The research for this review, as well as much of its drafting, was carried out before the global financial crisis and the earlier commodity price shock had started to take their toll on Korea’s economic growth. An obvious question to ask, therefore, is whether the analyses and recommendations contained in this review are still relevant. This introduction seeks to answer this question by first sketching out the new economic environment for Korean innovation policy. It goes on to consider some of the challenges facing the Korean innovation system before concluding with a set of guiding principles for innovation policy. As will be apparent, these guiding principles are well aligned with, and in fact reinforce, much of the analysis and many of the recommendations highlighted in various parts of this review.

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.

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.

This chapter describes the key actors in the Korean innovation system. It begins with an account of the role and performance of large national firms, in many respects the main players in Korean innovation. It then considers the role and performance of small and medium-sized enterprises (SMEs), an increasingly important sector for Korean innovation performance. It then turns to public-sector actors, starting with government research institutes (GRIs), which have played a crucial role in Korea’s ability to move into hightechnology sectors. Next, it considers Korean universities, which have played a modest though increasingly important role in research, but have been crucial for the mass education of young Korean adults. In terms of a key factor, human resources for science, technology and innovation, the chapter looks at the demand for skills and examines how overall arrangements for education and training are geared to meeting this demand. Finally, it discusses linkages between the various actors in the system with a view to assessing their strengths and overall coherence.

This chapter examines the innovation policies put in place by the Korean government to address the many issues discussed in previous chapters. It begins with a short history of developments in Korean innovation policy over the past 40 years and highlights the issues that dominate today’s innovation policy agenda. The main policy-making institutions are then described, followed by an examination of the way policy is co-ordinated and governed. Funding programmes for research are discussed, as is Korean policy on human resources for science and technology, followed by consideration of more demand-side policies and policies aimed at improving the framework conditions for innovation. The final sections of the chapter take a spatial perspective by considering policy efforts for promoting the internationalisation and regionalisation of science and innovation.