The evolution of STI policy in South Korea
On November 17, 2015, Professor Jeong-Dong Lee (Seoul National University, Republic of Korea), gave a lecture to the 2nd year students of the Master’s Programme “Governance of Science, Technology and Innovation” about the evolution of industry, technology and innovation policies and their impact on the development of Korea’s economy.
South Korea managed to turn from an agricultural country to one of the most innovative countries in the world, occupying the 14th place in the Global Innovation Index 2015, within the last 50 years. How did it become possible and what were the key drivers of such an incredible surge? During the lecture on the evolution of industry and technology policies in South Korea, Professor Lee described how his country had developed and passed through four stages. Each of these stages is characterized by a unique vision and goals, target areas, policy tools and framework conditions.
At the first stage (1962–1973), the country`s economy was based on agriculture, and there was a lack of infrastructure, experience and knowledge. Since the late 1960s, government has started promoting export orientation of the economy in order to secure national currency.
Stage two (1973–1986) started with the implementation of the Sector Specific Promotion Act of 6 heavy and chemical industries, which were supposed to have the largest spillover effect for the whole economy. As a result, industrial processes were totally restructured by the deep government intervention. In order to improve transfer of knowledge into economy, machinery was imported from other countries. Then it was disassembled to analyse its working process in order to create its analogs.
Beginning of a new stage – Stage three (1986–1997) – started with the substitution of the Sector Specific Promotion Act with the Industrial Development Act, introduced in 1986. It promoted sector-neutral policy and liberalization of economy. Instead of supporting particular industries, government started encouraging the development of technologies. Public R&D investments also grew targeting at building innovation capacity of the country. Between Stage two and Stage three there is a huge gap in terms of industrial policy which can be attributed as transformation from imitation to innovation development of the economy.
Stage four has lasted from 2000 until nowadays. It started after a significant recession during the late 1990s due to the Asian Financial Crisis. After it, the government understood that a more innovative economy is needed. As a result, innovation system started to be integrated at all levels. The focus shifted from short-term goals to middle- and long-term perspectives. Basic science grew in importance, since it was seen as a base for new knowledge creation. Therefore, both public and private R&D investments began to surge.
As a result, currently, South Korea is one of the top-10 high-income economies in the world according to the Global Innovation Index 2015. These results were achieved through coherent policy, which was integrated step by step to provide continuous development of the economy during the last 50 years. Another principle that played an important role in successful performance of the country is co-evolution of policy, which implies its adjustment to changing environment conditions. South Korea’s experience can be useful for Russia in terms of switching from catching-up to forging ahead development.
Professor Lee also identified two main principles that enabled successful economic development of the Republic of Korea from 1962 to the present: coherency and co-evolution. First of all, in the 1970s it was a coherent policy framework that made sector-specific industry promotion acts. Later, coherency was achieved in the form of production and innovation system as a set of complementary institutions combining education, labor and industrial relations, financial systems, industry structure, governmental policy, socio-political system, knowledge generation, adoption, diffusion and utilization, external market conditions and, finally, firm capability and strategy in the center. The key features of such a system were indicative policy, orientation at export, support of big corporations and (or) corporate networks, bank-backed financial system instead of orientation at stocks, weak labor union, stable political system, focus on knowledge imitation and diffusion and, finally, education that supports industrial development.
Second, co-evolution of policy made it possible to adapt to dynamic changes in the world and inside the country. Before 1986, the policy was oriented at supporting seven specific sectors, provision of labor and capital and leadership by the government. After 1986, the policy became sector-neutral and functional concentrating on innovation capacity building and leadership by the private sector.
Professor Lee concluded his lecture by presenting currently existing challenges to the Korean industry. In particular, he stated that a new round of a co-evolution process for a new policy is needed due to a short cycle of new technology development, impact of Information and Communication Technology (ICT) on all sectors of economy, “China effect” in terms of trend for many private companies around the world to outsource labor force, long-term global recession and increasing preferences for welfare state. Finally, another big challenge, in his opinion, is the lack of policy coherency as there is no industry policy with R&D subsidy programmes only.
Prepared by:
Pavel Bakhtin & Olga Nekhaichik
Other students' feedback on the lecture.
Ekaterina Tertyshnaya:
"This lecture helped us to understand the development and implementation of scientific and technical policies of the Republic of Korea, mainly its experience and current state, strategic goals and objectives of science, technology and innovation policy for the near future".