology
Equipment-
embodied
Technology
Equipment-
embodied
Technology
Production
Technology
Production
Technology
Critical/
Essential
Technology
Critical/
Essential
Technology
Creative
Technology
Creative
Technology
Importation/
Learning of
Turnkey-
based
Foreign
Technologies
Importation/
Learning of
Turnkey-
based
Foreign
Technologies
Absorption/
Assimilation
of Foreign
Technologies,
Reverse
Engineering
Absorption/
Assimilation
of Foreign
Technologies,
Reverse
Engineering
Modification
of Foreign
Technologies,
Fostering of
Endogenous
Technology
Development
Modification
of Foreign
Technologies,
Fostering of
Endogenous
Technology
Development
Broadening/
Deepening of
Domestic
R&D Efforts
Broadening/
Deepening of
Domestic
R&D Efforts
ImitationImitation InnovationInnovation
Strengthening
of Future
-oriented
R&D
Efforts
Strengthening
of Future
-oriented
R&D
Efforts
※ Source : Hwang, Yongsoo(2007).
32
HRD Needs / Efforts
1960s1960s
Needs of
Human
Resource
Needs of
Human
Resource
HRD
Efforts
HRD
Efforts
1970s1970s 1980s1980s 1990s1990s 2000s2000s
TechnicianTechnician EngineerEngineerHigh-
caliber
Engineer
High-
caliber
Engineer
High-
caliber
R&D
Personnel
High-
caliber
R&D
Personnel
Creative
S&T
Manpower
Creative
S&T
Manpower
Expansion
of
Technical
High School
Expansion
of
Technical
High School
Expansion
of
Engineering
College
Expansion
of
Engineering
College
Cultivation
of Graduate-
level S&T
Manpower
Cultivation
of Graduate-
level S&T
Manpower
Cultivation
of Highly
Professional
S&T Manpower
Cultivation
of Highly
Professional
S&T Manpower
Brain DrainBrain Drain Reverse Brain Drain
Reverse Brain Drain
Brain Circulation
Brain Circulation
※ Source : Hwang, Yongsoo(2007).
33
World Competitiveness of Main Products
DRAM : World market leader since 1998(51%, 2009)
CDMA mobile phone : World market leader since 1998(38%, 2008)
Shipbuilding : World market leader(40%, 2008)
TFT-LCD : World market leader since 2001(46%, 2008)
Automobile : Fair global market share(5.7%, 2009)
TV : World market leader(35%, 2010)
Refrigerator : High global market share(22%, 2008)
Flash Memory : World market leader(54%, 2008)
Iron/Steel : Fair global market leader(3.9%, 2008)
※ Source : Ministry of Knowledge Economy, Korea International Trade Association
Key Characteristics of Key Characteristics of Korean Innovation SystemKorean Innovation System
44
35
Key characteristics of Korean Innovation System Key factors that influenced the Korean Innovation System
Outward-looking development strategy → Pressure for R&D investment
Government policy toward FDI TT → Focus on indigenous R&D
Government-led industrial development
- Industry-targeting → Inter-industry R&D imbalance
- Favoring large enterprises → R&D system biased for large firms/Financial
capability to invest in R&D
- S&T for industrialization → R&D system biased toward technology development
Rich pool of well educate HRST → High absorptive capacity
Government-led development of S&T infrastructure
→ Relative importance of GRIs
36
Government’s role : STI support programs by stage
MOSTMOST MOCIE, MIC, MOE, …..MOCIE, MIC, MOE, ….. Regional gov’sRegional gov’sTechnology Development Reserve Fund(’72)
R&D Tax Incentive(’81) Tariff Reduction for R&D Equipment(’82)
Special Tax Incentives for Foreign Engineers(’02)
Korea Technology Promotion Corp.(’74)
KTB(’82)- Law for the Promotion of Start-ups(’91)- Financial Support for Industrial Development(’86)- S&T Promotion Fund(’93)- IT Promotion Fund(’93)
NRDP(’82) - Industrial Base Technology Development Program(’87)
- New Growth Industries (’03)- Regional Cluster Program (’03)- Green Technology Program(’08)- Total R&D expenditure / 5% of GDP(’08)
TaxTax
Finan-cial
Finan-cial
R&D Subsi-dies
R&D Subsi-dies
1970 1980 1990 2000 2005
Wig
Plywood
Apparels, Steel,
Chemicals,
Construction, Home
application
Automobiles, Ships,
Computer, Semi-
conductor
-TD Reserve Fund- TDPL / ETPL*
-R&D Tax Incentive-Industrial R&D Center-NRDP
-MOST: HAN Project-MOCIE: Industrial Base TD Program-MIC: IT, R&D
-Industrial Base Development Program-Promotion of Ventures-KOSDAQ
-NIS / RIS-New Growth Engine-TT
3,21013,849
24,155
R&DInput-based growth
Semi-conductor, digital
appliances, IT, …..
Knowledge-based growth
GrossExpen-diture
on R&D
TT
2010
212
- Green Growth- New Growth Engine
PCGG, PMOPCGG, PMOR&D tax incentives for
growth engine products
- GT development program - Support for new growth engines
Green Growth FundNew Growth Engines
Fund
29,703(2009)
* Technology Development Promotion Law / Engineering Technology Promotion Law
37
Strength and weakness
Strength
- Consensus on the importance of S&T : Dynamism of Korean business
enterprises plus strong commitment of the government to S&T-based national
development
- Economic environments conducive to active innovation : Domestic firms’
exposure to international markets – pressure for R&D
- Chaebol system : Financial capability to invest in long-term risky projects
- Human resources
Growing scientific achievements : publications, IPR, etc
Attained technological leadership in selected areas
38
Weakness
Disadvantage of being small
Imbalances in innovation system
- Basic scientific research vs technological development
- Large firms vs SMEs
- Regional concentration
- Manufacture vs Service
Excessive reliance on private investment : vulnerable to changes in
markets
Weak industry-science relationship
Insufficient internationalization : insufficient international R&D
collaboration and international co-invention, etc.
Policy Lessons and Policy Lessons and Future DirectionsFuture Directions
55
40
Policy Lessons and Future Directions Lessons
Market competition is the very source of motivation for innovation
- Pressure for technological competitiveness
- Effectiveness of the outward-looking development strategy for small economies
Human resource is the key to learning
Government can play effectively the role of facilitator and promoter at
the early stage of development
The efficiency of an NIS
Future Directions Industry-oriented policy Catch-up Strategy → Creative Strategy Globalization and Open Innovation Create New Growth Engine
41
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