Insights

South Korea’s position as one of the world’s most innovative nations is a remarkable achievement considering that, for the first half of the twentieth century, it was an agrarian-based Japanese colony, then a battle ground.

It is second only to Germany in Bloomberg’s 2020 Innovation Index, having reigned at the top of the 60-country list for the previous 5 years. In the separate 2019 Global Innovation Index, published by Cornell University, INSEAD and the World Intellectual Property Organization, South Korea is at number 11 and Germany is in 9th place among the 129 countries ranked.

Both indices highlight South Korea’s outstanding performance in research and development (R&D) intensity, an indicator based on R&D investment by government and industry and the number of researchers working in and between both sectors. For example, South Korea had the greatest share of researchers who moved from industry to academia in 2017 to 2019 among 71 countries, data from academic recruitment firm, League of Scholars, show.

Top-down success

The high R&D intensity that helped South Korea become a global leader in information and communication technologies has emerged from a historically ‘top-down’ innovation system that promotes “close collaboration between government, industry, and the academic community in the process of nation building”, says Tim Mazzarol from the University of Western Australia in Perth, who specializes in innovation and entrepreneurship.

President Park Chung-hee drove South Korea’s economic development between 1961, when he took power in a military coup, until 1979, when he was assassinated. Park shifted the economy from its post-war dependence on technology imports and the construction of industrial facilities by foreign companies to focus on home-grown labour-intensive industries, such as clothing and textiles. Crucially, strong support for R&D was central to his first Five-Year Economic Development Plan in 1962 and manifest in his establishment of the Korea Institute of Science and Technology (KIST) in 1966, and the Ministry of Science and Technology the following year.

These instruments supported the emergence of large industrial groups called chaebols, which were owned and controlled by South Korean individuals or families. The government pushed the chaebols to invest heavily in R&D while shielding them from competition. With increased R&D intensity that focused on applied knowledge, chaebols such as LG, Lotte and Samsung were driven towards new heavy industries, including petrochemicals, car manufacturing and shipbuilding, as well as consumer electronics.