Big Push in South Korea Term Paper

Excerpt from Term Paper :

Throughout the 1990s decade however, the South Korean labor force changed to raise new challenges, such as the aging of the population, the declining rates of the young population, and the resulting shortage of skilled labor force. In such a setting then, the vocational training system was extended to promote lifelong training for the employees, and this took the form of the Vocational Competency Development Program.

Despite the advances made, much still remains to be done, as South Korea is among the countries with the lowest investments in worker education. According to a study of the Organization for Economic Cooperation and Development (OECD), South Korea invested 0.05 per cent of its gross domestic product in employee training; Germany for instance invested 0.37 per cent and Austria invested 0.40 per cent (Lee and Jeon, 2009).

Aside from the increasing education of the labor force, the economic development of South Korea can also be linked to increases in the organizational and state investments in research and development. Throughout the past recent decade, the investments in research and development in the country have increased at a sustained rate, in a gradual and consistent manner. The chart below reveals this evolution as percentage in the gross domestic product:

Source: Trading Economics, 2012

As a result of this gradual increase in R&D spending, South Korea became one of the leading countries in terms of investments in research and development. In 2011 for instance, South Korea was the third largest nation by percentage of GDP invested in R&D, being only surpassed by Israel and Sweden. The chart below reveals the top ten countries by size of R&D investments:

Source: The Economist, 2011

At the particular level of the structure of the investments, it is noted that the majority of the R&D investments, approximately 75 per cent, are completed by the private sector, including both domestic economic agents, as well as foreign investors. The R&D investments of the South Korean state only account for approximately 25 per cent of all investments, and are generically divided between the R&D efforts of universities and the R&D efforts of public institutions; universities revealed a slightly higher rate of investments in research and development (University World News, 2009).

While at the level of percentage in the GDP, the R&D investments in South Korea are global leaders, in terms of the actual amounts, these are considerably decreased in comparison to the investments of other states. South Korea's investments in 2010 for instance totaled up to $37.93 billion, whereas the investments of the United States of America totaled nearly $400 billion; France, China and Germany also outperformed South Korea's R&D investments (Yonhap News Agency, 2011).

All in all, the combination of increasing investments in research and development on the one hand, and increased worker education on the other hand, has supported the transformation of South Korea from a centrally planned economy into a market driven economy, in which knowledge workers drive growth and development. Still, the full transition to a knowledge-based economy has yet to be completed and some challenges which remain to be addressed include the decreased participation of the services sector to the generation of the gross domestic product, an underdeveloped financial sector or decreased competitiveness of the South Korean business sectors (MacDonald, 2006).

3. Conclusions

South Korea has traditionally been an enclosed economy, but is now focusing on becoming a free market. The past recent decades have witnessed tremendous evolutions and combinations of forces, which have led to the creation of economic developments.

At the current level, the economic development takes the form of the knowledge economy, which is becoming preponderant within the modern day global society. South Korea is attaining its knowledge economy objectives through various elements, two important ones being the education of its workforce, as well as the increase in the amounts of research and development funding.

The table below reveals the structured representation of the big fish model in South Korea.

Feature of big push model

Application in South Korea


Combination of two elements

- Worker education

- Investments in research and development


Results of the two elements combined / Big push

Economic growth in South Korea / Transition to the knowledge economy


Free market

- More emphasis on international trade / imports

- Policies to free the market and globally integrate the country


State intervention to coordinate investments

The policies of President Park Chung Hee


Increase in R&D investments

Sustained increase

3rd largest country in the world, by R&D investments as percentage of GDP

By amount, the values of R&D investments remain low


Increase in worker education

Offered by employers

Supported by the state

Continued need for program improvement


Big push / economic growth

Transition to knowledge economy

Challenges still remain

In South Korea, the policies developed and implemented by President Park Chung Hee have materialized in the stimulation of the economic sector at multiple levels, including the efforts of economic agents in sustaining more research and development efforts; while the former president denied any worker rights, the modern day society in South Korea is stimulating the education, training and motivation of the staff members.

The relationship between the two variables in the big push model is revealed at a basic level as follows:

Investments in research and development support economic growth through increases in production, quality, demand and so on. These outcomes are however pegged to the existence of skilled and qualified workforce.

Increases in worker education support production, quality, offer, superior demand satisfaction and so on. Still, in order for these objectives to be attained, there is an increased need for research and development as well.

In other words, there is a direct relationship between worker education and R&D investments and it is necessary for these efforts to become aligned and coordinated in order for them to lead to a big push. The success of the combination between the two variables is based on the ability to generate economies of scale and the adherent advantages, the superior access and sharing of technologies, as well as superior quality interactions between firms, supplies and demands. These interactions all lead to industrialization.

Another important aspect to consider in the generation of big push in South Korea, at the intersection of worker education and R&D investments, is represented by the equilibrium between the two elements. In other words, the two elements are inter-dependent in the meaning that they support and reinforce each other. This virtually generates a need for the two features to find themselves in equilibrium / optimization.

At this level, the threshold for economic growth and the transition to a knowledge economy is raised by the economic agents in the private sector, which set the level of the investments in research and development, as well as the need for knowledge workers, and as such stimulate the education of the employees. For the time being, the features seem to be in equilibrium, with an increased need being observed for both of the elements. As South Korea is still undergoing major change processes, the equilibrium is expected to change, but it would be restored by the adaptation to the needs of the market.


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