Schumpeterian Analysis of Catch-up and Post-Catchup in Korean Capitalism

Scholars from Schumpeterian school, such as Lundvall and Nelson, have advocated the concept of the National Innovation System (NIS), arguing that the differences between the NIS among countries give birth to differences in innovation performances and this would determine economic growth.  Keun Lee will analyze the past NIS adopted by Korea for their catching up stage as well as the NIS for the post-catching up stage. His award-wining book (Schumpeter Prize) or Lee (2013) measures and analyzes the key NIS variables using the patent citation data, such as cycle time of technologies, localization of knowledge creation and diffusion, concentration among innovators, and technological diversification and originality. It also shows that major advanced countries are specialized in sectors of longer cycle time of technology while Korea and Taiwan show tendency to focus on sectors of shorter cycle time of technology since mid-80s, and that this difference in technological specialization has contributed to have successful catching up for South Korea and Taiwan. At the same time, South Korea also achieved a certain degree of localization in knowledge creation and technological diversification. However, it is also found that South Korea has had very high degree of concentration across assignees, and a room for a higher degree of technological diversification and of localization of knowledge creation. Most importantly, to sustain growth into the post-catching up stage, Korea should move into longer cycle technology-based sectors which is the hall mark of the most advanced economies, because Korea is likely to be caught up in short cycle sectors by next tier economies like China.