OECD Reviews of Innovation Policy: Korea 2009

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This report assesses the current status of Korea’s innovation system and policies, and identifies where and how the government should focus its efforts to improve the country’s innovation capabilities. It finds that Korea has one of the highest rates of spending on R&D in the world, much of which is performed by private firms. It also has a highly educated labour force – as signalled by its impressive PISA performance and exceptionally high rates of tertiary level graduation – with a strong interest in science and technology.

However, a number of bottlenecks persist that hamper Korea’s economic convergence with the leading OECD economies. These include a relatively weak SME sector and weak performance in services, as well as lagging capacities to conduct leading-edge research in many areas. Furthermore, Korea faces numerous threats in the mid term, notably increased levels of competition from China and other newly-industrialising economies, the lowest fertility rate in the OECD and an ageing society, and a continuing high dependency on imports of natural resources, particularly hydrocarbons. In the shorter term, the economic crisis offers its own challenges, with the need for some policy adjustments to deal with expected falls in business investment in R&D and growing levels of unemployment among the highly skilled.



Overall Assessment and Recommendations

Korea has performed exceptionally well over the last few decades in its efforts to catch up with the world’s leading economies, and it has instigated waves of industrial upgrading to become a world leader in some of the most high-technology industries. Historically, the Korean form of catch-up was shaped by strong state leadership, a statecontrolled banking system, and the dominance of the chaebol – large, highly diversified, family-owned companies. Substantial increases in capital and labour, driven by the highest rate of business investment in the OECD area, a growing population, a long working-hours culture, and rising participation in the labour force, were the main drivers of growth.

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