The most important sources of productive growth for South Korean manufacturers had traditionally been directly or indirectly related to the ability of South Korean companies to acquire new technology from abroad and to adapt it to domestic conditions, rather than paying the cost of research and development. However, as Seoul's industry and exports continued to evolve toward higher levels of technology, domestic research and development efforts needed to be increased. Fortunately for South Korea, its high level of well-educated workers, who constitute a formidable brain trust for future research and development, are its major asset.

The Seoul government began investing in technology research institutes soon after the republic was established. The Korean Atomic Energy Commission founded in 1959 was responsible for research and development, production, dissemination, and management of technology for peaceful applications of atomic energy. In the mid-1960s, the government established the Ministry of Science and Technology to oversee all government research and development activities and the Korea Institute of Science and Technology to function as an industrial research laboratory. In the 1970s, in order to better coordinate research and development, two scientific communities were established--one in Seoul, the other near Taejon. The Seoul complex included the Korea Institute of Science and Technology, the Korea Development Institute (affiliated with the Economic Planning Board), the Korea Advanced Institute of Science, and the Korea Atomic Energy Research Institute. Plans for the Daeduk Science Town near Taejon were far more ambitious. Modeled after the Tsukuba Science City in Japan, by the late 1980s the Daeduk Science Town accommodated laboratories specializing in shipbuilding, nuclear fuel processing, metrology, chemistry, and energy research. The government founded the Korea Advanced Institute of Science to develop and offer graduate science programs, and it also encouraged universities to develop their own undergraduate programs in science.

The tremendous growth of Samsung since the mid-1980s was strong evidence of the high productivity in such modern industries as electronics. The group's total sales nearly doubled (8.4 billion won to 14.6 billion won) between 1984 and 1986, while the number of employees only increased from 122,000 to 147,000. The reason for this high degree of productivity was South Korea's move away from labor-intensive industries to those that were highly automated.

South Korean planners realized that the country needed to advance quickly in such areas as high technology if the economy were to grow while matching foreign competition. POSCO's decisions to build the Pohang Institute of Science and Technology and the Research Institute of Industrial Science and Technology were examples of this trend. POSCO also used a great deal of money to lure back more than 100 top South Korean scientists and researchers who had emigrated abroad.

The Pohang Institute of Science and Technology also maintained a major undergraduate and graduate f6c e school. By 1988 the institute had a faculty of 132 teachers, about 500 undergraduate students, and approximately 110 graduate students. Only one of every fifteen applicants was accepted and only those students who scored in the top 2 percent of the nation's college entrance examinations were allowed to apply.

POSCO's efforts represented a great change from the past. As of the late 1980s, many of South Korea's younger scientists, technocrats, and economic planners in had received their graduate education in the United States. Throughout the 1970s and 1980s, the government sponsored the scientific and technical education of many graduate students at prestigious institutions, such as Harvard University and the Massachusetts Institute of Technology. The success of the Pohang Institute of Science and Technology meant that many of South Korea's future scientific and technical leaders would be educated at home.

In 1990 Seoul announced an ambitious plan to promote science and technology so that high-technology activities would dominate the economy by the year 2000. The Ministry of Science and Technology intended to coordinate technology-related projects between government and industry in a variety of fields including semiconductors, computers, chemistry, and new materials.

The anticipated slowdown in economic growth could well be counteracted by the continued high rate of capital formation, increased productivity of labor, and expansion of the education system. Until South Korea's per capita income reached that of the most advanced industrial nations and as long as South Korea remained a "follower" country benefiting from the experiences of others while avoiding their mistakes, it was likely that strong growth would continue.

In 1987 the Korea Development Institute issued a report, Korea Year 2000, that profiled South Korean economic development in 2000. The Korea Development Institute noted that the industrial structure would be highly developed and would resemble that of advanced countries inasmuchas high value-added industries, high-technology industries, and soft industries grew relatively rapidly. Further, changes in industrial structure were expected rapidly to reduce the demand for unskilled workers while simultaneously increasing the demand for professional and technical manpower, resulting in further change of the employment structure.

The Korea Development Institute also noted that the Ministry of Science and Technology had prepared a long-range plan of science and technology for the twenty-first century that took into account limited available resources. Accordingly, Seoul selected its comparative advantage areas, including informatics-- particularly information storage and retrieval and electronic data processing, fine chemicals, and precision machinery in the short term biotechnology and new materials in the mid-term public benefit areas, such as the environment, health, and welfare, as another group and oceanography and aeronautics for the medium and long term.

Data as of June 1990