Development Centre Studies Industrial Policy and ...

1 OVERVIEWD evelopment Centre StudiesIndustrial Policy and Territorial DevelopmentLESSONS FROM KOREAA nnalisa PrimiBuy this book at our online bookshop: more us at: book can also be obtained by using the order form at the end of this Policy and Territorial DevelopmentLessons from KoreaDEVELOPMENT Centre OF THE ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENTINDUSTRIAL POLICIES AND TERRITORIAL Development : LESSONS FROM KOREA 3 The Development Centre of the Organisation for Economic Co-operation and Development was established by decision of the OECD Council on 23 October 1962 and comprises 24 member countries of the OECD: Austria, Belgium, Chile, the Czech Republic, Finland, France, Germany, Iceland, Ireland, Israel, Italy, Korea, Luxembourg, Mexico, the Netherlands, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey and the United Kingdom.

2 In addition, the following non-OECD countries are members of the Development Centre : Brazil (since March 1994); India (February 2001); Romania (October 2004); Thailand (March 2005); South Africa (May 2006); Egypt and Viet Nam (March 2008); Colombia (July 2008); Indonesia (February 2009); Costa Rica, Mauritius, Morocco and Peru (March 2009); the Dominican Republic (November 2009); Senegal (February 2011); and Argentina and Cape Verde (March 2011). The European Union also takes part in the Centre s Governing Development Centre , whose membership is open to both OECD and non-OECD countries, occupies a unique place within the OECD and in the international community.

3 Members finance the Centre and serve on its Governing Board, which sets the biennial work programme and oversees its Centre links OECD members with developing and emerging economies and fosters debate and discussion to seek creative Policy solutions to emerging global issues and Development challenges. Participants in Centre events are invited in their personal small core of staff works with experts and institutions from the OECD and partner countries to fulfil the Centre s work programme. The results are discussed in informal expert and Policy dialogue meetings, and are published in a range of high-quality products for the research and Policy communities.

4 The Centre s Study Series presents in-depth analyses of major Development issues. Policy Briefs and Policy Insights summarise major conclusions for Policy makers; Working Papers deal with the more technical aspects of the Centre s an overview of the Centre s activities, please see CentreINDUSTRIAL POLICIES AND TERRITORIAL Development : LESSONS FROM KOREA4 The relationship between Industrial and technological catching up and territorial Development is a major economic Development puzzle, both in theory and in practice. Industrialisation and technological catching up are key ingredients for national Development ; but there are no automatisms that guarantee that the benefits will be equally distributed across the territory and the society, and that positive backward and forward linkages will be established, thus fostering an inclusive and more resilient production structure.

5 How to support industrialisation avoiding territorial and social exclusion is a common concern for OECD and non-OECD economies. There will be no unique response to this challenge, but there are good Policy principles that can be shared and lessons to be learned from the experience of other the framework of the OECD Development Centre work on production Development and innovation and as part of the knowledge sharing initiative, this report reviews the Korean experience in fostering industrialisation and technological catching up, highlighting the reforms and policies that have been put in place to address regional Development . Korea is a well known success case of catching up, but less is known about the Policy efforts to support a more balanced Development and to foster the Development of regional innovation systems.

6 This report describes the process of integrating the territorial perspective into the national Development strategy and identifies some lessons for developing POLICIES AND TERRITORIAL Development : LESSONS FROM KOREA 5 Table of contentsAcronyms and abbreviationsPrefaceExecutive summaryChapter 1: The success of Korea s catching up strategy Introduction High growth and rising income per capita Structural change and export orientation Technological catching up and skills Development Regional Development patterns ConclusionsChapter 2: Regional Development Policy in Korea Introduction Regional Development : a recent priority in the national agenda The institutional framework for regional Policy A rapid catching up in the regional Policy paradigm The current Policy mix for regional Industrial Development ConclusionsChapter 3: What can be learned from the Korean experience?

7 Introduction Prioritising regional Development in the national agenda Factoring in the regional dimension in Industrial policies Looking ahead: current challenges in regional Development in Korea ConclusionsKnowledge sharing for Development : A Brazilian perspective on the Korean experienceINDUSTRIAL POLICIES AND TERRITORIAL Development : LESSONS FROM KOREA 7 The OECD Development Centre , as a Policy dialogue platform between OECD and non-member countries, undertook this study with the aim of sharing knowledge with developing and emerging economies from the Korean experience in Industrial and territorial Development . Emerging and developing economies are heterogeneous.

8 They differ in assets, resources and institutional capabilities; but there are common features of the Development process that make knowledge sharing a valuable exercise for Policy Development and innovation are recognised as drivers to sustain inclusive and sustainable growth in the long term. For this, governments will need not only to facilitate the efficiency of markets and to ensure the expansion of current endowments and capabilities, but also to ease the creation of new sectors and new enterprises. In successful catching up countries, such as Korea, Development entailed a combination of Industrial and innovation policies, effective rent management schemes, investments in human capital and infrastructure and private sector commitment.

9 However, less is known about the territorial side of Development strategies; in particular when in the Development phase and how governments can intervene to support a more balanced Development pattern and mobilise untapped sources of matters indeed for Development . On the one hand, social, economic and institutional characteristics of the environment contribute to the productivity of firms and their capacity to cope with rising competitive pressures. Among other things, territories are, in fact, the expression of know-how linked to cultural, social and institutional dimensions that are not easily transposable and which shape Development trajectories.

10 The experience of OECD and non-OECD economies shows that institutions and policies are needed to address the territorial dimension in national Development strategies both for reasons of efficiency (untapping new potential sources of growth) and of equity (creating balanced opportunities and equal service delivery). On the other hand, regional governments can be pivotal in supporting new business models or forms of innovation and could mobilise production Development in their region, if endowed with capacities and resources. Support to Development of micro-enterprises and small and medium enterprises is also more effective when done in partnership with local agencies and actors.