|Technological Independence The Asian experience (UNU, 1994, 372 pages)|
|3. The Republic of Korea|
The electronics industry has contributed much to the attainment of self-reliance in the economy and in science and technology, since it has achieved the fastest growth rate of all manufacturing industries.
This search for self-reliance occurred in four stages. In the first technology introduction phase, several foreign-oriented approaches were taken: the introduction of foreign loans for manufacturing facilities, the conclusion of licence agreements for production technologies, and, through the latter, the obtaining of licence drawings for product design.
At the second stage of equity joint venture and OEM, economies of scale were pursued. The OEM set-up was used to expand the market and the acquisition of managerial skills was achieved by equity joint ventures. During this stage, self-reliance was sought in relation to the foreign exchange burden. The industry had to service foreign exchange from the previous stage, while finding new sources of foreign finance to procure new parts and equipment. To achieve these ends, foreigners' own investments were encouraged, and were preferred to commercial loans. Thus, in order to be self-reliant in foreign exchange, the Korean electronics industry became reliant on foreigners for managerial skills in equipment production and in overseas marketing.
The next stage of copying and transforming was one of self-reliance with regard to the contractual assistance arrangements with foreign companies. Unless this was reached, the industry would be unable to free itself from foreign restraints on decisions about the import of basic supplies and the independent cultivation of overseas markets.
This awareness prompted the industry to engage in product design and manufacture on its own without relying on manufacturing licences or on foreign capital. However, all the industry could do at this stage was to copy foreign products, transforming them as much as possible. This gave rise to two sets of difficulties. One was increasing regulation and restriction in intellectual property and the second was the importance of key parts designed by industrially advanced countries.
Overcoming these problems brought the Republic of Korea to the fifth stage, that of developing its own technologies in design and manufacturing. The industry would also continue seeking financial self-reliance by enhancing the value added on domestic products and promoting self-reliance through a build-up of its own overseas sales network.
Looking to the future, the industry's main necessity today is to free itself from reliance on foreign sources, principally Japan, for parts and raw materials. These and other similar problems have to be seen in the context of the need for a properly scheduled and systematic technology transfer. The need to identify and strengthen, for mutual advantage, the International Divisions of Industry is therefore pressing.