Innovation in Korea

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South Korea's R&D investment, GRIs, Science/Technology/Innovation Policy, and about STEPI(Science and Technology Policy Institute) as well

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Innovation in Korea

  1. 1. Innovation in Korea Some General Issues VTT, Finland October 23, 2013 Seogwon Hwang, Ph.D. Research Fellow at STEPI hsw100@stepi.re.kr
  2. 2. Contents • About STEPI • Status quo of Korean Innovation Activities • Evolution of Korean STI Strategies • Players in Korean STI • Epilogue * This is the material modified based on many slides provided by Dr. Yongsuk Jang in STEPI
  3. 3. Contents • About STEPI • STI in Korean Development • Evolution of Korean STI Strategies • Players in Korean STI • Epilogue
  4. 4. STEPI: Roles and functions • 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
  5. 5. STEPI: Position President PACST Prime Minister Presidential Advisory Council on Science and Technology MSIP MOTIE Ministry of Science, ICT and Future Planning Ministry of Trade, Industry and Energy KRCF NRCS Korea Research Council of Fundamental Science & Technology (13 GRIs) SMBA The National Research Council for Economics, Humanities and Social Sciences Small and Medium Business Administration ISTK Korea Research Council for Industrial Science & Technology (14 GRIs) STEPI Science and Technology Policy Institute
  6. 6. STEPI: Organization President Prime Minister Ministry of Science, ICT and Future Planning Ministry of Trade, Industry and National Research Council for Economics, Humanities and Social Sciences (NRCS) Energy and Other Ministries Research Advisory Committee President Auditor Vice President Division of Planning and Management Division of Division of Division of Center for Innovation Industrial Global Human Public Policy Innovation Policy Resources Research Foreign Countries Division of Basic and Research Research Research Policy Center for HRST Joint Future Research Studies Center Local Governments
  7. 7. STEPI: History Originated in 1967 as a Division of KIST The Center for Science and Technology Policy (CSTP) was established. CSTP was renamed the Science and Technology Policy Institute (STEPI). Decision made to establish STEPI under the KCESRI based on the “Law on the Establishment, Operation and Promotion of Government Sponsored Research Institute”. SCIENCE AND 1987.1 TECHNOLOGY POLICY 2005.7 INSTITUTE 1993.5 2011.8 1999.5 2012.5 The KCESRI was reorganized into the National Research Council for Economics, Humanities and Social Science (NRCS) Dr. Jong-Guk SONG was appointed as the 12th president of STEPI. The 25th Anniversary
  8. 8. STEPI: Researchers and Staffs Total of 137 Employees Administrative Staff Executive 1 22 Research Staff 114 Academic Backgrounds of the Researchers 14 (24.1%) 11 (19.0%) 12 (20.7%) Economics 21 (36.2%) Business Administration Political Science & Science and Technology Policy Science and Engineering
  9. 9. STEPI: Researches 60% Grant Researches • Basic Research • Issue-focused • Pilot Research • Contract-outs Contract Researches • Agency-directed • Customer-oriented 40% * Government Money, eventually
  10. 10. STI Policy Review • Overview of Korean STI • An Interdisciplinary Journal on STI Policies around the world • www.stipolicyreview.net
  11. 11. 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
  12. 12. Contents • About STEPI • Status quo of Korean Innovation Activity • Evolution of Korean STI Strategies • Players in Korean STI • Epilogue
  13. 13. Republic of Korea (South) A Small Land with Scarce Resources
  14. 14. Korea's Economic Development, 1953-2010 $23,679 (2012) 2nd Poorest Country in 1945 15th Largest Economy in 2012 $67 (1953) Source: The Bank of Korea, IMF • 1953-1970: Per Capita GNP (current US$, 1975 base year) • 1971-2010: Per Capita GNI (current US$, 2005 base year)
  15. 15. Trends of Total R&D Exp. and R&D/GDP in Korea 50,000.0 4.00 (%) (Billion KRW) $ 44 Billion (4.03%) in 2011 3.74 3.57 43,854.8 3.36 3.21 40,000.0 37,928.5 Target 5% 34,498.1 2.79 2.68 2.47 30,000.0 31,301.4 2.49 2.40 2.30 2.30 3.00 GERD/GDP Total R&D 3.01 27,345.7 24,155.4 2.00 22,185.3 1.68 20,000.0 19,068.7 17,325.1 16,110.5 1.41 13,848.5 1.00 9,440.6 10,000.0 0.56 0.37 1.4 0.20 10.5 0.42 42.7 211.7 1975 1980 3,210.5 1,155.2 0.0 0.00 1964 1970 1985 1990 1995 2000 2001 2002 2003 2004 Source: NTIS (www.ntis.go.kr) 2005 2006 2007 2008 2009 2010
  16. 16. Public R&D Investment Growth Public R&D Investment 16.0 3.0 0.002 1963 1997 Government’s R&D Budget (Trillion KRW) Source: NTIS (www.ntis.go.kr) 2012
  17. 17. Trends of Public vs. Private R&D Investment in Korea 100% Public: Private = 26: 74 (2011) 90% 80% 70% Private Share, % 60% 50% 40% Gov. Share, % 30% 20% 10% Source: MEST (www.mest.go.kr), NTIS 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 1978 1976 1974 1972 1970 1968 1966 1964 0%
  18. 18. Korea in Global R&D (2011) Source: Battelle (2011)
  19. 19. Total Number of Researchers Growth Total Number of Researchers 375,176 138,438 2,962 1964 1997 Total Number of Researchers Source: NTIS (www.ntis.go.kr) 2012
  20. 20. Major S&T Achievements International Patents Science & Technology Articles 11,846 (5th) 13,233 (3th) 44,718 (11th) 7,870 (18th) 4 1,891 (53th) 10 30 1981 1997 2011 288 1984 Number of Articles (Ranking) 1997 No. of PCT Applications 2012 No. of US Granted Patents Science & Technology Competitiveness (IMD) 3th 2th 14th 세계 순위 12th 14th 21th 5th 7th 10th 14th 14th 17th 24th 2002 6th 13th 17th 2001 6th 8th 2003 Science Competitiveness 2004 2005 Source: NTIS (www.ntis.go.kr) 2006 Technology Competitiveness 2007 2008 2009
  21. 21. 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
  22. 22. Contents • About STEPI • Status quo of Korean Innovation Activity • Evolution of Korean STI Strategies • Players in Korean STI • Epilogue
  23. 23. Industrial Shifts and STI Policies 1990s 1980s 1970s 1960s Import Protection fostering exportoriented light industry expanding technological capability (absorptive) import liberalization expanding investment in technological development training skilled manpower strengthen technological innovation establishment of nationwide IT infrastructure
  24. 24. Industrial Shifts: Select and Focus Demand Side •SelfSustain •ImportSubs. Light Industries •Import Protection •ExportOrient Supply Side •Mfg. Capacity •Industrial Seeds Heavy Industries •Import Tech. •Tech. Capability •Open Market Assembly & Processing Industries •Expand R&D •Skilled HR •Higher Valueadded IT Industries •Innovation Capability •Industrial Diversificat ion New Growth Engines •original Tech.
  25. 25. Evolution of Korean STI Policies I Innovation Technology Catching-up Institutional Building 1962 19661967 1st 5-Year Economic Plan 1971 1981 Korea Advanced Institute of Science (KAIS) Ministry of S&T (MOST) Korea Institute of S&T (KIST) 1982 1987 1991 1992 Industrial Generic Technology Development Program (IGTDP) National R&D Program (NRP) Technology Development Promotion Act 2004 2008 2013 1997 MSIP Financial Crisis Information and Communication R&D Program (ICRP) Highly Advanced National Project (HAN) Deputy Prime Minister of MOST (OSTI) MEST & MKE
  26. 26. 1960s • Industrial Policies • STI 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 - 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) - - -
  27. 27. 1970s • Industrial Policies • STI Policies - Expand Heavy & Chemical Industries (e.g., machinery, shipbuilding, chemicals, marine science, electronics, electricity) Capital and Technology Imports Strengthen Exportoriented Industrial Competitiveness Foster Chaebols (e.g., Samsung, Hyundai, LG) - 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) - - - - -
  28. 28. Evolution of Korean STI Policies II S&T Leadership Technology Catching-up Institutional Building 1962 19661967 1st 5-Year Economic Plan 1971 1981 Korea Advanced Institute of Science (KAIS) Ministry of S&T (MOST) Korea Institute of S&T (KIST) 1982 1987 1991 1992 Industrial Generic Technology Development Program (IGTDP) National R&D Program (NRP) Technology Development Promotion Act 2004 2008 2013 1997 MSIP Financial Crisis Information and Communication R&D Program (ICRP) Highly Advanced National Project (HAN) Deputy Prime Minister of MOST (OSTI) MEST & MKE
  29. 29. 1980s • Industrial Policies • STI Policies - Economic Slowdown due to the oil shock / Trade Imbalance Restructuring heavy and chemical Industries Expand Technologyintensive Industries Encourage Human Resource Development and Improve Productivity of Industries Promote SMEs - Reluctant to TT from Advanced Economies Pressure on Strong IPR Develop and Acquire Toplevel 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) - - - - -
  30. 30. 1990s • Industrial Policies • STI Policies - 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) - From Imitation to Indigenous Innovation Realign National R&D Projects HAN Project (Long-term, Large-scale) Construct S&T Infrastructure Basic Research at Universities - - - -
  31. 31. Evolution of Korean STI Policies III S&T Leadership Technology Catching-up Institutional Building 1962 19661967 1st 5-Year Economic Plan 1971 1981 Korea Advanced Institute of Science (KAIS) Ministry of S&T (MOST) Korea Institute of S&T (KIST) 1982 1987 1991 1992 Industrial Generic Technology Development Program (IGTDP) National R&D Program (NRP) Technology Development Promotion Act 2004 2008 2013 1997 MSIP Financial Crisis Information and Communication R&D Program (ICRP) Highly Advanced National Project (HAN) Deputy Prime Minister of MOST (OSTI) MEST & MKE
  32. 32. 2000s • Industrial Policies • STI Policies - 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) - 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 - - - - -
  33. 33. Standing NSTC in 2011 For Effective Coordination President Prime Minister NSTC Standing NSTC as a Control Tower with STI Policy Coordination and R&D Budget Allocation Power MEST MKE NRCS KRCF ISTK 26 Policy Inst. 13 GRIs 14 GRIs Others
  34. 34. New Governance for Creative Economy (2013) For Driving ‘Creative Economy’ President Prime Minister MOSF MSIP S&T MOTIE ICT NSTC Economy Budget Trade Industry Energy * 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 Others
  35. 35. 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
  36. 36. Contents • About STEPI • Status quo of Korean Innovation Activity • Evolution of Korean STI Strategies • Players in Korean STI • Epilogue
  37. 37. 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
  38. 38. Evolution of Korean Triple Helix GRI-led / Univ.-supported Industrial Innovation! 2000’s 90’s 80’s Firms 70’s GRIs 60’s Univ.
  39. 39. Roles of GRIs • 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
  40. 40. Evolution of Korean GRIs 1945 1960 KIGAM 1948 KAERI 1959 1966 1970 1980 KIST 1966 KORDI 1973 KERI 1976 1990 KRIBB 1985 KITECH 1989 KOPRI 1987 KICT 1962 KISTI 1991 KBSI 1988 ETRI 1976 KRISS 1975 NSRI ? STEPI 1987 KRICT 1976 KIMM 1976 KIER 1977 KIOM 1994 KRRI 1996 KIT 1982 KASI 1974 2000 NFRI 1996 NIMS 2005 KFRI 1987 KARI 1989 WKIMCHI 2010 KIMS 2007
  41. 41. KIST: The First Korean GRI • 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 • Principles • Close to Industries • Operational Autonomy • Stable Funding • Transparency
  42. 42. Roles of Universities • 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
  43. 43. S&T-specialized Research-oriented 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)
  44. 44. KAIST: The First Research-oriented Graduate School • 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+) • Functions • Education & Research • Theoretical & Applied Researches • Mid- & Long-term R&D • Incubate Entrepreneurs
  45. 45. Evolution of Korean Universities 400 No. of Higher Education UNIST 2009 300 DGIST 2003/2010 GIST 1993 200 POSTECH 1986 100 KAIST 1971 *S&T-Specialized Univ. 1965 1970 1980 1990 Source: MEST (2010) 2000 2010
  46. 46. A Success Story: TDX Development Project (1977-1984) TDX Dev. Team TDX Op. Team KT (KTA) (1981) Participate TDTF (Telecom. Dev. TF) (1981) Establish Develop Commercialize ETRI (KICT) (1977) Participate KIST Spin-off MPS (M. of Postal Service) Create Coop. Form MOST (M. of S&T) TDX-1 (1984) Samsung E. Dongyang E&T LG (Goldstar)
  47. 47. Policy Implications for Late-Comers • 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!
  48. 48. 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
  49. 49. • 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
  50. 50. Contents • About STEPI • Status quo of Korean Innovation Activity • Evolution of Korean STI Strategies • Players in Korean STI • Epilogue
  51. 51. How Has Korea Evolved? FACTORDRIVEN INVESTMENTDRIVEN INNOVATIONDRIVEN WEALTHDRIVEN ? U.S. Japan Korea 1960s Korea 1970s Korea 1980s Korea 1990s From IMITATION To INNOVATION UK ? Korea Current In Innovative Way
  52. 52. Roles of STI Policy in Korean Development Period 1960s 1970s 1980s 1990s 2000s 2010~ Era ExportOriented 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. Catchup/ Large Gov. R&D Prog. Focus on indigenous tech./ Systemize S&T Prog. Globalize S&T/ Focus on fusion tech. and green growth ? Paradigm Change Imitation Catching-Up Innovation ?
  53. 53. Challenges in Korean STI Policies • 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 Source: Cho (2012)
  54. 54. Evolution of Korean STI Strategy Where should I go? I may just follow him! They are too far away!
  55. 55. 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
  56. 56. Q: Evidence Based Policy? • Indicators and indices • Technology Barometer  TEK/VTT + STEPI  Korean case addition • Impact analysis • STEPI  S&T Indicator team
  57. 57. 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
  58. 58. 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
  59. 59. 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 overleverage • STEPI ?  some criticizing scholars of other organizations in Korea
  60. 60. Q: How to renovate GRIs? • Case: VTT renovation  Renovation and corporatization • Benchmarks?  Fraunhofer’s matchning mechanism • STEPI  Division of Basic & Public Research
  61. 61. 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
  62. 62. Thank You! For Further Comments & Questions; Seogwon Hwang hsw100@stepi.re.kr

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