A thriving private sector was the last thing South Korea had 60 years ago. South Korea was one of the poorest countries in the world, with a majority of its people living in poverty. Its GDP per capita is lower than Haiti’s, Ethiopia’s, and Yemen’s. The country had little electricity, and textiles were its only industry.
Despite that, the Bloomberg Innovation Index ranked South Korea as the world’s most innovative country. In addition, South Korea has innovated with innovative products that have improved consumers’ lives in both domestic and international tech ecosystems. Furthermore, our need for entertainment has led to great technological advances, one of them being online casinos. They offer a great source of entertainment and technology has enabled us to learn how progressive jackpot slots work from the comfort of our homes.
What led the country to become one of the world’s leading innovators in less than a century?
- Homegrown industries thrived because of the government’s support
- Market-creating innovations were created by homegrown industries
- Economic Growth Note
Homegrown industries thrived because of the government’s support
The Innovation Index evaluates countries on the basis of their R&D intensity, manufacturing value-added, productivity, high-tech density, tertiary efficiency, researcher concentration, and patent activity. In fact, South Korea excels at both R&D and manufacturing, both of which are incorporated into its culture and processes. Korea’s business management professor, Lee Kyung-mook, said that R&D plays an important role in the country’s future.
The Korean government proposed its first significant investment in 1961, under Park Chung-hee’s presidency. As part of President Park’s five-year economic plan, he emphasized support for research and development. As a result, the Korea Institute of Science and Technology was established in 1966, followed by the Ministry of Science and Technology in 1967.
Government investments in research and development paid off by the 1970s. Several large corporations, including Samsung, Kia, Hyundai, and local universities, now have the capability to launch affordable and accessible innovations that will benefit millions worldwide.
Market-creating innovations were created by homegrown industries
Although the Korean government-funded local R&D, how R&D was leveraged to fuel innovation played a crucial role in helping the country escape poverty and become a prosperous, innovative nation. R&D was conducted to make complex and expensive products and services simple and affordable, so a new group of consumers can use them. It is often necessary for innovators to create entirely new markets to reach these new populations of consumers. As a result, new infrastructure investments are needed, new job opportunities are available to manufacture, market, and distribute products/services, and new, sustainable tax revenues are generated.
Samsung, for instance, has democratized television in Asia through new advances in technology despite its widespread adoption in other markets. South Korea’s government decided to support Samsung, despite the US and European manufacturers’ desire to sell their own models in Korea. For the Korean market, Samsung created a new, local market for black and white televisions at affordable prices in order to reach the majority of poor Koreans. By 1976, over one million sales had been recorded by the company in South Korea.
Economic Growth Note
It is fair to say that South Korea is now among the top 10 economies in the world, barely resembling what it was 60 years ago when it was an emerging country. The key to South Korea’s success has been its close partnership between governments, corporations, and research institutions which has created an environment that drives market-creating innovation. Certainly, other governments in growth economies should take note of this trend, and determine what steps they can take to support R&D that will generate new and powerful markets in their countries.