|Technological Independence The Asian experience (UNU, 1994, 372 pages)|
|3. The Republic of Korea|
Beginning with the first Five-Year Plan, the Korean government enthusiastically promoted the development of S&T to support socioeconomic growth. During the 1960s, Korea was completely dependent on advanced countries for production facilities and technology. The choice of the appropriate technology to adopt was a very important task for economic development. The choice of strategic industries for economic development was affected by the possibility of success in technological adaptation.
A primary emphasis was put on the import of advanced technologies for solving problems that arose in import-substitution industries, such as the energy, fertilizer, and cement industries, and in the export-oriented industries that were now being promoted. In 1960, a law was enacted promoting the inducement of foreign capital and this hastened the introduction of foreign technology and capital goods. But the accelerated importation decreased foreign exchange holdings and resulted in many unfavourable contracts.
Consequently, the government turned to a passive but stable policy on the import of foreign capital and technology. As a result, the number of technology imports decreased from seven in 1962-1963 to two in 1964, rising slightly to four in 1965. The major sources for technology imports were the United States and the Federal Republic of Germany.
In 1965, a Korea-Japan agreement led to resumed diplomatic relationships, and Korea obtained the right to demand compensation from Japan. As a result there was a significant ten-year inflow of Japanese capital, starting in 1966, which made Japan the major source of technology. The number of technology imports now increased sharply.
The primary emphasis of S&T policy during the 1970s was the adaptation and improvement of imported technologies and the establishment of private research and development (R&D) systems. During this period, joint investment of domestic and foreign capital was promoted, with a consideration for its spread effect on domestic technology. Foreign interests had made investments since 1962 and these had been favoured by the Korean government. But direct foreign investment turned out to be ineffective in the domestic dissemination of foreign technology. Therefore, the government enacted a law for foreign capital inducement which added some limitations on the terms and conditions for direct foreign investment while encouraging the import of technology.
The development of heavy and chemical industries in the 1970s rapidly increased the demand for advanced foreign technology. The Republic of Korea's foreign exchange holdings had increased remarkably from the mid-1970s, and the government realized that, for further economic growth, it was necessary to transfer its leadership in economic and technological development to industries. These factors, along with an international trend in liberalization of trade and foreign investment, forced the Korean government, from 1978, gradually to liberalize technology and capital imports.
In the 1980s, the country took another leap forward towards the goal of being an advanced industrialized country. In the achievement of this goal, S&T played an active part, leading, rather than supporting, economic growth. Considerable support was provided for graduate education, basic as well as applied sciences, and university research in basic science.