Earlier this year, South Korea’s Ministry of Science, ICT and Future Planning published the “Survey of Research and Development in Korea, 2013,” presenting its latest review of South Korean R&D expenditures. The country’s R&D spending is particularly notable as South Korea, at 4.15%, has the highest R&D expenditures as a percentage of GDP among Organization for Economic Co-operation and Development (OECD) nations. Although still recording healthy growth, the country’s R&D spending slowed in a number of categories in 2013.

The survey garnered 34,100 respondents for an 81% response rate. Ninety-five percent of respondents were classified as business enterprises, and 2% each were described as public research institutes and general hospitals. The remainder were universities and colleges.

Total R&D spending in the country rose 6.9% in 2013 to KRW 59,300.9 billion ($54.2 billion = KRW 1095.01 = $1), down from an 11.1% increase in 2012. Science and technology (S&T) accounted for 76% of R&D expenditures. Within S&T R&D spending, Engineering and Technology (ET), Natural Science (NS), Medical and Health Science (MHS) and Agricultural Science (AS) accounted for 71%, 14%, 12% and 2%, respectively.

Medical and Health Science

Although ET represented the largest share of 2013 South Korean S&T expenditures among the four S&T fields, MHS was the fastest growing. In 2013, MHS R&D spending increased 11.6% to KRW 69,820 billion ($63.8 billion), but this was a decrease from the 15.4% growth recorded in 2012.

MHS also recorded the largest increase in the number researchers (defined as “researchers by major field of study”) in 2013 among the four S&T fields, with a 16.8% rise to 23,292 (see graph below). In contrast, the number of MHS researchers declined 2.6% in 2012 after high-single-digit growth in the prior two years. In 2013, 80% of MHS researchers were employed by universities and colleges, 12% worked at business enterprises, and 8% worked at public research institutes.

Despite the majority of these researchers working at universities, R&D performance for MHS was dominated by business. In 2013, business enterprises represented 78% of R&D performance for the field, followed by universities and colleges at 16%, and by public research institutes at 5%.

A source of private industry employment for MHS researchers is the country’s growing pharmaceutical industry. The number of researchers at companies defined as involved in the “manufacture of pharmaceuticals, medicinal chemicals and botanical products” increased only 1.2% in 2013 to 6,295 versus a 15.3% jump in 2012 (see graph, page 9). However, 2012’s double-digit jump was a one-year event, as the industry’s number of researchers grew 5.3% in both 2010 and 2011.

Just as the growth in the number of researchers for South Korean pharmaceutical businesses slowed in 2013, so did the industry’s R&D spending. R&D expenditures by such companies grew 3.7% to KRW 10,828 billion ($9.9 billion) in 2013 versus a 21.0% increase in 2012. And 2012’s double-digit increase followed a 17.0% increase in 2011. Nonetheless, R&D expenditures as a percentage of sales at the companies increased from 6.35% in 2012 to 6.72% in 2013.

Chemical Industry

Looking at South Korea’s chemical industry excluding pharmaceuticals and medicinal chemicals, business R&D expenditures rose 16.3% to KRW 26,569 billion ($24.3 billion), or 1.94% of sales, in 2013, following a 2.1% decline in 2012. In contrast, the industry’s number of researchers rose just 3.2% in 2013 to 16,194, after 11.7% growth in 2012 and 12.2% growth in 2011.

Other Fields

As South Korea is a leader in electronics and telecommunications industries, it is not surprising that three sectors—electricity and electronics, information/communication, and machinery—made up more than 60% of the country’s 2013 R&D expenditures. In 2013, R&D spending for ET rose 6.4% to KRW 405,610 billion ($370.4 billion), following a 9.1% increase in 2012. Business accounted for 83% of R&D performance, while public research institutes, and universities and colleges represented 11% and 6%, respectively. The number of researchers in the field rose only 2.0% to 279,388, following an 8.0% increase in 2012. Eighty-two percent of ET researchers worked at businesses, 12% at universities and 6% at public research institutes.

In 2013, R&D spending for NS grew 5.5% to KRW 82,368 billion ($75.2 billion), down from a 21.9% jump in 2012. As with MHS, the majority of R&D performance in NS was by businesses, at 75%, followed by public research institutes at 14%, and universities and colleges at 11%. However, the total number of NS researchers declined 4.0% in 2013 to 51,494, following a 10.5% increase in 2012.

AS R&D expenditures increased 7.6% to KRW 12,577 billion ($11.5 billion) in 2013. Unlike other S&T fields, AS R&D spending experienced only a small increase, 2.3%, the year before. Also unlike other S&T fields, business did not dominate expenditures, as public research institutes accounted for 43% of AS 2013 R&D performance. Business accounted for 30%, and universities and colleges accounted for the remainder. AS’s number of researchers rose only 1.9% in 2013 to 10,102, compared to a 0.7% increase in 2012.

Total R&D Spending

By source of funding, industry accounted for 76% of South Korean R&D funding or KRW 44,879 billion ($41.0 billion) in 2013 and rose 8.3%, which was a slower than the 12.7% increase in 2012. Government and other national sources accounted for just 24% of the country’s R&D support, or KRW 14,241 billion ($13.0 billion). This funding grew just 3.0% in 2013, compared to 6.3% growth in 2012.

By R&D expenditures, business enterprises accounted for the majority in 2013, at 79%, or KRW 465,599 billion ($425.2 billion), followed by public research institutes at 12%, and universities and colleges at 9%. Business enterprise spending on R&D showed the fastest increase in 2013, rising 7.7%. R&D spending by public research institutes rose 4.5%, and spending by universities and colleges, grew 3.9%. In the case of business and universities, the 2013 growth rate decreased from 2012, when R&D expenditures grew 13.2% and 4.8%, respectively. For public research institutes, R&D spending actually accelerated in 2013 compared to 2012, when it grew 4.2%.

Despite the predominance of business funding and expenditures for R&D, development made up only 63% of R&D spending, followed by 19% and 18% for applied research and basic research, respectively. In 2013, expenditures on all three types of research continued to grow, with spending on development rising 7.5%, applied research spending up 7.0% and basic research spending increasing 5.0%. However, for development and basic research, 2013 experienced big declines in growth compared to 2012, when spending increased 12.9% and 12.6%, respectively. In contrast, expenditures on applied research accelerated in 2013, as it rose just 4.5% in 2012.

Total Researchers

The number of full-time equivalent (FTE) researchers increased 2.0% in 2013 to 321,842, after rising 9.2% in 2012. Business enterprises accounted for 79% of FTE researchers. By count, the number of researchers in South Korea grew 2.1% to 410,333 in 2013. At 12.4 researchers per thousand labor force, this is the highest share among OECD countries. In 2013, business enterprises, universities and colleges, and public research institutes accounted for 69%, 24% and 8% of researchers, respectively. The fastest growth in number of researchers was at public research institutes, increasing 8.0% to 31,140. The number at business enterprises increased 2.1% to 281,874. The number at universities and colleges was stable at 97,319.