UJ 102 comercio internacional P rivate-pubsic alliances for export development: the Korean case Yoo Soo Hong NACIONES UNIDAS Division of International Trade and Integration Santiago, August 2010
Contents Abstract 7 Introduction 9 1. Growth and industrial transformation 10 2. Status of the Korean economy in the World 12 a) GDP 12 b) Trade 12 c) Leading industries 13 d) Science and technology 13 II. Political regimes and achievements 15 1. Korea's political development and regime changes 15 a) Push for industrialization and Park Jung Hee regime (1961-1979) 15 b) Liberalization reform and Chu Du Whan government (1980-1987) 16 c) Democratization and Roh Tae Woo government (1988-1992) 17 d) Globalization and Kim Young Sam government (1992-1996) 17 e) Overcoming the financial crisis and Kim Dae Jung government (1997-2002) 18 f) Government-business relationship and economic development 19 III. Development strategies, institutions and trade 21 1. The process of formulating national strategies and policies 21 a) The president-chaired meetings 25 2. The Korean economic development policy on historical perspective 26
a) Economic and industrial policy 27 b) Trade policy 30 3. Korean economic development models 32 4.. The five-year economic development plans 35 a) Background purpose 35 b) Planning and formulating process and mechanism 36 c) Contents and results 38 d) Implementation and the public-private interactions 39 5. The leading public (government) organization 40 a) The Economic Planning Board 40 b) Ministry of Finance and Economy (MOFE) 41 c) Economic Policy Coordination Committee (EPCC) 42 d) Ministry of Commerce, Industry and Energy (MOCIE) 43 6. Institutional innovation case 50 a) The General Trading Company (GTC) 50 IV. Technological capability building and evolution of National Innovation System 59 1. Science and technology policy during the decade of 1960 and the decade of 1970 59 2. Science, technology and human resource development policy 60 3. Technology catch-up and economic development 61 4. History of government R&D programs and policies 62 5. National innovation system of Korea 64 a) Innovation system and governance before the 2004 reform 64 b) Innovation system and governance after 2004 66 c) Science and technology policy in Korea 67 d) Industrial innovation strategies for 2015 70 e) Science and technology framework plan 71 6. Ministry of Science and Technology (MOST) 76 a) Affiliated organizations under MOST 80 V. Innovation and internationalization of SMEs 83 1. SMEs innovation policies 83 2. Public and private cooperation in promoting SMEs 88 3. Small and Medium Business Administration (SMBA) 89 a) Revitalizing start-up and enhancing entrepreneurship 89 b) Providing effective financial service 89 c) Strengthening capacity building of human resources 90 d) Strengthening marketing capability of SME 90 e) Building technological innovation capacity of SME 90 f) Fostering venture business 91 g) Providing service for Micro-Enterprises (ME) and conventional markets 91 h) Guide for SME, SPi-1357 92 4. Korea Institute of Industrial Technology (KITECH) 92 VI. Implications 93 Bibliography 95 Serie Comercio Internacional: Issues published 97 Table index TABLE 1 TRENDS IN GDP IN KOREA 11 TABLE 2 PARK JUNG REGIME (1961-1979) 16 TABLE 3 CHUN DU WHAN GOVERNMENT (1980-1987) 16 TABLE 4 ROH TAE WOO GOVERNMENT (1988-1992) 17
TABLE 5 KIM YOUNG SAM GOVERNMENT (1992-1996) 18 TABLE 6 KIM DAE JUNG GOVERNMENT (1997-2002) 19 TABLE 7 GOVERNMENT INTERVENTION SCOPE, TOOLS AND COMPARATIVE STRENGHT 19 TABLE 8 ECONOMIC DEVELOPMENT POLICIES BY STAGE IN KOREA 26 TABLE 9 EXPORT SUPPORT POLICIES IN KOREA IN THE DECADE OF 1960 30 TABLE 10 AN OVERVIEW OF KOREA'S FIVE-YEAR ECONOMIC DEVELOPMENT PLANS 38 TABLE 11 PERSONNEL ORGANIZATION OF MOCIE (AS OF 2006) 44 TABLE 12 EXPORTS OF KOREAN GTCS 51 TABLE 13 THE NUMBER OF OVERSEAS BRANCES OF GTCS IN KOREA (BY REGION) 52 TABLE 14 PERCENTAGE OF SME'S PRODUCTS IN EXPORT AMOUNT OF GTCS 54 TABLE 15 THE NUMBER OF SUBSIDIARY COMPANIES OF GTCS 54 TABLE 16 THE PROPORTION OF HEAVY INDUSTRY IN EXPORT ITEMS OF GTCS 55 TABLE 17 EXPORT MARKETS OF KOREAN GTCS 55 TABLE 18 THE NUMBER OF OVERSEAS BRANCHES OF BTCS IN KOREA (BY REGION) 56 TABLE 19 THE EFFECT OF EXPORT ON EMPLOYMENT 56 TABLE 20 DEVELOPMENT OF INDUSTRY AND TECNOLOGY POLICY 61 TABLE 21 EVOLUTION OF GOVERNMENT R&D PROGRAMS AND POLICIES 62 TABLE 22 TRENDS IN R&D STRUCTURE IN KOREA 62 TABLE 23 TRENDS IN R&D IN KOREA 63 TABLE 24 TRANSFORMATION OF S&T POLICY IN PARADIGM 68 TABLE 25 THE NEXT GENERATION GROWTH ENGINE TECHNOLOGIES 74 TABLE 26 DEFINITION OF SME IN KOREA 83 TABLE 27 TRANSITION OF SME POLICIES IN KOREA 84 TABLE 28 SME TECHNOLOGY INNOVATION PROGRAM 85 TABLE 29 ORGANIZATIONS AND PERSONNEL PARTICIPATING IN THE SME TABLE 30 TECHNOLOGY INNOVATION PROGRAM (2005) 85 INDUSTRY-UNIVERSITY-REASEARCH INSTITUTE CONSORTIUM BY YEAR 86 TABLE 31 STATUS OF VENTURE CAPITAL FIRMS BY YEAR 87 TABLE 32 EMPLOYEES IN KITECH 92 Figure index FIGURE 1 GROWTH TREND IN THE KOREAN ECONOMY, 1945-2000 11 FIGURE 2 TRENDS IN MAJOR EXPORTS IN KOREA 12 FIGURE 3 HIERARCHICAL RELATIONSHIP 22 FIGURE 4 HORIZONTAL RELATIONSHIP 22 FIGURE 5 AGENTS AND ORGANIZATIONS INCLUDED IN THE CASE STUDY 24 FIGURE 6 NATIONAL ECONOMY MANAGEMENT STRUCTURE OF PARK JUNG HEE ADMINISTRATION 26 FIGURE 7 PHASE-1 ECONOMIC MODEL 33 FIGURE 8 PHASE-II ECONOMIC MODEL 34 FIGURE 9 PLANNING PROCEDURE IN THE SECOND AND FORTH FIVE YEAR PLANS 36 FIGURE 10 ORGANIZATION OF MOCIE 45 FIGURE 11 ESTIMATED EXPENDITURE 46
FIGURE 12 INCREASE OF R&D INVESTMENT 47 FIGURE 13 THE WEIGHT OF LOCAL REGIONS IN TOTAL EXPORT AND GDP 48 FIGURE 14 GREENFIELD INVESTING OUT OF TOTAL FDI 49 FIGURE 15 ESTABLISHING AN INNOVATION DRIVEN INDUSTRY, TRADE AND ENERGY TO ACHIEVE PER CAPITAL INCOME OF $20.000 49 FIGURE 16 PRODUCT DIVISION AND ORGANIZATION OF A TYPICAL GTC 52 FIGURE 17 GOVERNMENT R&D PROGRAMS BY MINISTRY 64 FIGURE 18 THE NIS STRUCTURE 64 FIGURE 19 DIRECTIN OF THE NIS REFORM IN KOREA 66 FIGURE 20 THE OVERALL SCHEME OF THE NEW NIS 66 FIGURE 21 NEW SCIENCE AND TECHNOLOGY GOVERNANCE 67 FIGURE 22 THE TREND OF TOTAL R&D EXPENDITURE IN 1998-2006 69 FIGURE 23 CHANGE OF COORDINATION AND ALLOCATION SYSTEM OF R&D BUDGET 70 FIGURE 24 STI ADMINISTRATION SYSTEM IN KOREA (BY 2003) 72 FIGURE 25 S&T FRAMEWORK PLANNING SYSTEM 73 FIGURE 26 STRENGTHENING REGIONAL INNOVATION CAPACITY 75 FIGURE 27 POLICY GUIDELINES FOR S&T POLICY FOR THE 21 ST CENTURY 77 FIGURE 28 STRUCTURE OF S&T ADMINISTRATION IN KOREA 79 FIGURE 29 ORGANIZATIONAL STRUCTURE OF MOST 80 FIGURE 30 SME INNOVATION POLICY DIRECTION 85 FIGURE 31 FRAMEWORK FOR SUPPORTING SME 86