Political economy of late industrialization in high tech

politics, policy, and innovation in the Korean aircraft manufacturing sector

CHOI, Jung Hyuk

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The study intends to review the prospects of bolstering sectoral capacities in East Asian developmental states over the course of building institutional infrastructure in highly complex technological products with a focus on aircraft manufacturing. In the case of the late industrialization process of East Asian catch-up economies, theory revealed the astonishing economic performances that arouse from established institutional arrangements, which were engendered unique towards the country’s idiosyncratic political attributions. Leaving behind the glorious economic achievements of late industrialization, however, East Asian developmental states have been struggling in its attempts of enhancing sectoral competitive capacities into intensely science based areas of highly advanced technological fields.

Industrial upgrading has been the talk of the town the past few decades in Korea, as the fast following sectors in technology catch-up started to foresee the stalling growth patterns emerging across its economic sphere. In order to grasp the growing economic potentials of high tech advanced products such as in aircraft-manufacturing, the national innovation systems of Korea attempted to accommodate emerging developmental challenges through established institutional arrangements in R&D, production, and industrial competition structures, which once proven its effectiveness during the earlier days of rapid industrialization. Over the process of industrially upgrading into these knowledge-based capital intensive sectors, the domestic institutional arrangements, in association with external international conditions, which facilitated achievements in fast economic catch-up, have turned cumbersome in terms of transitioning the country’s innovation system adaptive enough to accommodate the more complex technological challenges. Vertical stovepipes streamlined towards state driven economic development policies have somewhat become obsolete as the institutional construct, shaped attune to the processes of late industrialization, has exhibited incompetence over regulating spontaneously grown sectoral firm based capacities and competitiveness in advanced technological manufacturing fields. Thus, the inherent developmental complexities unfolding in a highly technological Schumpeterian Mark II sector increasingly present convoluted challenges against established institutions of the national innovation systems. The situation materialized ostensibly evident in the Chaebol dominated industrial composition of the Korean aircraft-manufacturing sector where government competition policies did not perform well enough to fulfill the developmental aspirations of aircraft manufacturing. The proposed framework of analysis for this study attempts to accommodate relevant contemporary theories made known from a bundle of innovation studies, which include the theories of national innovation systems, varieties of capitalism, developmental state, and complex product systems. The theory illuminates the sectoral innovation systems demonstrated from the technological regimes of the Schumpeterian Mark II sectors, of which translates into the situation of the Korean aircraft-manufacturing sector. In this regard, the proposed analytical framework developed from these point of views highlights the role of coordinative mechanisms that interconnects national-regional-sectoral levels of innovation over a chosen high technology sector. The absorptive capacities of key actors and diffusion mechanisms of established institutions constitute the major analytical point of this coordinative mechanism.

The main argument of the study asserts the need to effectively build cross sectoral coordinative mechanisms throughout the national, regional, and sectoral level of analysis, while exerting concerted efforts to overcome the multiple layers of hurdles against late entrants into technologically complex business areas. Consequently, regarding an attainable solution for Korea successful accession into highly technological sectors, the paper necessitates the transitional efforts of transforming a rigid state-led innovation system into a spontaneously integrated coordinative institutional structure, which accommodates a broad spectrum of absorptive capacities and diffusion mechanisms tailored for developing complex product systems.

Park, Hun Joo
KDI School, Ph.D in Public Policy
Issue Date
KDI School
Thesis(Doctoral) --KDI School:Ph.D in Public Policy,2018
Aircraft industry--Government policy--Korea (South)
Industrial policy--Korea (South)
Chapter 1: Introduction

Chapter 2: Theory and Analytical Framework

Chapter 3: The Global Aerospace and Defense Industry

Chapter 4: State Capitalism and the National Innovation Systems of Korea

Chapter 5: The Aircraft Manufacturing Sector: Background and National Level Innovation Systems

Chapter 6: The Aircraft Manufacturing Sector: Regional and Sectoral Level Innovation Systems

Chapter 7: Case Studies: The T-50 Supersonic Advanced Trainer Program

Chapter 8: Case Studies –The Korea Helicopter Program, KUH-Surion

Chapter 9. Conclusion
358 p.
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