[Insight & Opinion] Despite Top Innovation Index Rankings, South Korea Needs More "Open Innovation"

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Since 2000, global investment in research and development (R&D) has increased approximately threefold. The R&D intensity, which is the proportion of R&D in a country's Gross Domestic Product (GDP), places South Korea consistently in the top one or two positions annually. Thanks to this, South Korea has held the number one spot on Bloomberg's Innovation Index for a long time. According to the Global Innovation Index rankings published by the World Intellectual Property Organization under the United Nations (UN), Switzerland maintained first place for 12 consecutive years until last year. In last year's rankings, the United States was second, Sweden third, and South Korea ranked sixth, making it the top country in Asia.

Is our objective innovation index really that high? There is a common perception that the phenomenon of South Korea ranking first on Bloomberg's Innovation Index reflects the structural reality of "foreign appearance but domestic emptiness" in our society. Since the score is raised by quantitative indicators such as university enrollment rates in addition to R&D intensity, this view is not entirely incorrect. In the United States, the rising cost of tuition and increasing blue-collar wages have led to fewer students enrolling in universities. As hourly wages rise, young people questioning the utility of degrees are entering the blue-collar job market. Does this mean innovation in the U.S. has declined? No.

Although South Korea has a high number of patents, the citation rate indicating the excellence of patented technologies or the number of useful patents is only about one-fifth of that of the United States. The rate of technology transfer and commercialization of patents is among the lowest in OECD countries. While international patents have increased, South Korea lags behind China and Japan. At this year’s Consumer Electronics Show (CES), South Korea ranked 26th out of 70 countries in the Global Innovation Index announced by the Consumer Technology Association of the United States, failing to be included in the innovation champion group. Why is this? If innovation means acceptance of change, this is understandable. To become an innovation powerhouse, it is important not just to apply a lot of fertilizer alone but to create soil where flowers can bloom together. In domestic manufacturing, the proportion of independent R&D exceeds 90%, focusing on solo R&D, which is far from fostering an open innovation ecosystem. If an ecosystem for innovation companies to grow is not established, industrial policies aimed at nurturing individual industries are meaningless.

The 2023 top 50 most innovative companies ranking released by Boston Consulting Group clearly illustrates this. This ranking evaluates four areas: global mindset sharing, industry peer opinions, industry disruption, and value creation (stock value increase). Samsung, ranked seventh after Apple, Tesla, Amazon, Google, Microsoft, and Moderna, is somewhat reassuring. Compared to 2013, only the United States (first) and China (second) have increased their share of innovative companies. Huawei, ranked eighth, leads innovation in China. European countries’ shares have declined, and the shares of Japan (eighth) and South Korea (tenth) have also decreased.

In the era of open innovation, cooperation among industry, academia, research institutes, and government is crucial. Currently, our intellectual property policy is concentrated at the national level, specifically within the central government. There is a lack of regionally specialized support and capabilities, and regional disparities are worsening.

Creating an open innovation ecosystem economy without being fixated on numbers is the key to national prosperity. Neighboring Japan is reviving through open innovation. Even in semiconductors, Japan is attracting semiconductor factories from Taiwan’s TSMC, and the U.S.’s Micron and Western Digital, encouraging cooperation with Japanese material and equipment companies. Eight Japanese companies jointly established the semiconductor company Rapidus and have begun joint development with IBM to secure 2-nanometer technology.

The time has come for our government and companies to consider what efforts they will make in terms of open innovation. The Ministry of Science and ICT plans to build collaborative infrastructure and strengthen open source expert education to revitalize the domestic open source ecosystem. This is a welcome development. In this process, more effort should be devoted to forming an ecosystem where local governments, companies, and universities share the fruits of achievements evenly, linked to the characteristics of regional industries.

Wonkyung Cho, Professor at UNIST, Director of the Global Industry-Academia Cooperation Center

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