Manufacturing Innovation and Policy Issues for Economic Outcomes

Sang Hyun Lee ()
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Sang Hyun Lee: Korea Institute for Industrial Economics and Trade, http://www.kiet.re.kr

No 19-21, Industrial Economic Review from Korea Institute for Industrial Economics and Trade

Abstract: With the advent of Fourth Industrial Revolution, being a leader is crucial to economic survival as well as corporate and national competitiveness. At the same time, standards of competitiveness in manufacturing are shifting, from efficiency to value creation through manufacturing capability. Since manufacturing leaders possess the ability to develop and apply new technologies, innovation that supports those abilities will determine who gets ahead in the new era of 4IR. From this aspect, Korea has a great advantage in terms of innovation capability. With active and continuous R&D investment, Korea is equipped with scientific innovation capabilities. It was selected as the most innovative country in the Bloomberg Innovation Index for six years in a row. However, Korean manufacturing is losing its vitality, with a continuous decline in production, exports and the ratio of value added. In addition, the manufacturing ecosystem is tottering and polarization is increasingly stark as the productivity discrepancy between firms is growing larger. The Korean economy is now facing a “Korean Paradox”. To bridge the gap between innovation and practical economic value creation, we need to take different view from the previous research. Previous studies put weight on the efficiency of R&D activity and its fruits, such as new technologies and products. So most studies propose policy suggestions supporting R&D activity and improving the innovation system at the national and regional scale. Such a views is based on the simple assumption that R&D outcomes directly translate to economic value. However, the economic value creation process is more complicated in the real world and involves the performance of firms and industries. Therefore, we differentiate ourselves by taking a manufacturing innovation point of view which include firms and industries. The path of economic value creation in this study includes two more steps before ultimately arriving at value creation at firms and industries.

Keywords: manufacturing; Korean manufacturing; innovation; innovation capacity; R&D (search for similar items in EconPapers)
JEL-codes: L60 O32 (search for similar items in EconPapers)
Pages: 9 pages
Date: 2023-01-08
New Economics Papers: this item is included in nep-cse and nep-sbm
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