Mu-hyup: "Korean R&D Performance Lagging... Urgent R&D Innovation Needed to Enhance Export Competitiveness"

Martial Arts, 8th Trade Industry Forum
Held on Enhancing Export Competitiveness and R&D Productivity

South Korea's research and development (R&D) investment as a percentage of gross domestic product (GDP) ranks second highest in the world, but its outcomes fall below the average of the Organisation for Economic Co-operation and Development (OECD), highlighting an urgent need for R&D innovation.

On the 5th, the Korea International Trade Association (KITA) held the 8th Trade and Industry Forum and the 43rd Industrial Development Forum at COEX in Samseong-dong, together with 17 industrial organizations, under the theme "Measures to Enhance Export Competitiveness and R&D Productivity." In his keynote speech, Jung Manki, Vice Chairman of KITA and Chairman of the Industrial Union Forum, stated, "Our R&D investment as a percentage of GDP was 4.93% in 2021, ranking second in the world, but the results are questionable."

Chairman Jung said, "Our share of SCI papers ranks only 12th globally, and the proportion of income from intellectual property royalties relative to R&D is 17.8 percentage points lower than the OECD average," adding, "the poor performance stems from ▲discrimination between large and small-to-medium enterprises, ▲the inevitability of government R&D bureaucracy, ▲and inefficiencies in government-funded research institutes (hereafter referred to as 'funded institutes'), which consume over 40% of the government budget," he explained.

He advised, “To improve R&D productivity, it is necessary to shift support to a tax credit system,” adding, “In this case, research can begin immediately, and even joint research with funded institutes would have a higher concentration on R&D, thereby increasing R&D productivity.”

He also mentioned the need for innovation in funded institutes. He said, “While maintaining the current system for public sectors such as defense, disaster management, and basic research, industrial technology funded institutes should adopt the funding allocation method of Germany’s Fraunhofer Institute (see attachment) to attract corporate projects.” He further noted the need to improve the research management system centered on autonomy and accountability, as well as to restructure zombie company research centers.

Kim Kyunghoon, head of the supply chain analysis team at KITA, presented on “Analysis of the Current Status of Korean Corporate R&D and Measures to Enhance Performance,” reporting that an analysis of the top 2,500 global companies in R&D in 2021 showed that the number of Korean companies decreased from 80 in 2013 to 53 in 2021, while Chinese companies increased more than threefold from 199 to 678. He also explained that the average R&D investment as a percentage of sales for Korean companies included in the top R&D firms was 3.5%, which is lower than major foreign countries such as the United States (7.8%), Germany (4.9%), Japan (3.9%), China (3.6%), and Taiwan (3.6%).

Oh Hyunhwan, head of policy planning at the Korea Institute of Science and Technology Planning and Evaluation, stated, “The government’s call for cuts and efficiency in the R&D budget reflects the assessment of ‘low productivity despite world-class R&D investment.’” He added, “To overcome this, improvements such as government matching fund support for private sector public R&D investment and expanded tax credits for companies’ open innovation R&D activities (including public-private and large-small enterprise cooperation) are necessary.”

This content was produced with the assistance of AI translation services.