Korea 4th in R&D spending in OECD

By Kim Tae-gyu

The unrivalled prowess of Korea’s top-tier business conglomerates has been confirmed once again, by the huge amount of their overall investment, that accounts for more than half of national expenditure on research and development (R&D).

The Ministry of Knowledge Economy (MKE) said Wednesday that Korea spent a total of 34.5 trillion won for research in 2008, which amounted to 3.37 percent of gross domestic product (GDP).

Among the total, 54 percent was made by large-sized corporations in such fields as semiconductors, flat-panel displays, oil refineries, electricity and telecom networks to name but a few.

Chaebol made more than 60 percent of national investments in 2004 and 2005. The ratio headed downward to 58.5 percent in 2006 and 55.5 percent in 2007 before reaching 54 percent in 2008 but the figure is still pretty high.

``Korean conglomerates have jacked up their R&D investments since many of them are involved in research-oriented industries like semiconductors, displays or home appliances,’’ MKE official Kim Yeol-kyu said.

``In addition, they realize the significance of research. They are highly likely to further jack up investments in R&D down the road in order to remain ahead of the pack in the stiff global competition.’’

Kim said that Korea’s R&D investment-to-GDP ratio of 3.37 percent is strong even in comparison to conventional powerhouses including Scandinavian countries and Japan.

Asia’s fourth-largest economy is estimated at having placed fourth in the 2008 ratio among the 30 member countries of the Organization for Economic Cooperation and Development (OECD).

Sweden topped the list at 3.75 percent followed by Finland with 3.49 percent. Japan would have come in at third in consideration of the previous year’s performances but statistics were not yet available.

Other traditional R&D behemoths such as the United States and Germany failed to pass the 3 percent mark.

``The ratio was a mere 2.49 percent to assume the eighth slot in 2003 but the nation has substantially ratcheted up the figures thereafter to 3.01 percent in 2006 and 3.37 percent in 2008,’’ Kim said.

The MKE has spearheaded the government’s expenditures on R&D as the ministry spent up to 4 trillion won last year alone mostly in delving into futuristic technologies concerned with electricity and space programs.

The ministry funneled 178.9 billion won in developing electricity and nuclear power generation while the renewable energy and space systems segments followed with 173.8 billion won and 163.3 billion won respectively.

Also staying in the higher levels of the list were semiconductors, energy efficiency, automobiles, production systems, info-tech convergence, next-generation telecom and robotics.

Chaebol refer to Korea’s sprawling large-sized corporations where founding families exert almost unrestricted control of management despite their small direct shareholding.

Sometimes likened to keiretsu of Japan, the most outstanding example is Samsung Group, which have such flagship subsidiaries as Samsung Electronics and Samsung SDI.