Technological Capability Building in South Korea: Some Lessons for Pakistan (Technological Development) (Report‪)‬

This paper examines the process of technological capability building in South Korea during 1960-1990. It finds that the growth process was primarily sustained by investment in physical and human capital. Productivity growth was modest and innovation was limited by two factors: (a) concentration on exports and (b) dominance of international buyer groups of export marketing processes and Korea's acceptance of subordination to the marketing strategies of these international buyers groups. Lack of integration between large and small enterprises also inhibited innovation. It was this lack of innovation and slow productivity growth, which increased the dependence of Korean enterprise on foreign capital. The crisis of 1997-98 precipitated by rapid financial liberalisation of the previous three years has created conditions for Korea's permanent subordination to international capital.