Adoption of Foreign Technologies in Korean Manufacturing Firms: Characteristics and Microfoundations

KDI Journal of Economic Policy. 2015;37(3):75-106 DOI 10.23895/kdijep.2015.37.3.75


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Journal Title: KDI Journal of Economic Policy

ISSN: 2586-2995 (Print); 2586-4130 (Online)

Publisher: Korea Development Institute

Society/Institution: Korea Development Institute

LCC Subject Category: Social Sciences: Industries. Land use. Labor | Social Sciences: Economic theory. Demography

Country of publisher: Korea, Republic of

Language of fulltext: Korean, English

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Suh, Joong hae (Fellow, Korea Development Institute)


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Time From Submission to Publication: 12 weeks


Abstract | Full Text

The primary goal of this paper is to explore the microeconomic foundation of Korean firms’ adoption of foreign technologies. The paper also reviews the overall trend of international technology transfers to Korea. The period covered in this paper is Korea’s high growth era, from the 1960s to the 1990s. The works of this paper center on the two questions of what characterizes foreign technologies which had been imported through licensing contracts, and which driving forces expedite technology adoption by firms. The Korean experience provides the context of success in the catch-up growth. The co-movement of technology imports with capital goods imports manifests Korea’s effort to improve the technical efficiency toward the world frontier. Underlying this trend are firms’ decisions to adopt new technologies. The paper shows that firms respond proactively to wage increases by adopting newer technologies and thus, in turn, increasing employment, which implies the existence of a virtuous interactive mechanism among these factors.