0. (President of STEPI, Korea)
Astana Economic Forum
1,2 July 2010, ASTANA
Technology Transfer Policy of Korea
2 July 2010 Suk Joon Kim
(President of STEPI, Korea)

1. Contents Globalization and open innovation
Technology transfer as a source of innovation
Industrialization and S&T development of Korea
Technology transfer in Korea
Policy implications

2. Globalization and open innovation
R&D Globalization: a new keyword in technological innovation
Globalization of technological source
Localization of R&D with localization of production
R&D global network
Technological fusion and convergence
Needs for outsourcing technology, especially in high-tech area
Globalization of R&D plays a very important role in the strategies of multinational companies and it will certainly gain further momentum
Government policy to strengthen the globalization of R&D

3. Globalization and open innovation
Acquisition of external technology (licensing, corporate VC, M&A, collaborative research)
Externalization of R&D results (licensing, spin-offs)
Globalization to tap into world-wide talent pools
Internal Technology Base
Current
Market R D
External
Technology Base
Technology Insourcing
Technology Spin-off
New Market
Other Firms’ Market

4. Technology Transfer as a source of innovation
What is ‘Technology Transfer’?
A process by which a body of technical knowledge, techniques, or tools is transferred from one place to another for use in a production or service environment from where it is generated to where it is used
Importance of Technology Transfer
Providing the means by which elements of the existing science-technology base can be more closely coupled to the innovation process in order to spur productivity growth
Offering the opportunity to obtain a greater return from past investment in R&D
Ability to stimulate and strengthen the innovation process

5. Technology Transfer as a source of innovation
Pros and Cons of International Technology Transfer
The Existence of Absorptive
Capacity in LDCs
Yes No
Willingness of DC to
transfer technologies through formal
mechanisms to LDCs
Transfer takes place
Both DCs & LDCs
gain
DCs gain but LDCs
Become dependent
DCs lose but LDCs
Transfer does not
take place.
gain little

6. Technology Transfer as a source of innovation
Learning and diffusion effects of TT
Time
FDI
Licensing
Imitation
Indigenous
R&D
Learning
&
Diffusion
Effects
Short-term effects: Licensing, FDI > Imitation, Indigenous R&D
Long-term effects: Indigenous R&D, Imitation > Licensing, FDI

7. Technology Transfer as a source of innovation
Barriers in the International TT from DCs to LDCs
Investment Barrier
Application Barrier
Technology Adaptation Barrier
Technical Capability Barrier
Recent Factors Influencing the Environments on International Technology Transfer
Boomerang consideration
Shortening product life cycle
Reluctance to share results of scientific research
Intellectual property concerns

8. Technology Transfer as a source of innovation
S&T Development System and TT
Government
Accumulated
Knowledge
Technological
Environments
Economic
Org’l & social
Invention
R&D
Market
[Innovation Process]
Univ.
Firms
GRIs
TT between
Institutions
Vertical TT

9. Technology Transfer as a source of innovation
Policy Directions for activating TT
TT between
Institutions
Vertical TT
Cooperative R&D program
Personnel exchange
Technology networks
Active dissemination of
information and output
Spin-off from GRI & Univ.
Program for supporting
commercialization
Professional institutions &
manpower for technology
market
Technomart
Legal protection for
intellectual property

10. Industrialization and S&T development of Korea
Acquisition of technologies for development : ’60s and ’70s
Development of light industries and heavy chemical industries for import substitution and export-expansion
Generated enormous demand for technologies that were not available from domestic sources
Policy responses
Promotion of inward transfer of technologies
Developing domestic absorptive capacity to digest, assimilate and improve upon the transferred technologies
DFI and FL played relatively less important role in TT
in the process of industrialization of Korea.
Korea relied on its HR for learning from foreign technologies
transferred through informal channels.

11. Industrialization and S&T development of Korea
Korean economic growth into the 1980s
Increased demand for complex and sophisticated technologies
Increasing reluctance of foreign countries to transfer technologies to Korea
Policy response : Launching the NRDP and promoting private industrial R&D
NRDP in 1982
Policy incentives for industrial R&D : financial, fiscal, tax, etc.

12. Industrialization and S&T development of Korea
Chronology of Major S&T Policy Measures
Establishment of KIST (1966), MOST (1967)
S&T Promotion Act (1967)
1960’s
Establishment of GRIs in the field of chemical & heavy industries from mid-1970s
Construction of Daeduk Science Town (Started in 1974)
1970’s
Launching of the national R&D program (1982)
Promoting private firm’s research institutes by reforming financial & tax incentives to stimulate R&D investment
1980’s
Promotion of university research: SRC, ERC, etc.
Introduction of new types of nat’l R&D programs
- Highly Advanced Nat’l Program, The 21st Century Frontier R&D Program.
Establishment of inter-ministerial coordination body: NSTC
1990’s
Introduction of National Technology Road Map (NTRM)
- To suggest TRMs for key technologies to secure products/functions.
Introduction of overall coordination system
- Office of S&T Innovation in MOST was created in Oct. 2004
2000’s

13. Industrialization and S&T development of Korea
Key factors that influenced the innovation system of Korea
Outward-looking development strategy Pressure for R&D investment
Government policy toward FDI and TT Focus on indigenous R&D
Government-led industrial development
Industry-targeting Inter-industry R&D imbalance
Favoring large enterprises R&D system biased for large firms/Financial capability to invest in R&D
S&T for industrialization R&D system biased toward technology development
Rich pool of well educate HRST  High absorptive capacity
Government-led development of S&T infrastructure  Relative importance of GRIs

14. Technology Transfer in Korea
Technology Import Policy of Korea
Establishing a base for technology import and regulations (’62-’69)
Relaxing regulations for technology import (’70-’78)
Stepwise freeing technology import (’ )
1960’s :
“Act for importation of foreign capital (1962)” specified conditions and permission criteria of technology import
Priority for technologies in export-oriented industry, capital goods, large spin-off impacts
Rigid regulations for technology import : Royalty rates should be within 3%
It had worked to make the price of imported technology, but technology import itself was not activated

15. Technology Transfer in Korea
Technology Import Policy of Korea
1970’s :
Larger needs for foreign advanced technology in right time -> government relaxed conditions and regulations for technology import
Government established GRIs to support selecting appropriate technology and assimilation & diffusion of imported technology
(ex: KIST -> Consulting Center for Technology Import)
1980’s - :
Government simplified approving processes of technology import more than 10 times after 1978, step by step
Excepting several strategic industries, such as aerospace, nuclear and defense, government allowed all technology import without approving process

16. Technology Transfer in Korea
Technology Import Policy of Korea
Technologies for strategic industries were imported form AC
87% of imported technologies : machinery, metal, electric & electronics, refined petroleum and chemicals
Technology import had contributed to increasing plant & equipment investments, enlargement of production facility and industry developments
Turn-key based technology import in chemicals, fertilizer, cement, iron, paper making industries
Technology acquisition by importing capital goods -> machinery for production facility
Amount of capital goods import is 23 times larger than that of FDI and 70 times larger than that of licensing

17. Technology Transfer in Korea
Technology Exports & Imports
(Million US$, %)
Tech. Exports
Tech. Imports
Tech. Balance
Balance
Ratio

18. Technology Transfer in Korea
Technology Exports & Imports (Million US$, 2008)

19. Technology Transfer in Korea
TT Policy of Korea focusing on TT from public to private
GRI have been played active roles for transferring advanced technology to the industry from 1960’s.
From the 1980’s, National R&D Programs initiated cooperative research and development between GRI and industry.
Technology Transfer Program for SMEs
Technology transfer program to identify marketable technologies which had been on the shelves of GRIs, and to transfer them to SMEs
In 2000, Technology Transfer Act was announced to enhance technology transfer between public and private sector, and commercialization of R&D results.

20. Policy Implications Lessons from Korean experiences
Market competition is the very source of motivation for innovation and technology outsourcing
Pressure for technological competitiveness in the market
Effectiveness of the outward-looking development strategy for small economies
Needs for advanced technology by technology transfer
Human resource is the key to technological innovation
“learning by doing” with imported technology
Government can play effectively the role of facilitator and promoter at the early stage of development
Supporting technology import in selecting best partner with reasonable prices

21. Policy Implications
Appropriate technology transfer policy is needed with economic development stages
Less developed stage : technology import with government regulations
Developing stage : technology import with accumulating indigenous R&D capability
Overcome barriers in the international TT from DCs to LDCs
Investment Barrier
Application Barrier
Technology Adaptation Barrier
Technical Capability Barrier

22. Policy Implications
Factors to be considered for technology import for developing countries
“Make-some-and-Buy-some” path
Impacts on economy : economic growth, local value-added
Impacts on S&T : innovation capability
Impacts on society : distribution of wealth and income
Dynamic TT rather than static TT

23. Thank you!

24. Ministry of Education and S&T Ministry of Knowledge Economy
[Appendix]
Government S&T System of Korea
President
Presidential Advisory Council
for S&T (PACST)
National S&T Council (NSTC)
Principal Secretary of Education and S&T for President
Prime Minister
Ministry of Strategic Planning and Finance
Ministry of Education and S&T
Ministry of Knowledge Economy
Korea Research Council for Fundamental S&T
Korea Research Council for Industrial S&T
Other S&T related Ministries
MOHW, MOE, MOCT, MOAF etc.