Korea has rapidly progressed when it comes to innovation, Rob Atkinson notes in his Korea Times column. In the World Intellectual Property Organization’s 2020 Global Innovation Index, Korea broke into the top 10 for the first time, ranking first in research and development (R&D) and second for human capital and information and communications technology (ICT).
But in the category of regulatory environment—the degree to which government regulations facilitate instead of hindering companies and entrepreneurs from innovating—Korea ranked a dismal 52nd, behind nations such as Bulgaria, Columbia, Kazakhstan, and Peru. The World Bank finds the same thing, with the regulatory burden in Korea higher than the global median.
In contrast, the top nine nations in innovation, including the United States, Singapore and Switzerland, have an average regulatory rank of just 9—43 slots better than Korea. Moreover, having a good regulatory environment is highly correlated with a key innovation indicator: ICT and organizational business model creation (i.e., the development and spread of new technology-based business models).
Why is this relevant for Korea? After all, it’s in the top 10, so it must be doing pretty well. The answer is that the core challenge now for the Korean innovation economy is to fully make the switch from being a “fast follower” (an economy in which firms are not on the global leading edge of innovation, but rapidly copy the leaders) to being a global innovation leader.