In the 1960’s South Korea was one of the poorest countries in the region. However throughout the duration of a few decades South Korea has become one of the richest economic centres of the world. At the heart of the change which allowed South Korea to become one of the Asian Tigers was “innovation”
It’s precisely innovations and technologies that have become the key factors in the competitiveness of the South Korean exports and stimulated the country’s rapid economic growth in recent decades. According to the World Bank, South Korea ranked 13th among the largest economies in the world (2014).
In Bloomberg’s global innovation index in 2016 South Korea ranked higher than German, Sweden, Japan and Switzerland, becoming a country with one of the more innovative economies in the world. The index is divided into six different categories: research and development, high-tech companies, manufacturing, research personnel, patents and education.
The economic success of South Korea after the Korean War can be attributed to the government strategy of the expansion of the development of cheap goods for export. Afterwards Korean financial-industrial conglomerates, known as "chaebols", began to form, which turned into large multinational corporations, and became the basis for the economic transformation of the country. The scale of large companies such as Samsung and Hyundai did not only allow for the combination of significant resources, but also brought about a new stage of growth for Korean development. Thanks to the leadership in technology and innovations goods from Korean companies have gained a reputation of being high-tech and advanced.
The Korean government also played a vital role, by creating a world class infrastructure in the country as well as introducing high-quality education system. In theory, all innovative processes in the country were originally, and still are, very centralised and systematic. The government provides support to innovative companies at all levels: from the internal benefits and subsidies to the entrance into the international markets. The main goal is the creation of a new kind of economy - the so called “Creative Economy”. The task is to improve the existing production facilities and open new directions, which will give a new impetus for economic development.
The main government tools are all the possible innovative institutions, most of which were created in the last 20 years. In 1998, the Ministry of Commerce, Industry and Energy had a specialised program for work with small and medium sized businesses, from which the program for the support of start-up (advice, grants, legislative initiatives, etc.) spun off in 2007. In 1999, the Korean Institute of Science and Technology (analogue of "Skolkovo Tech") was formed, by bringing together seven of the leading universities and nine research centres. In 2000 the Korean Techno-Venture Foundation was created; the fund’s tasks include the development of national venture capital industry through the promotion of the program and the formation of an entrepreneurial culture through the commercialisation of technologies with global potential. Over the next five years, specialised tools, such as microelectronics and nanotech centres and investment programs with a focus on technology companies were created. In 2011 its own Ministry of Economic Knowledge was formed, by integrating the respective functions of the aforementioned Ministry of Commerce, Industry and Energy, the Ministry of Information and Communications as well as the Ministry of Science and Technology.
In the 1990’s the government launched a new program called “On the edge of the 21st century”, which was dedicated to the development of key technologies in priority sectors. In order to do this, a clearly clustered system for the support of technological entrepreneurship has been developed. Each cluster has a leading university that becomes the centre of all scientific and technological activities; there are industrial parks, incubators and other platforms to support start-ups. And if the original South Korean modernisation was built on the support of predominantly large companies, then currently the South Korean government is directly interested in reducing the share of employment at work in large corporations. The problem is that South Korea has a strong tradition of family continuity in the occupation, which means that if the father works in Samsung, the son, after finishing university, will try to get a job at Samsung as well. This behaviour directly contradicts the programs launched that encourage entrepreneurial activity. Therefore, in addition to the promotion section, a number of programs for the support of college graduates who have decided to open their own business in order to create a generation of young entrepreneurs have been launched. For this very reason, all South Korean universities are open to international students, in order to attract young people from abroad in order to form a dynamic environment for the exchange of experience and joint projects within the universities. The national priorities include information technologies, biotechnology, new materials for construction, medicine, aerospace technologies, robotics, and so on. In all areas where there is a possibility of a breakthrough, Korea plans to become one of the world leaders in the coming years.
Apart from this, a few words must also be said about the peculiarities of mentality, which has strongly influenced the development of the innovation culture in the country, which became one of the factors of leap in innovation in South Korea.
- Firstly, the Koreans by nature are a very disciplined and hard-working people. This helps them to maximise the success of many start-up programs and projects.
- Secondly, Koreans are very respectful towards Western culture and always try to follow the latest trends. The country is always closely watching the latest European and American trends and tries to copy them with minimal adaptation. Also, Korea is incredibly advanced in terms of communication technology. In 2014 more than 80% of the population had smartphones. About 65% of users are connected to the 4G network and actively use mobile applications.
- But at the same time there is a very strong traditionalism and continuity at individual and familial levels. In this regard, the private enterprise system requires additional support from the state. This inconsistency is the main peculiarity of the Asian mentality, which at a certain stage of the innovational development of the country allowed it to become a leader. However, this peculiarity may become an obstacle to future development, where the real breakthroughs, the revolutionary products and new markets depend on the creative potential of talented entrepreneurs.