On March 13, the Korea Institute of Science and Technology Evaluation and Planning (KISTEP), a government-affiliated research institute operating under the Ministry of Science, ICT and Future Planning, released the English edition of its biannual report on R&D survey and analysis, entitled “Main Science and Technology Indicators 2017–2.” The international comparison data in the publication is largely based on the Organization of Economic Co-operation and Development’s global R&D survey and statistics analysis up to December 2017.

The South Korean government announced earlier this month that it increased R&D funding 1.1% in the 2018 budget, with over $6 billion of the total budget, or 34%, allocated to the Ministry of Science, ICT and Future Planning (see IBO 3/15/18). This slight growth is part of a continuing trend of incremental increases in South Korean R&D funding, which is reflected in the latest KISTEP report through growing funding for biotechnology imports and exports, as well as small bumps in basic, applied and development research.

Gross Domestic Expenditure on R&D (GERD)

South Korea has been amongst the top 10 countries for R&D expenditure for almost a decade. In 2016, KRW 69.4 trillion ($65.4 billion at KRW 1,067.58 = $1), or 4.24% of the country’s GDP, went towards R&D, ranking South Korea in fifth place for global GERD. Although South Korea’s GERD is less than countries such as China, France, Germany, Japan and the US, it is the highest among them as a percentage of GDP. Since 2012, South Korea’s GERD as a percentage of GDP has stayed above 4.0%; in contrast, GERD as a percentage of GDP for China, France, Germany, Japan and the US have been in the 1.7%­–3.40% range over the same time period.

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The government and public research institutions ranked highest in GERD in 2016 by performance sector in South Korea, representing 78% of total GERD. This figure is akin to China, Japan and the US, but is higher than France, Germany and the UK.

However, universities in South Korea represented only 9% of GERD by performance sectors in 2016, which is lower than France, Germany, Japan, the UK and the US, yet is 2% higher than China. Business enterprises represent 13% of GERD in South Korea, similar to the aforementioned countries.

By source of funds, GERD in South Korea was largely propelled by the private sector in 2016, which contributed KRW 52.3 trillion ($49.0 billion), or three-quarters of total GERD. The government spent KRW 16.4 trillion ($15.4 billion), or 24% of total GERD, while the remaining 1%—KRW 649.6 billion ($612 million)—came from international sources. Approximately 62% GERD was allocated to development research, with applied and basic research representing 23% and 16%, respectively.

Future and emerging technologies have been a major focus for South Korean R&D for the past six years. As with previous years, information technology represented the greatest GERD at 33%, or KRW 23.5 trillion ($22.0 billion) in 2016. This was followed by nanotechnology, which made up 12% at KRW 8.5 trillion ($8.0 billion), and environment technology, which represented 9% at KRW 6.3 trillion ($5.9 billion). Biotechnology made up 8% at KRW 5.6 trillion ($5.3 billion). Biotechnology, environment technology and nanotechnology GERD all slightly decreased in 2016, with biotechnology and nanotechnology dropping one percentage point each, and environment technology falling four basis points.

Regionally, Gyeonggi continued to have the greatest GERD, as has been the case since at least 2011. In 2016, GERD in Gyeonggi was KRW 33.1 trillion ($31.0 billion), up 3.8%, representing 48% of total GERD in South Korea. Seoul followed, with a 2016 GERD of KRW 10.4 trillion ($9.8 billion), up 4.5%. Seoul made up 15% of total GERD, while Daejeon represented 11% with GERD of KRW 7.3 trillion ($6.8 billion), a 9.3% jump.

Business Enterprise and Government Intramural Expenditure on R&D (BERD and GOVERD)

Business enterprises received 4.2% of total BERD from the government in 2016, down one percentage point. The vast majority of BERD, or KRW 48.0 trillion ($45.0 billion), in South Korea was for the manufacturing industry, with KRW 5.5 trillion ($5.2 billion) allocated to coke, refined petroleum products, chemicals and chemical products, and rubber and plastic products. As a percentage relative to sales in South Korea, BERD has been steadily increasing over the past few years, reaching 3.2% in 2016.

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GOVERD in South Korea has also been on a progressive rise since 2013, totaling KRW 19.0 trillion ($17.8 billion) in 2016, up one percentage point. GOVERD by performance sector was unchanged, with research institutes making up almost 50% of total GOVERD at KRW 8.8 trillion ($8.3 billion), just as in 2015. Universities, business enterprises and ministries’ GOVERD also increased nominally, again representing 23%, 22% and 3% of total GOVERD at KRW 4.3 trillion ($4.0 billion), KRW 4.2 trillion ($3.9 billion) and KRW 628 billion ($590.4 million), respectively.

GOVERD in federal ministries remained flat as well. The Ministry of Science, ICT and Future Planning received the highest GOVERD in 2016 at KRW 6.5 trillion ($6.1 billion). The Ministry of Agriculture, Food and Rural Affairs’ GOVERD of KRW recorded 196.9 billion ($185.1 million), while the Ministry of Health and Welfare received KRW 519.1 billion ($488.0 million). GOVERD at the Ministry of Food and Drug Safety has remained flat since 2014, receiving KRW 81.7 billion ($76.8 million) in 2016.

Biotechnology in South Korea

In 2015, the South Korean government announced plans to focus on the nation’s biotechnology industry, with eight government ministries investing a combined KRW 2.38 trillion ($2.17 billion) into the sector and 86% of those funds allocated to R&D (see IBO 8/31/16). In March 2016, a committee to simplify and expedite the policymaking process in the biotech industry was established by the government, and later in the year, a biotech fund of KRW 80 billion ($74.9 million) was created for startup companies in the industry.

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Although 2016 data is not yet available, the KISTEP report reflects these initiatives, with trends and personnel in the industry incrementally increasing over the past few years. In 2015, the country had a biotech output of KRW 8.4 trillion ($7.9 billion), up 10.7%. Biotech exports also increased in 2015, jumping 26.5% to KRW 4.3 trillion ($4.0 billion). Domestic demand and biotech imports remained flat in 2015 at KRW 5.6 trillion ($5.3 billion) and KRW 1.4 trillion ($1.3 billion), respectively.