The Story of One “Vision”
Korea has established itself as an emerging Knowledge Economy powerhouse in a remarkably short period of time. Yet, many believe its experience has limited relevance to other countries. Success of such transitions in Asian countries, the conventional wisdom claims, rests solely upon peculiar arrangements allowing governments to authoritatively impose “progressive” top-down policies on businesses and society at large. Korea ’s transition towards knowledge-based economy is not such a story.
The Bright Side of Crisis
Beginning of Korea ’s interest in knowledge economy can be traced to … Mexico. Its financial crisis of 1995 was just an unfortunate event in a remote country for some, and a strong wake up call for others. Is a similar crisis possible in Korea? - asked the Maeil Business Newspaper (MBN), one of the major media groups in the country. “Very much so” – was the answer from its joint report with Booz Allen & Hamilton, Vision Korea Report, Revitalizing the Korean Economy Towards the 21st Century. The report was published in October 1997, coinciding with the crisis it was warning against.
The report identified several key challenges: (i) wide-ranging systemic impediments, particularly in the financial and labor markets; (ii) a managerial and technical knowledge gap; and (iii) the need for a strategic response to the tightening competitive nutcracker – being caught between China’s low costs and Japan’s technical excellence. While the government response to crisis was focused mainly on effectively addressing immediate systemic issues, such as strengthening anti-corruption and competition policies, the Vision called for a strategic shift – for Korea to become knowledge-based and globally connected economy.
Reaching for the “Global Knowledge”
The MBN designated several reporters to create the Knowledge Project Team (KPT) to cover the KE issues on a regular basis. The KPT proposed to the representatives of the global media and knowledge intensive companies in Korea to cooperate. The objective was to develop “smart and actable” strategies that could be introduced to the opinion leaders and CEOs. Remarkably, most of the partners were willing to work on a pro bono basis. It was a win-win strategy. The MBN as well as Korean society would get access to Global Knowledge, while the companies got the influential marketing channel.
Building the National Consensus
A key report was published in 1998 with the Monitor Company: Knowledge for Action - Transforming Korea into a Knowledge-driven Economy. To help change the country’s focus from large scale, capital intensive industries to knowledge-based economy, the report presented detailed agendas for the government, companies, and individuals. The MBN then hosted a series of National Conventions and invited business, academia and government leaders to share the results and to hasten the implementation of change. There has emerged a broad consensus that old Korean development model, focused largely on copying and reverse engineering, became obsolete, especially as economic importance of intangible knowledge became increasingly important. This is when the government became interested, which is to say – very committed.
From Vision to Action Plan
Resources
The World Bank recommendations report
PdfRepublic of Korea: Transition to a Knowledge-Based Economy (PDF, 12.3Mb)
The government started by creating a special task force of 10 think-tanks, headed by the Korean Development Institute (KDI). The Ministry of Finance and Economy also requested the World Bank’s assistance on the matter, starting a fruitful cooperation that has lasted to this day. Carl Dahlman, the first manager of the K4D Program, led the team of international experts, in collaboration with the Organization for Economic Co-operation and Development (OECD).
The WB team focused on providing continuous input into strategy being developed by KDI-led task force. Knowledge Economy was a controversial issue at the time. “There was Washington Consensus in finances, but in other policies such as education, there were many competing models and ideas,” says Dr. Cheonsik Woo, Vice President of KDI. “We felt we needed more authority to resolve these issues, so we “borrowed” some of it from OECD and the World Bank.”