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Systemic reforms that were supported by strong investments have led to fast and long-lasting results. South Korea is one of the most innovative countries in the world, which is a big deal considering that it was a Japanese agricultural colony and then a war zone for most of the 20th century.
Only Germany is ahead of it in Bloomberg’s 2020 Innovation Index. For the past five years, it has been at the top of the 60-country list. In the 2019 Global Innovation Index, which was put out by Cornell University, INSEAD, and the World Intellectual Property Organization, South Korea came in at number 11 and Germany came in at number 9.
Both indices show how well South Korea is doing in terms of research and development (R&D) intensity, which is based on how much government and business invest in R&D and how many researchers work in and between government and business. League of Scholars data shows that, out of 71 countries, South Korea had the most researchers who switched from working in the industry to working in academia from 2017 to 2019.
South Korea’s high R&D intensity helped it become a world leader in information and communication technologies. This was made possible by a “top-down” innovation system that has been in place for a long time and encourages “close collaboration between government, industry, and the academic community in the process of nation-building,” says Tim Mazzarol, an expert in innovation and entrepreneurship at the University of Western Australia in Perth.
From 1961, when he took power in a military coup, until 1979 when he was killed, Park Chung-hee was in charge of South Korea’s economic growth. Park changed the economy so that it didn’t depend on importing technology and having foreign companies build factories. Instead, he put the focus on labor-intensive industries like clothing and textiles.
Importantly, strong support for research and development was a key part of his first five-year economic development plan, which he made in 1962. He showed this by creating the Korea Institute of Science and Technology (KIST) in 1966 and the Ministry of Science and Technology the next year.
Large industrial groups called chaebols, which were owned and run by South Korean people or families, grew with the help of these instruments. The government forced the chaebols to put a lot of money into research and development (R&D) while protecting them from competitors. With more applied research and development, chaebols like LG, Lotte, and Samsung were pushed into new heavy industries like petrochemicals, car manufacturing, and shipbuilding, in addition to consumer electronics.
Samsung is a good example. In 1938, the company started out as a grocery trader. Now, it is South Korea’s biggest chaebol, and it works in many different fields, such as electronics, insurance, construction, and shipbuilding. It made up about 15% of the country’s gross domestic product in 2018.
With help from the government’s protectionist policies, the company’s founder, Lee Byung Chul, grew into textiles after the Korean War, electronics in the 1960s, heavy industries, aerospace, and computers in the 1970s and early 1980s. In the 1990s and 2000s, Samsung was the best in the world at making tablets, cell phones, and computer chips.
Based on contributions to research articles published in 82 high-quality natural science journals tracked by the Nature Index, the company is by far South Korea’s top corporate institution. With a share of 10.36 in 2019, it ranked 28th among all institutions in the country. It beat LG, which had a share price of $1.99 and was its closest corporate competitor. The Nature Index also shows that Samsung is a part of each of South Korea’s top nine corporate-academic collaborations.
The most productive partnership is with Sungkyunkwan University (SKKU) in Seoul. Between 2015 and 2019, they wrote 159 articles together. Their cooperation is especially strong in the field of electrochemistry and the creation of new energy sources like lithium-ion batteries (J. K. Shon et al., Nature Communications, 7, 11049; 2016). Seoul National University in Seoul (41 articles) and the Korea Advanced Institute of Science and Technology (KAIST) in Daejeon are also partners (35 articles).
Samsung Group’s top ten collaborating academic partners on articles in the Nature Index journals are split between the United States and domestic institutions. Here they are ranked by bilateral collaboration score (CS), 2015–19. CS is derived by summing each institution’s Share of the papers to which authors from both have contributed.
|1||Sungkyunkwan University||South Korea||75.07||159|
|2||Seoul National University||South Korea||21.10||41|
|3||Korea Advanced Institute of Science and Technology||South Korea||20.16||35|
|4||Stanford University||United States||19.29||31|
|5||University of California, Berkeley||United States||17.16||51|
|6||Korea University||South Korea||13.62||27|
|7||Yonsei University||South Korea||11.07||22|
|8||Harvard University||United States||9.67||26|
|9||Pohang University of Science and Technology||South Korea||8.82||16|
|10||California Institute of Technology||United States||8.35||12|
Park’s successors kept pushing research and innovation as the keys to economic and social progress at the national level. Government and business spending on research and development (R&D) went up, and basic research capabilities grew. By the middle of the 1980s and the beginning of the 1990s, the government was paying more attention to high-tech industries like designing and making semiconductors. For example, it started KAIST in 1971, which is still one of the best national research universities (see “Manipulating brains with smartphones”).
Targeted programs to help build the country were also set up. In 1995, for example, the government started a US$1.5 billion, ten-year plan to build up the national broadband infrastructure and offer public programs about how to make the most of it.
The Asian Financial Crisis of 1997 caused many chaebols to stop relying on low-value-added exports, which are typical of a “tiger” economy, and instead focus on products and services that require a lot of technology and knowledge, like semiconductors, mobile phones, and mobile applications.
Working with chaebols, the government started building regional innovation centers like Gyeonggi, which is a region of about 13 million people around Seoul and is now seen as the economic and innovative powerhouse of the country.
The center brought together research, development, and production infrastructure from industry with research facilities and universities from around the country. For example, Samsung Electronics, which is based in Gyeonggi and is Samsung’s most important subsidiary, is working with SKKU Chemistry to create a semiconductor material that can reduce the amount of radiation exposure when medical X-ray images are taken. By the year 2010, South Korea had 105 regional innovation centers, 18 techno-parks, and 7 federal programs to make industrial clusters more competitive.
Even though the government continued to fund research and development (R&D) spending and programs to improve translational development and scientific, engineering, and management skills, the corporate sector, in search of patents and profits, began to invest more in R&D. Nearly 80% of South Korea’s R&D spending in 2019 came from the private sector. This is more than innovative countries like Germany, Sweden, and Switzerland, which spend 70% of their R&D money on the private sector. Tax breaks for R&D and bringing in foreign technology helped make this change possible.
In the 2010s, small to medium-sized businesses in biotechnology, artificial intelligence and cybersecurity, and broadband-based firms began to emerge. Founded by a new generation of entrepreneurs, they were backed by government funding and supported by the national technological infrastructure.
Woowa Brothers are one example, among many, of the strategy’s success. The Seoul-based 2010 start-up exploited the national broadband to build a mobile food-delivery application connecting restaurants, customers, and riders.
In December 2018, Woowa joined the ‘unicorn’ club — a rare status denoting a privately held start-up valued at more than US$1 billion — with investment from national and international venture-capital sources. In December 2019, Germany’s Delivery Hero bought the company in a $4-billion deal that will see co-founder and chief executive, Kim Bong Jin, manage the Asian business, including South Korea, Vietnam, and Hong Kong. A delivery robot, self-driving technology, and an online customer and revenue-management system for restaurants are in development.
The South Korean government’s systematic approach has been a crucial factor in creating an innovative economy adept at turning ideas from laboratories into products and industries. Martin Hemmert, an expert in east Asian innovation systems, at Korea University, adds that the cultural mindset evident in South Korea helps. “Complacency is not on the cards. The glass is always half empty,” he says.
Even so, as Mazzarol concludes: “It’s a miracle when you consider where Korea was.”
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