Development of ICT industries

There had already been recognition of the importance of technology during the earlier phases of Korea’s industrial development. But as developed countries began to withhold advanced technology from Korea, the Korean government and industry decided to step up its own technology development.

Since the mid-1990s, Korea has relied more on technologies that it developed on its own rather than using technology adopted from elsewhere. This achievement has been substantially due to the help of the state-financed research institutes that were set up in the 1960s and 1970s to foster development in key industrial sectors. They took the lead in developing home-grown technology, with the launch of full-scale efforts in the 1980s.

They have also been the source of well-trained researchers who have gone on to companies and universities to continue R&D programs as well as conducting joint research projects with the state institutes. In the 1980s, private enterprises also began R&D activities with government support and participated in many national R&D projects promoted by the government. Since the 1990s, Korean enterprises have been able to expand their own R&D efforts and created anumber of private-sector research institutes.

The expansion of corporate R&D activities enhanced their ability to develop core technologies needed to gain self-reliance in such new sectors as semiconductors and telecommunications as well as existing key industries. Although the R&D efforts of universities were minimal in comparison until the beginning of the 1990s, various national R&D projects after that were started to stimulate basic research activities at the universities and led to the establishment and support of various university research centers.

Technology development in the 1990s focused on the information and communication technology (ICT) sector, which rapidly expanded and encouraged more private-sector initiatives in this area. The rise of ICT-related industries in the 1990s represented an important turning point in Korea’s industrial development. It showed that Korea was able to compete in a rapidly changing international environment and that economic development was no longer dependent on a state-directed industrial policy. The success of the ICT sector also helped create a new development vision for Korean HCIs just as they were emerging from the period of industrial rationalization and were searching for ways to achieve future-oriented growth. Moreover, this period was notable for the fact that Korea was weaning itself from adopting technology from advanced countries and instead was beginning to develop its own.

In this way, the new advanced technology industries introduced structural changes in Korean industry by being able to cope with new challenges in various areas. Until then, Korean industries had not been able to respond adequately to these challenges due to an inefficient industrial structure as well as the lack of technological expertise and other assets compared to advanced countries. Korea’s bid for technological leadership focused on developing the new materials and bio-industry sectors in addition to ICT. But the ICT industry was better able to make gains than the other sectors due to government support.

Korea made rapid progress in the ICT sector, including the creation of an information-based society that was among the most advanced in the world. For example, the personal computer was developed by IBM in 1978, but its mass distribution in the U.S. only began in 1981. It was only two years later when Samsung Electronics was distributing its own personal computers in Korea, starting in 1983.

Table 3-11. Growth contribution by ICT industries

In the telecommunications sector, Korea had been far behind advanced countries in establishing fixed-line phone networks, but it caught up with the rest of the world quickly when it came to mobile phones. Korea was not far behind the U.S. in introducing the internet and in some respects soon overtook the U.S. in terms of establishing a more extensive broadband internet network.

Korea also proved to be on the cutting edge in developing or adopting other information and communication technologies. Samsung Electronics was the first in the world to develop 256 megabit DRAMs. In other remarkable initiatives, Korea developed the TDX telephone switching technology and CDMA wireless system. These research breakthroughs were partly due to government efforts to create an efficient national telecommunications infrastructure. With the establishment of the Ministry of Information and Communication (MIC) in 1994, the government sought to create a “national information super-highway” based on high-speed broadband internet access. These goals were supported by the MIC’s Informatization Promotion Fund, which aided the rapid growth of the ICT sector.

These developments took place against the background of two noticeable investment trends. One was that R&D investments, mainly spurred by technology development, increased to 2.4 percent of GDP in 1997 from 1.7 percent in 1990. The second was that private-sector R&D spending now accounted for 70-80 percent of total R&D investments in Korea, a sharp reversal of the government’s previous dominant role in the area. The number of private research institutes soared to 7,100 in 2000 from less than 1,000 in 1990, signifying that technology development was now mainly being driven by the private sector. As aresult, Korea has emerged at the forefront of the global semiconductor industry, while the number of patents applied by Korea’s private sector has increased at an explosive rate.

Source : SaKong, Il and Koh, Youngsun, 2010. The Korean Economy Six Decades of Growth and Development. Seoul: Korea Development Institute.