Lessons From Korea Inc.

Korean companies have spun a high-tech success story that has some surprising lessons for Americans

Photo: Chung Sung-Jun/Getty Images

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While the United States struggles to convert scientific and engineering prowess into commercial victories and robust employment, Korea Inc. is doing exactly that. South Korea’s unemployment rate is about a third that of the United States, and household income is about two-thirds of America’s—on track to equal the U.S. level in a generation. For a country of roughly 50 million people, lacking in oil and other commodity resources, newfound wealth flows almost entirely from technological advances.

South Korea’s ascent is often greeted with astonish­ment; in the 1960s, the country was poorer than Ghana. Hard work and a zeal for imitating and outdoing the high-tech triumphs of Japan—which occupied Korea from 1910 to 1945—explain some of Korea’s rise. So does proximity to China’s booming northeastern cities.

But location and Confucian culture is only part of the Korean story. Smart government policies have strengthened Korea’s high-tech juggernauts—Samsung, LG, Hyundai, Kia, and Daewoo to name a few—raising high-skill, high-wage employment and increasing Korea’s global competitiveness. The experience provides clear lessons for the United States.

Make stuff people need. The United States continues to lead the world in visionary, next-generation science and engineering. But jobs and profits flow from today’s products and services. While the U.S. government tends to shun existing technologies, the Korean government lavishes money on its national champions to improve existing systems on the margins. The approach helps Samsung in its rearguard attack on Apple in smartphones, for instance. The lesson is contrarian: Don’t get too visionary; avoid getting too far ahead of the market. “We were lucky to have Japan as our learning target,” says Keun Lee, an economist at Seoul National University who studies innovation and rapid economic growth. “We copied Japanese policies. We became a fast follower rather than a first mover.”

Change comes slower than we anticipate. The United States has directed tremendous sums at alternative energy technologies and futuristic autos. Rather than fund next-gen cars, Korea’s government and its favored domestic firms have focused on making incremental improvements in old-tech autos. The result: Hyundai and Kia have posted impressive gains in market share by providing attractive value for money. When approaching electric vehicles, Korea has tackled the critical yet prosaic problem of battery recharging with its on-line electric vehicle system, which uses a wireless power supply.

Glorify engineers and harvest the science of others. Korea puts engineers at the center of its educational universe; science is a relative sideshow. While some of the brightest young Koreans attend U.S. universities, increasingly they’re staying at home, fighting for places in such stellar engineering bastions as the Korea Advanced Institute of Science and Technology (KAIST), which is led by an MIT professor emeritus of engineering, Nam Pyo Suh. In areas where world-class science is required, Koreans falter: For instance, the government space agency has repeatedly failed to launch its own satellites, relying instead on Russian launchers.

Go with whom you’ve got. While the United States opens its doors to the world’s technoscience stars, Korea depends almost entirely on indigenous talent. Korea Inc.’s dependence on natives means that Korean families pour resources into education, knowing that their own sons and daughters will win top jobs at home.

The win-now emphasis of Korea’s government policies on technology isn’t without critics. Some Koreans worry intensely that they have mortgaged the future to win now. The tactic of dominating established technology sectors promises fewer dramatic gains simply because the ripest areas have been taken. Growth must slow.

“We have entered into a cul-de-sac. We are trapped,” says Jae-Yong Choung, a professor of management and innovation at KAIST. “How do we escape? How do we build our own unique innovation systems?”

For Korea and Americans concerned about technological vitality, the revelation is that uniqueness—the radical breakthroughs—may be overblown as a metric of advance. Winning victories now—­mastering everyday technologies that result in value, jobs, and growth—is more important than capturing the notional frontiers of tomorrow.

About the Author

Photo of G. Pascal Zachary

G. Pascal Zachary is a professor of practice at the Consortium for Science Policy & Outcomes at Arizona State University. He is the author of Showstopper!: The Breakneck Pace to Create Windows NT and the Next Generation at Microsoft (The Free Press, 1994), on the making of a Microsoft Windows program, and Endless Frontier: Vannevar Bush, Engineer of the American Century (The Free Press, 1997), which received IEEE’s first literary award. Zachary reported on Silicon Valley for The Wall Street Journal in the 1990s; for The New York Times, he launched the Ping column on innovation in 2007. The Scientific Estate is made possible through the support of Arizona State University and IEEE Spectrum.

 

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