The greatest strengths in South Korea's national innovation system in earlier decades became its most serious liabilities in the 1990s, as South Korea failed to adapt to the rapidly changing political and economic environment. This chapter first assesses the impact of the Asian economic crisis of 1997 on South Korea's national innovation system. The crisis resulted in numerous negative consequences in the short term but also provided a rare opportunity for long-term reform. The chapter then discusses how South Korea has progressed in reengineering the various aspects of the technonational innovation system that has bearing on the future competitiveness of its economy. South Korea will make major changes to accommodate to multinationalization, but increasing globalism will be a means toward a nationalist end.

Beyond Technonationalism

South Korea's phenomenal economic growth in the 1960s and the 1970s, during the first two decades of its industrialization, may be attributed to its strong system for national innovation. But major strengths in the early decades have become liabilities in more recent times, as South Korea failed to adjust to rapidly changing political and economic circumstances. This failure, together with mismanagement of the financial sector and foreign investor panic, led to the onset of a major economic crisis in 1997.