Governments and mainstreaming of new technologies: Learning from Korea

While governments world over are seeing varying outcomes in their endeavour to mainstream new technologies through appropriate policies and promotions, one nation stands out in its transition. South Korea, whom the Bloomberg Innovation Index 2017 ranked #1 overall based on R&D spending and concentration of high-tech public companies, has seen success in terms of government-driven promotion of technology-intensive sectors.

What did the South Korean government do to achieve this success?

What can other emerging economies learn from its experiences?

From the policy perspective, the government in Seoul created a Fourth Industrial Revolution committee, called the Presidential Committee on the Fourth Industrial Revolution. It focuses on developing policies, partnerships and regulations pertaining to the Fourth Industrial Revolution technologies. It also works on regulatory and institutional reforms, PPPs, improving knowledge exchanges and coordination of public campaign efforts.

It works at the intersection of science and technology, industry and economy and the social systems and consists of members from a cross-section like the government, domain experts and business. The Ministry of Science, ICT and Future Planning is the liaison point and the President himself exerts control over the committee’s work. To facilitate patents, the Korean International Patent Office even developed a new classification system for seven critical new technologies, namely artificial intelligence, internet of things, big data, 3D printing, intelligence robotics, cloud computing and autonomous driving.

From the perspective of providing an enabling ecosystem, the government set up an organization to support R&D for small firms with government assistance, called the Korea Small Business Innovation Research Programme (KOSBIR), designed on the Small Business Innovation Research Programme of the US. As far back as 2016, it allocated KRW3tn (~U$2.5bn) out of its total R&D budget of KRW19tn (~U$15.7bn) for the innovation of small and medium firms (SME) through R&D grants. This made Korea the 2nd largest spender in absolute amounts amongst the OECD members after the US. If one included the government’s direct grants and indirect tax benefits, the annual R&D spending of Korean SMEs was KRW13tn (~U$10.7bn) in 2016. It also announced KRW500bn (~U$450mn) fund to help technology startup entrepreneurs restart the business after a failure.

The government has also led in terms of setting up supporting infrastructure, say a smart highway for autonomous vehicles led by the Ministry of Land, Infrastructure and Transport, which reduces the cost of production for innovations. In 2019, Hyundai Hyundai successfully conducted the first autonomous truck demonstration on the Yeoju Smart Highway using two 40-ton trailer trucks using normal driving conditions.

Its Flagship Project Support Programme (FPSP) goes a step further by democratising the ecosystem for late-comer entrepreneurs. It helps them overcome entry barriers vis-à-vis the large companies in innovative industries like smart cars, virtual reality, etc.

The government is also lowering the investment barrier in terms of the paid-in capital required for setting up a startup, providing them income tax exemptions and cutting data usage costs.

From the perspective of skill creation, the government looked at an across-the-board effort. It is training over 10,000 computer science teachers for elementary and middle schools, apart from high schools, to help their students better understand how the networked economy runs. The Employment ministry also adopted a license program to develop professionals in the fields encompassing the Fourth Industrial Revolution. To the extent the current President Moon has set a goal of creating 160,000 jobs by fostering innovative entrepreneurs during his tenure and as many as 800,000 information technology-related jobs by 2030.

The Korean government’s intent is three-fold:-

·         advance technologies that are scalable and profitable when commercialised,

·         transition to an economic model that leverages the merits of new technologies and

·         invest in skills for long-term development.

The sheer entrenchment of the Fourth Industrial Revolution in Korean political ethos can be gauged from the fact that it is one of the hotly discussed topics in recent Presidential election debates, something rarely witnessed in other countries. The adoption of new technologies to even socially-relevant sectors like healthcare, wherein Korea designated artificial intelligence-based new drug development and healthcare innovation as part of its Fourth Industrial Revolution efforts in 2018 and set up a Healthcare Special Committee, apart from conventional sectors like manufacturing, like the Shinsung E&G smart factory, is testament to the diversity of its focus-areas.

It is imperative that other emerging economies take learnings from the South Korean government’s initiatives to strengthen their efforts to mainstream new technologies and make them engines of future growth!