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.



Performance and Framework Conditions for Innovation

This chapter first reviews Korea’s macroeconomic performance, with its above-average OECD-area economic growth and sustained shift towards high-technology production. It then considers the structural features of the Korean economy: the unique role of the chaebol, the position of SMEs, the productivity gap between manufacturing and services, regional economic imbalances, and relatively low levels of internationalisation. It then turns to an examination of the framework conditions for innovation: the business environment, competition policy, and product and labour market conditions. A final section assesses and benchmarks Korea’s performance in science, technology and innovation (STI), with a focus on indicators such as research spending, publication and patenting rates, and human resource capacity.


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