Innovation in Korea

Innovation in Korea Some General Issues

VTT, Finland

October 23, 2013

Seogwon Hwang, Ph.D.

Research Fellow at STEPI

[email protected]

• About STEPI

• Status quo of Korean Innovation Activities

• Evolution of Korean STI Strategies

• Players in Korean STI

• Epilogue

Contents

* This is the material modified based on many slides provided by Dr. Yongsuk Jang in STEPI

• About STEPI

• STI in Korean Development



• Epilogue

Contents

• Conduct research and analyze issues pertaining to STI

• Provide government agencies with policy ideas and suggestions

for the promotion of innovation

• Identify policy issues to effectively deal with future challenges

• Suggest strategic options in technology development for the

government as well as industry

• Create and disseminate S&T policy materials, data and

information

STEPI: Roles and functions

STEPI: Position

Prime Minister

President

MSIP Ministry of Science, ICT

and Future Planning

MOTIE Ministry of Trade, Industry

and Energy

KRCF Korea Research Council of

Fundamental Science & Technology (13 GRIs)

NRCS The National Research Council for Economics, Humanities and Social

Sciences

SMBA Small and Medium Business

Administration

STEPI Science and Technology

Policy Institute

PACST Presidential Advisory Council on

Science and Technology

ISTK Korea Research Council for Industrial

Science & Technology (14 GRIs)

STEPI: Organization

Ministry of Science, ICT and Future Planning

Ministry of Trade, Industry and

Energy and Other Ministries

Foreign Countries

Local Governments

Research Advisory Committee

Auditor

National Research Council for Economics, Humanities and Social Sciences (NRCS)

Prime Minister

President

President

Vice President

Division of

Basic and

Public

Research

Division of

Innovation

Policy

Research

Division of

Industrial

Innovation

Research

Center for

Future

Studies

HRST Joint

Research

Center

Division of

Global

Policy

Research

Center for

Human

Resources

Policy

Division of Planning and

Management

STEPI: History

The Center for Science

and Technology Policy

(CSTP) was established.

CSTP was renamed

the Science and

Technology Policy

Institute (STEPI).

The 25th Anniversary

Decision made to establish

STEPI under the KCESRI

based on the “Law on the

Establishment, Operation and

Promotion of Government

Sponsored Research Institute”.

Dr. Jong-Guk SONG was

appointed as the 12th

president of STEPI.

The KCESRI was

reorganized into the

National Research Council

for Economics, Humanities

and Social Science (NRCS)

1987.1

1993.5

1999.5

2005.7

2012.5

2011.8

SCIENCE AND

TECHNOLOGY

POLICY

INSTITUTE

Originated in 1967 as a Division of KIST

STEPI: Researchers and Staffs

Total of 137 Employees

Executive Administrative Staff Research Staff

Academic Backgrounds of the Researchers

21 (36.2%)

12 (20.7%)

14 (24.1%)

11 (19.0%)

Economics

Business Administration

Political Science & Science and Technology Policy

Science and Engineering

1 22 114

STEPI: Researches

60%

40%

Grant Researches

• Basic Research

• Issue-focused

• Pilot Research

• Contract-outs

Contract Researches

• Agency-directed

• Customer-oriented

* Government Money, eventually

• Overview of Korean STI • An Interdisciplinary Journal on STI Policies around the world

• www.stipolicyreview.net

STI Policy Review

Question 1: Innovation policy researches for business?

• Critique of distance between policy (research) and business

reality

• Can STEPI do help firms to make profits from innovation?

Question 2: More Evidence Based Policy?

• Much more facts and evidences needed for decision making

• Construction of indicators and indices based on S&T data

• About STEPI

•Status quo of Korean Innovation Activity



• Epilogue

Contents

Republic of Korea (South)

A Small Land with Scarce Resources

Korea's Economic Development, 1953-2010

$67 (1953)

$23,679 (2012)

Source: The Bank of Korea, IMF • 1953-1970: Per Capita GNP (current US$, 1975 base year) • 1971-2010: Per Capita GNI (current US$, 2005 base year)

15th Largest Economy in 2012

2nd Poorest Country in 1945

Trends of Total R&D Exp. and R&D/GDP in Korea

Source: NTIS (www.ntis.go.kr)

1.4 10.5 42.7 211.7 1,155.2

3,210.5

9,440.6

13,848.5

16,110.5 17,325.1

19,068.7

22,185.3

24,155.4

27,345.7

31,301.4

34,498.1

37,928.5

43,854.8

0.20

0.37 0.42

0.56

1.41

1.68

2.30 2.30

2.47 2.40

2.49

2.68 2.79

3.01

3.21

3.36

3.57 3.74

0.00

1.00

2.00

3.00

4.00

0.0

10,000.0

20,000.0

30,000.0

40,000.0

50,000.0

1964 1970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

GER

D/G

DP

To

tal R

&D

(BillionKRW)

(%)

$ 44 Billion (4.03%)

in 2011

Target

5%

Public R&D Investment Growth

3.0

0.002

16.0

Government’s R&D Budget (Trillion KRW)

Public R&D Investment

1963 1997 2012


Trends of Public vs. Private R&D Investment in Korea

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%1

96

4

19

66

19

68

19

70

19

72

19

74

19

76

19

78

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

Private Share, %

Gov. Share, %

Source: MEST (www.mest.go.kr), NTIS

Public: Private = 26: 74 (2011)

http://www.mest.go.kr/

Korea in Global R&D (2011)

Source: Battelle (2011)

Total Number of Researchers Growth

375,176

138,438

2,962

Total Number of Researchers

Total Number of Researchers

1964 1997 2012


Major S&T Achievements

International Patents Science & Technology Articles

2003 2005 2006 2004

세계

순위

2007 2008 2002 2001

1984 1997 2012

13,233 (3th)

11,846 (5th)

1,891

288 30 10

1981

44,718 (11th)

1997 2011

7,870 (18th)

4 (53th)

Science & Technology Competitiveness (IMD)

3th

14th 12th

13th

17th

14th

10th 7th

5th

21th

17th

24th

8th

2th

6th 6th

14th

Science Competitiveness Technology Competitiveness

14th

2009

No. of PCT Applications No. of US Granted Patents Number of Articles (Ranking)


Question 3: many articles and patents but then?

• Low R&D productivity in terms of commercialization

• tech transfer, spin-off, etc.

Korea US

University GRI total University GRI total

Royalty Revenue (Million$) (C) 52 101 153 1,764 576 2,340

R&D Expenditure (Million$) (D) 5,645 5,993 11,638 52,232 5,366 57,598

R&D Productivity (%) (C/D) 0.9 1.7 1.3 3.4 10.7 4.1

Source: MOTIE, 2011

• About STEPI

• Status quo of Korean Innovation Activity



• Epilogue

Contents

Industrial Shifts and STI Policies

1960s

1970s 1980s

1990s

Import Protection

fostering export- oriented light industry

expanding technological capability (absorptive)

import liberalization

expanding

investment

in technological

development

training skilled

manpower

strengthen technological innovation

establishment of nationwide IT infrastructure

Industrial Shifts: Select and Focus

Light

Industries

Heavy

Industries

Assembly

&

Processing

Industries

IT

Industries

New

Growth

Engines

Demand Side

Supply Side

•Self-

Sustain

•Import-

Subs.

•Import

Protection

•Export-

Orient

•Mfg.

Capacity

•Industrial

Seeds

•Open

Market

•Higher

Value-

added

•Industrial

Diversificat

ion

•Import

Tech.

•Tech.

Capability

•Expand

R&D

•Skilled HR

•Innovation

Capability

•original

Tech.

1982

Institutional Building

Technology Catching-up

Innovation

1981 1971 1967 1962 1987 1991 1997 2004 1966

Korea Institute

of S&T (KIST)

1992

Korea Advanced Institute

of Science (KAIS)

National R&D

Program (NRP)

Ministry of S&T

(MOST)

Technology

Development Promotion

Act

Industrial Generic

Technology

Development Program

(IGTDP)

Deputy Prime

Minister of MOST

(OSTI)

Information and

Communication R&D

Program (ICRP)

Highly Advanced

National Project

(HAN)

1st 5-Year

Economic Plan Financial

Crisis

2013 2008

MEST & MKE

MSIP

Evolution of Korean STI Policies I

1960s

• STI Policies

- Establish Scientific and Technological Infrastructure (e.g., KIST)

- Initiate S&T Education (e.g., KAIS)

- Promote Foreign Technology Imports

- Establishment of Ministry of S&T (MOST)

• Industrial Policies

- Import-Substitution Industries (Textiles, Plywood, etc.)

- Expand Export-oriented Light Industries (export subsidy, preferential financing)

- Five-Year Economic Plans

- From Agriculture to Labor-intensive Light Manufacturing Industries

1970s

• STI Policies

- Expand Technical Training

- Improve Institutional Mechanism for Adapting Imported Tech. (GRIs)

- Invite eagerly Korean Scientists trained overseas

- Promote Research Applicable to Industrial Needs

- Promote Imports of Foreign Tech. (imitation, reverse engineering, imports of capital goods)


- Expand Heavy & Chemical Industries (e.g., machinery, shipbuilding, chemicals, marine science, electronics, electricity)

- Capital and Technology Imports

- Strengthen Export-oriented Industrial Competitiveness

- Foster Chaebols (e.g., Samsung, Hyundai, LG)

1982



S&T Leadership

1981 1971 1967 1962 1987 1991 1997 2004 1966

Korea Institute

of S&T (KIST)

1992


of Science (KAIS)

National R&D

Program (NRP)

Ministry of S&T

(MOST)

Technology


Act

Industrial Generic

Technology

Development Program

(IGTDP)

Deputy Prime

Minister of MOST

(OSTI)

Information and

Communication R&D

Program (ICRP)

Highly Advanced

National Project

(HAN)

1st 5-Year


Crisis

2013 2008

MEST & MKE

MSIP

Evolution of Korean STI Policies II

1980s

• STI Policies

- Reluctant to TT from Advanced Economies

- Pressure on Strong IPR

- Develop and Acquire Top-level Scientists and Engineers

- Perform National R&D Projects Efficiently (e.g., NRP, IGTDP, AEECTP, ICRP)

- Promote Industrial Technology Development

- Promote Collaborative R&D (San-Hak-Yun)


- Economic Slowdown due to the oil shock / Trade Imbalance

- Restructuring heavy and chemical Industries

- Expand Technology-intensive Industries

- Encourage Human Resource Development and Improve Productivity of Industries

- Promote SMEs

1990s

• STI Policies

- From Imitation to Indigenous Innovation

- Realign National R&D Projects

- HAN Project (Long-term, Large-scale)

- Construct S&T Infrastructure

- Basic Research at Universities


- Financial Crisis and Deep Restructuring of Industrial and Financial Structure

- From Imbalanced to Balanced Growth Strategy

- Investment for Network Infrastucture

- Information Tech. (e.g., Computer, Semiconductor)

1982



S&T Leadership

1981 1971 1967 1962 1987 1991 1997 2004 1966

Korea Institute

of S&T (KIST)

1992


of Science (KAIS)

National R&D

Program (NRP)

Ministry of S&T

(MOST)

Technology


Act

Industrial Generic

Technology

Development Program

(IGTDP)

Deputy Prime

Minister of MOST

(OSTI)

Information and

Communication R&D

Program (ICRP)

Highly Advanced

National Project

(HAN)

1st 5-Year


Crisis

2013 2008

MEST & MKE

MSIP

Evolution of Korean STI Policies III

2000s

• STI Policies

- New Growth Engines (Bio/Nano/IT, Green Growth, Creative Economy)

- Develop Regional Innovation Clusters

- Decentralization of R&D Authorities but Emphasis on Coordination

- Five-Year S&T Principal Plan

- Efficiency of Gov. R&D Investments (Evaluation Emphasis)

- National Technology Road Map (NTRM)

- Private Sector-led NIS


- Searching Sustainable Growth based on Tech. Innovation

- “Select and Concentrate”

- Differentiated Strategies for Major Industries, Future Strategic Industries

- Regional Development

- Entrepreneurships (Venture Capital, KOSDAQ)

- Globalization (FTAs with Chile, U.S., EU, China)

Standing NSTC in 2011

President

Others MKE MEST NSTC

Prime Minister

ISTK

14

GRIs

NRCS

26

Policy

Inst.

KRCF

13

GRIs

For Effective

Coordination Standing NSTC as a Control

Tower with STI Policy

Coordination and R&D Budget

Allocation Power

New Governance for Creative Economy (2013)

President

Others MOTIE MSIP

Prime Minister

MOSF

For Driving

‘Creative Economy’

* MOSF: Deputy Prime Minister and Ministry of Strategy and Finance

* MSIP: Ministry of Science, ICT and Future Planning

* MOTIE: Ministry of Trade, Industry and Energy

S&T Trade ICT Industry

Energy

Economy

NSTC Budget

Question 4: Still “Select and Concentrate”?

• Uncertainty Uprising: From Imitation to Innovation

Wibro: Almost diminishing

WIPI: Withdrawn just as a useless regulation in the walled garden

Public Certificate for online exchange: ?

Question 5: One Company Risk?

• One extremely big company for a country

System risk management

Resilience with Innovation Capability

Capability of Human Resources, Entrepreneurship and Mobility

• About STEPI




• Epilogue

Contents

Triple Helix for Innovation

• Government (GRIs) • Government-sponsored

Research Institutes (GRIs)

• Research for Public Purposes

• Applied Research

• Universities • Supply S&Es

• Curiosity-driven

• Basic Research

• Firms • Commercialization

• Produce Innovations

• Development Research

Evolution of Korean Triple Helix

Univ. GRIs

Firms

60’s

70’s

80’s

90’s

2000’s

GRI-led / Univ.-supported

Industrial Innovation!

• Leading Player for Korean Innovation • Independent non-government organizations with government’s

financial supports

•Operating under the GRI Laws and civil laws

•Conduct about Half of Public R&D Investments (13% of the total

expenditure in 2011)

•KIST was established in 1966 with help of USAID

•27 (13 under KRCF & 14 under ISTK) S&T GRIs (as of 2011)

• Role Shifting • Absorbing & Internalizing imported foreign tech. (1970s)

• Modifying imported tech./Developing domestic tech. (1980s)

• Advancing catching-up tech. (1990s)

• Focusing on Endogenous Tech. (2000s~)

• Major Function: Providing Needed Tech. to Industries

• Challenges • As Private R&D Labs and University Researches Grow,

• Need to Redefine its Role

Roles of GRIs

Evolution of Korean GRIs

1990 1980 1945 1970 1966 1960 2000

NIMS

2005

NFRI

1996

KRRI

1996

KIOM

1994

KITECH

1989

KBSI

1988

KRIBB

1985

WKIMCHI

2010

KFRI

1987 KIER

1977

KRICT

1976

KERI

1976

KIMS

2007

KARI

1989

KIMM

1976

ETRI

1976

KRISS

1975

KIT

1982

KASI

1974

KOPRI

1987

KORDI

1973

KIST

1966

KICT

1962

KISTI

1991

KAERI

1959

KIGAM

1948

STEPI

1987

NSRI

?

• Korea-US Summit in 1965 • Between then Presidents, Park

Chung Hee and Lindon B. Johnson

• ‘Foundation of a research institute

for Korea’s Growth in industrial

technology and applied science’

• Under USAID Program

• Models < vs. > • Bell Lab: Research for Basic

Science

• Battelle: Industry-oriented Tech.

Dev. for Catching-up

• Growth • 1966: 50 FTE & 200 M.KRW

• 2010: 700 FTE & 250 B.KRW

KIST: The First Korean GRI

• Principles • Close to Industries

• Operational Autonomy

• Stable Funding

• Transparency

• Reservoir of High-Caliber S&E Human Resources • Korea High Fever on Education (College Enrollment Rate: ~70%)

• More than 400 Higher Education Institutes

• Holds about 70% of S&E Ph.D.s

• Excessive Teaching Orientation

• Conduct Only 10% of Gross R&D Expenditure (2011)

• Enforcing its Research Function • KAIST, the first S&T Research Univ., was established in 1971

• Allocating More Public R&D Investment to Universities

• Promoting Basic Researches

• Various Programs such as BK21, WCU, WCI, etc.

• Challenges • Shrinking S&E Enrollment

• Weak Univ.-Industry Partnership

• Into the World Class Level

Roles of Universities

• Education + Research • Supply High-Caliber S&Es to GRIs & Industries

• Conduct Mid- & Long-term Researches

• Under Different Governance

• Under MSIP • Most Universities were under auspices of Ministry of Education

(MOE)

• S&T-specialized Universities were under auspices of MSIP

• Operational Autonomy

• Stable & Growing Funding

• Expansion • POSTECH (Private Univ. sponsored by POSCO)

• GIST, DGIST, UNIST (Public Univ. funded by Government)

S&T-specialized Research-oriented Universities

• Korea Advanced Inst. of S&T • Established in 1971

• Under Special Law on KAIS

• With Government Funding

• Provided High-Caliber S&Es

• Evolution • Staffed with Oversea-trained

Korean S&Es

• Merged with KIST in 1981

• Undergraduates in 1986

• Split out from KIST and Moved to

Daejeon in 1989

• Current • Faculty: 700+ (Int’l: 100+)

• Student: 8,000+ (Int’l: 300+)

KAIST: The First Research-oriented Graduate School

• Functions • Education & Research

• Theoretical & Applied

Researches

• Mid- & Long-term R&D

• Incubate

Entrepreneurs

Evolution of Korean Universities

400

300

100

1965 1970 1980 1990 2000 2010

200

UNIST

2009

DGIST

2003/2010 GIST

1993

KAIST

1971

POSTECH

1986

No. of Higher Education

Source: MEST (2010)

*S&T-Specialized Univ.

A Success Story: TDX Development Project (1977-1984)

ETRI

(KICT)

(1977)

TDTF

(Telecom. Dev. TF)

(1981)

MPS

(M. of Postal Service)

KIST

KT

(KTA)

(1981)

TDX-1

(1984)

TDX Op.

Team

TDX Dev.

Team

MOST

(M. of S&T)

Dongyang

E&T

LG

(Goldstar)

Samsung E.

Spin-off

Cre

ate

Establish

Com

merc

ialize

Coop.

Part

icip

ate

Form

Develop

Part

icip

ate

• Triple Helix • Major Players for Modern Innovation • Each has its own designated Role • Collaboration among Triple Helix is Essential • For Development, Which Player should go First?

• Western Model (Balanced Strategy) • All Players should be developed in Balance • Based on Traditional Simple-Linear Innovation Model • Basic R -> Applied R -> Development -> Innovation • Assume Automatic Spillovers

• Korean Model (Unbalanced Strategy) • Under very limited framework conditions • University vs. GRIs • Korea chose GRIs to take a lead for Catching-up • Later, promote Research in University • Essence is Education!

Policy Implications for Late-Comers

Question 6: How to Renovate GRIs?

• Roles and Outcomes

Chabols do not need GRIs anymore for their own innovation.

SMEs not satisfied with the role of GRIs

Activities of TT and Spin-offs very weak

Universities getting better than GRIs in basic science and research

Question 7: Universities at risk?

• Dependence on Foreign Universities

Recruiting professors mainly educated in the US

Excellent students studies overseas, mainly in the US

Brain drain vs. brain gain

• Very basic problem of population structure

Number of students decreasing steeply

No graduate students in many universities: Are the professors in those

universities able to conduct researches without assistance from students?

Unbalance between the number of Ph.Ds (70%) and the portion of R&D

expenditure (10%)

Source: KOSTAT (www.kostat.go.kr), recited from http://misto.tistory.com/51

http://www.kostat.go.kr/

http://misto.tistory.com/51

• About STEPI




• Epilogue

Contents

How Has Korea Evolved?

Korea

Current

U.S.

Japan UK ?

FACTOR-

DRIVEN

INVESTMENT-

DRIVEN

INNOVATION-

DRIVEN

WEALTH-

DRIVEN ?

Korea

1990s

Korea

1980s

Korea

1970s

Korea

1960s

From IMITATION To INNOVATION

In

Innovative

Way

Roles of STI Policy in Korean Development

Period 1960s 1970s 1980s 1990s 2000s 2010~

Era Export-

Oriented

Export-led Economic

Liberalization

Democrat. Advancement Global

Leading ?

Focused

Industries

Light

Industries

Heavy

Industries

Assembly &

Processing

Industries

ICT ICT and

Diversification

Services/

Fusion Tech./

Green Ind. ?

Compet.

Factor

Cheap Labor Skilled Labor Capital

Investment

Technologies S&T

Innovation

Advanced S&T

Innovation ?

S&T Policy Turn-key

Capital

Import/ Tech.

Learning

Internalizing

Imported

Tech./

Reverse Eng.

Modify

Imported

Tech./

Develop

Domestic Tech.

Advancing

Tech. Catch-

up/ Large Gov.

R&D Prog.

Focus on

indigenous

tech./

Systemize

S&T Prog.

Globalize

S&T/ Focus on

fusion tech.

and green

growth ?

Imitation Catching-Up Innovation ? Paradigm

Change

• Creative S&E and Job Creation • Advance Education System for Creative HRD • Job Creation for Young Generation

• Linking Basic Research to Innovation • Overcome ‘Valley of Death’ and ‘Darwinian Sea’ • Strengthen Collaboration among GRI-Univ.-Firm

• New Growth Engines and Global Competitiveness • New Emerging Areas incl. Stem Cell, New Energy, Brain Research, IT-based Fusion Tech., etc. • Mega Sciences in Space, Defense, Marine, Security, etc.

• New Science Culture • S&T for Social Challenges

Challenges in Korean STI Policies

Source: Cho (2012)

Where

should I go?

I may just

follow him!

They are too

far away!

Evolution of Korean STI Strategy

Themes for Research Collaboration from the Questions

Q: Innovation policy for business?

• Market demand for innovation

policy research entities

Survey: Demand of Innovative

firms

Demand of Consulting firms

(eg) service of innovation

information

(eg) Technology and market

foresight

• STEPI

center for strategic foresight

S&T indicators team

Division of industrial innovation

research

Q: Evidence Based Policy?

• Indicators and indices

• Technology Barometer

TEK/VTT + STEPI

Korean case addition

• Impact analysis

• STEPI

S&T Indicator team

Q: Many articles and patents, but

then?

• R&D productivity

Comparative study among

countries including Finland and

Korea

Comparing the productivity of each

area of University, GRI and Industry

• Technology transfer policy

• Entrepreneurship among

researchers

• STEPI

Division of Innovation Policy

Research

Division of Basic & Public Research

Q: Still “Select and Concentrate”?

• Macroculture of National

Innovation System

From bureaucratic management to

autonomy

Entrepreneurship

• Incentive Mechanism and

Behavioral Approach

• STEPI

Division of Innovation Policy

Research

Q: One company risk?

• Finnish Experience and

potential risk in Korea

Nokia and Samsung

• Not only Samsung

Impact of chabol companies in

Korean economy and innovation

Historical experiences of over-

leverage

• STEPI ?

some criticizing scholars of other

organizations in Korea

Q: How to renovate GRIs?

• Case: VTT renovation

Renovation and corporatization

• Benchmarks?

Fraunhofer’s matchning

mechanism

• STEPI

Division of Basic & Public Research

Q: Universities at risk?

• Demand and Supply of HR

• Under population of young

generation but Over population

of the high-educated

Going global

Reunification

Much more and faster growth with

Disruptive Innovations ?

• STEPI

Center for S&T Human Resources

Policy

Thank You!

For Further Comments & Questions;

Seogwon Hwang

[email protected]