Innovation System in Korea

A National Innovation System is a complex of institutions that are directly related with the generation, diffusion, and appropriation of technological innovation. There are four groups of actors in a national innovation system, namely business firms, public research institutes, universities and government. The first three categories are actual research producers who carry out R&D activities, while the government can play the role of coordinator between the research producers through its policy instruments, vision and perspectives for future.

Korean Government has been playing a very important role in almost every aspect of society. During 1960s national efforts for the promotion of science, technology and innovation were initiated in line with First Five-Year Plan for economic development. It was the beginning of intensification of science education and construction of science & technology infrastructure. At this time, automobile production, shipbuilding, mechanical engineering and electronic industry were the central concern of the government promotion. Korea Institute of Science and Technology was founded to carry out R&D activities in these areas. Meanwhile, Korean universities attempted to produce as many engineers as possible, as there was a shortage of qualified engineers. The emphasis of the innovation policy shifted from simple imitation of the imported technologies to their adoption, and domestic development of simple, less complex technologies.

In 1970s the Korean government in its industrial policy placed emphasis on the establishment and expansion of heavy, chemical and export oriented industries. Several government-sponsored institutes such as, Korea Institute of Machinery and Materials, Korea Research Institute of Chemical Technology and Electronics & Telecommunications Research Institute were founded.

The 1980s were characterized by a strong increase in R&D activities that included the government motivating industrial enterprises to establish their own R&D institutes. In 1982 the Korean Government initiated the National R&D Program in which the key industrial technologies that industrial companies could not deal with by themselves were developed through joint projects, especially between industrial companies and government sponsored research institutes. As a result of strong R&D efforts in the public and private sectors during this period, Korea could attain a level of innovation capabilities to compete with advanced countries in some of the advanced technology areas like semiconductor. Towards the end of 1980s several ministries took interest in science, technology and innovation. In 1987, Ministry of Commerce, Industry and Energy initiated the Program for Nurturing Industrial & Technological base for the first time. Following the other ministries initiated their own programs. It made a great contribution to enhancing innovation capabilities in many industrial sectors.

The government stepped up national R&D expenditure. In 1991 the share of national R&D expenditures in GDP exceeded 2% for the first time in Korea’s history. Based on this, strong increase in industrial R&D capabilities in 1990s industrial companies took over major areas of R&D activities, previously performed by government owned institutes. As a result, during 1990s there were frequent reorganization and merger of Korean public research institutes. Therefore in 1999, the Korean Government introduced a new public research system called the Research Council System. During this period the Korean Government very strongly promoted R&D and innovation capabilities of Korean universities. In order to strengthen academic R&D capabilities, the government initiated the Excellent Research Center program for the most advanced research centers in the universities. This program consisted of Science Research Centers in the area of basic science and Engineering Research Centers in the area of engineering and applied research. When a center in a university is accepted as an excellent research center, as per the country provisions, it can be supported by a very large amount of money for ten years. A few best universities, especially in Seoul, benefited enormously by being recognized as the Excellent Research Center. The Korean government initiated the Regional Research Center Program in 1995 in order to strengthen the R&D and innovation capabilities of universities in other regions.

1960s	Beginning of S&T infrastructure construction
1970s	Construction of government sponsored research institutes Technical, scientific and further education Beginning of industrial R&D
1980s	Promotion of key technologies through National R&D program Activation of industrial R&D Mass production of highly qualified R&D personnel
1990s	Expansion of R&D resources and their efficient utilization Promotion of academic innovation potentials Introduction of regional innovation policy Introduction of Research Council System
2000s	Enactment of Basic Law of Science & Technology Selection and concentration on major technologies Coordination of innovation policies

Turning to 21^st century, the Korean government enacted a comprehensive law, the Basic Law of Science and Technology. This plan comprised of detailed S&T plans of all S&T related ministries. According to this plan, Korea aims to reach the top 10 countries in the areas of science, technology and innovation. In particular, Korea selected six technology areas i.e. information technology, biotechnology, nanotechnologies, space technology, environmental technology and cultural technology. The Presidential Committee on Science and Technology was established to better coordinate innovation policies among major S&T related ministries. Also the regional innovation gained an important priority in the Korean innovation policy, especially those of the Ministry of Science and Technology and the Ministry of Commerce, Industry and Energy.

Until the beginning of 1980s, Korea invested very little in R&D activities. Korean national R&D expenditures accounted for 0.58% of GDP. In the 1990s, the importance of technological innovation was widely diffused into the Korean society. The total R&D expenditure in 1997 were USD 13.51 billion, which amounted to 1.8% of Korea’s GDP. These figures nearly doubled in ten years and in 2005 the R&D budget stood at USD 25.59 billion. The share of total national R&D expenditures in GDP in 2005 was 2.30%. Korea is one the most significant R&D investing countries in the world. This phase was hit by financial crisis for the economy and the resultant recession. However, both the Government and the industry have shown a deep commitment to the R&D.

Till the end of 1970s, Korean national R&D expenditure had been financed by the public sector. But the role of public sector diminished in 1980s as a result of strong financing by the private sector. The ratio of public to private financing to R&D was about 23:17 in 2005. The private sector recognizes the importance of technological innovation strongly. During the last ten years the business expenditure on R&D has nearly doubled from USD 9.9 billion in1996 to USD18.13 billion in 2006.

The public sector in Korea recognized the importance of science, technology and innovation in overcoming the crisis period. The public sector was also influenced by the IMF jurisdiction. The annual increase rate declined sharply and it did not recover till after the jurisdiction, i.e. 1999 and 2000. In 2005, the private sector showed a much higher level of increase rate in R&D investment. Korean companies implemented an aggressive R&D and innovation strategy after the IMF jurisdiction period.

Until the end of 1970s public research institutes carried out almost all Korean R&D activities and continued to dominate in the1980s. The Korean universities played a relatively minor role in the national innovation system in this period. During the 1990s the share of innovation actor groups in national R&D changed. The share of R&D expenditures among universities changed from: 8.2% of the total in 1995 to 11.3% in 2000.

There has been transformation of technological innovation activities in Korea in terms of R&D manpower. In 1980, the Korean system of innovation comprised of 18,434 researchers. There was an annual increase rate of 14.4%. In1980, the academia was employing 47% of the total researchers, so that it was the biggest employer of Korean researchers followed by the industry. In 1990, Korean industry became the biggest employer of researchers by having 54.9 % of total. The Korean government implemented several policy measures to induce private companies to employ researchers During the 1990s, the number of Korean researchers almost doubled. However the IMF jurisdiction had a severe impact on the number of researchers in the Korean national innovation system. Total R&D workforce has increased six fold in the last decade. The private companies increased the R&D manpower to a large extent, while the share of the public research institutes decreased.

R&D has also contributed to Korean economy in more than one ways. In pure economic terms the high technology exports have more than doubled in the last seven years. It has also resulted in six-fold growth in intellectual assets in the shape of patents – both domestic and international. In 2005 Korea has sealed 4416 US patents and over 31,914 domestic patents.

Korea’s economic development is based on its innovation capabilities. In the previous three decades, Korea could formulate and implement a competent national innovation system which has served the country well. The dynamic development of Korean economy in this era of globalization can be attributed to the efficient functioning of this System.