The Korean government invested heavily in developing world-class physical infrastructure like broadband internet to provide the foundation or "highway" for knowledge flow and innovation. This helped boost Korea's "REACH-factor".

1. Innovation Led Economy:
The Malaysian Experience
Professor Mahendhiran Nair
School of Business,
MONASH University Sunway campus
Email: mahendhiran.nair@buseco.monash.edu.my
Technopreneurs Association of Malaysia
28 July, 2010

2. Questions
1. What are the old economy & innovation economy?
(innovation economy is also referred to as the new economy)
2. What are the „building-blocks‟ of the innovation
economy?
3. Why is the innovation economy important?
4. How have other countries leap-frogged to the
innovation economy? Korean experience.
5. Can Malaysia leap-frog to an innovation economy?
Drivers and Challenges
6. Can NEM help Malaysia „leap-frog‟ to a new
innovation trajectory?

3. Global Forces: Opportunities & Challenges
Virtual Social Converging National
Worlds Networks Technologies Security
Global
Outsourcing Intangible
Asset
Talent Globalization,
Poaching Liberalization, Changing
Demographics
Regionalization &
Energy
Digitization
New Economic
Crisis
Super Powers
Rapid
Liberalization Regional Technology
Globalization/ Diffusion
Blocs
Gobblelization

4. Global Forces: Opportunities & Challenges
Virtual Social Converging National
Worlds Networks Technologies Security
Global
Outsourcing Intangible
Asset
Talent
Poaching
Creative Changing
Destruction Demographics
- Schumpeter
Energy
New Economic
Crisis
Super Powers
Rapid
Liberalization Regional Technology
Globalization/ Diffusion
Blocs
Gobblelization

5. 1a. What is the old economy?
Neo-classical theory (Solow, 1956 & 1957):
production = f(Land, Labour, Capital)
– Economic Growth is dependent on land, labour & capital.
–Technology exogenous
– The economy will eventually experience Diminishing
Returns
Endogenous Growth Theory (Romer,1990):
production = f(Land, Labour, Technology(.), Education)
– Human capital, technology, & R&D are important for
economic growth and productivity
– Total Factor Productivity (what factors influence TFP?)

6. 1b. What is the innovation economy?
• An economy where the socioeconomic development &
welfare gains are predominantly dependent on the production,
diffusion and utilization of information, ideas and innovation.
• Knowledge & Innovation are key factors for societal
development & wealth creation
- source of increasing returns (productivity gains).
• Transformation of traditional factors of production
- [LAND] “Places to Spaces”
- [LABOUR] “Outsourcing”
- [CAPITAL] “Global Financial Markets”

7. Traditional Paradigm
Labour+
Labour+ Capital+
Technology+
Capital Education
Source: IMP2

8. Traditional Paradigm
Labour+
Labour+ Capital+
Technology+
Capital Education
Transformation of
Factors of Difficulty in initiating
Production and managing
the Value-Creation
Proposition!
Source: IMP2

9. 2. What are the ‘building-blocks’ of the innovation
economy? [The 7i Framework]
 REACH-factor [Foundation Condition] (Necessary)
Infrastructure that facilitate connectivity to the global
community - „highway‟ for the flow of information and
knowledge.
 RICHNESS-factor [Driver Conditions]
(Necessary & Sufficient)
Factors which deepens knowledge intensity in a society
(Intellectual capital, Interaction, Incentives, Institutions,
Integrity, Innovation).
Source:
Nair, M. (2007), “The „DNA‟ of the new economy,” Economic Bulletin, Volume 8, December, 27-59.

10. 7i Innovation Ecosystem
Source: Nair (2007)
Global Connectivity
Agents of
Transformation
Smart & Strategic
Catalyst for Partnerships Doing the things you
promise with the best
Creativity
of your abilities
Life-long learning

11. 7i Framework

12. Innovation is a Process
A process which leads to the following:
• new products/services; and/or
• new ways of improving the efficiency of traditional
factors of knowledge-buildup modes, invention,
production and commercialization; and/or
• New production and diffusion methods of
knowledge, inventions, products/services; and/or
• Enhance the reach and richness of goods/services
and knowledge to society.

13. Types of Innovation
• Business Model Innovation – eg. Franchise
• Process Innovation – eg. Lean Six-Sigma
• Product/Service Innovation
• Systemic Innovation - new industrial clusters & social
networks
• Social Innovation – changes in society/culture
• Position Innovation – changes in the context in which
product/services, reputation and location
• Paradigm Innovation – changes in the underlying mental
models (eg. Look East Policy under Dr. Mahathir and may be PM Najib‟s
NEM if it is well executed!)
• Radical Innovation – existing knowledge obsolete
• Incremental Innovation – knowledge to build on existing
knowledge

14. 3. Why is the Innovation Economy important?
Highly Marathon race in the innovation economy
Developed
(Driver Condition)
RICHNESS-factor
Weak REACH-factor Highly
Developed
(Foundation Condition)
Source: Nair (2008)

15. Highly
Marathon race in the innovation economy
Developed
(Driver Condition)
RICHNESS-factor
Failed States
I. INFANT
} Environment to support knowledge creation non-existent.
Disincentive for foreign firms to bring in technology and knowledge.
Serious brain-drain and capital flight.
Weak REACH-factor Highly
Developed
(Foundation Condition)
Source: Nair (2008)

16. Highly
Marathon race in the innovation economy
Developed
(Driver Condition)
RICHNESS-factor
Adopters
Few local creative endevours. Few linkages and
II. IMITATION fragmented. Most innovation by foreign entities.
Starters
Very few local creative endevours and very few linkages with foreign
Failed States entities. Number of foreign enterprises undertaking innovation low.
I. INFANT
} Environment to support knowledge creation non-existent.
Disincentive for foreign firms to bring in technology and knowledge.
Serious brain-drain and capital flight.
Weak REACH-factor Highly
Developed
(Foundation Condition)
Source: Nair (2008)

17. Highly
Marathon race in the innovation economy
Developed
(Driver Condition)
RICHNESS-factor
‘Adepters’ Fusion of clusters in key
sectors of the economy.
III. INTEGRATION Innovation transcend national border
Adapters
Attraction of Innovation-driven people
and enterprises.
Many linkages. Formation of clusters.
Adopters
Few local creative endevours. Few linkages and
II. IMITATION fragmented. Most innovation by foreign entities.
Starters
Very few local creative endevours and very few linkages with foreign
Failed States entities. Number of foreign enterprises undertaking innovation low.
I. INFANT
} Environment to support knowledge creation non-existent.
Disincentive for foreign firms to bring in technology and knowledge.
Serious brain-drain and capital flight.
Weak REACH-factor Highly
Developed
(Foundation Condition)
Source: Nair (2008)

18. Marathon race in the innovation economy
Highly
Developed
Leaders in Innovation ;
Pace-Setters Formation of next
IV. INNOVATION generation clusters &
Knowledge centers.
(Driver Condition)
RICHNESS-factor
‘Adepters’ Fusion of clusters in key
sectors of the economy.
III. INTEGRATION Innovation transcend national border
Adapters
Attraction of Innovation-driven people
and enterprises.
Many linkages. Formation of clusters.
Adopters
Few local creative endevours. Few linkages and
II. IMITATION fragmented. Most innovation by foreign entities.
Starters
Very few local creative endevours and very few linkages with foreign
Failed States entities. Number of foreign enterprises undertaking innovation low.
I. INFANT
} Environment to support knowledge creation non-existent.
Disincentive for foreign firms to bring in technology and knowledge..
Serious brain-drain and capital-flight.
Weak REACH-factor Highly
Developed
(Foundation Condition)
Source: Nair (2008)

19. Marathon race in the innovation economy
Highly
Developed
Leaders in Innovation
Formation of next
generation clusters &
Knowledge centers
(Driver Condition)
RICHNESS-factor
Fusion of clusters in key
sectors of the economy.
Innovation transcend national border
Attraction of Innovation-driven people
and enterprises.
Many linkages. Formation of clusters.
Few local creative endevours. Few linkages and
fragmented. Most innovation by foreign entities.
Very few local creative endevours and very few linkages with foreign
entities. Number of foreign enterprises undertaking innovation low.
} Environment to support knowledge creation non-existent.
Disincentive for foreign firms to bring in technology and knowledge.
Serious brain-drain and capital flight.
Weak REACH-factor Highly
Developed
(Foundation Condition)
Source: Nair (2008)

20. Marathon race in the innovation economy
Highly
Developed
Leaders in Innovation
Formation of next
generation clusters &
Knowledge centers
(Driver Condition)
RICHNESS-factor
Fusion of clusters in key
sectors of the economy.
Innovation transcend national border
Attraction of Innovation-driven people
and enterprises.
Many linkages. Formation of clusters.
Few local creative endevours. Few linkages and
fragmented. Most innovation by foreign entities.
Very few local creative endevours and very few linkages with foreign
entities. Number of foreign enterprises undertaking innovation low.
} Environment to support knowledge creation non-existent.
Disincentive for foreign firms to bring in technology and knowledge.
Serious brain-drain and capital flight.
Weak REACH-factor Highly
Developed
(Foundation Condition)
Source: Nair (2008)

21. Marathon race in the innovation economy
Highly
Developed
Leaders in Innovation
Formation of next
generation clusters &
Knowledge centers
(Driver Condition)
RICHNESS-factor
Fusion of clusters in key
sectors of the economy.
Innovation transcend national border
Attraction of Innovation-driven people
and enterprises.
Many linkages. Formation of clusters.
Few local creative endevours. Few linkages and
fragmented. Most innovation by foreign entities.
Very few local creative endevours and very few linkages with foreign
entities. Number of foreign enterprises undertaking innovation low.
} Environment to support knowledge creation non-existent.
Disincentive for foreign firms to bring in technology and knowledge.
Serious brain-drain and capital flight.
Weak REACH-factor Highly
Developed
(Foundation Condition)
Source: Nair (2008)

22. Marathon race in the innovation economy
Highly
Developed
INCREASING Leaders in Innovation
Formation of next
RETURNS TO generation clusters &
Knowledge centers
SCALE !
(Driver Condition)
RICHNESS-factor
Fusion of clusters in key
sectors of the economy.
Innovation transcend national border
Attraction of Innovation-driven people
and enterprises.
Many linkages. Formation of clusters.
Few local creative endevours. Few linkages and
fragmented. Most innovation by foreign entities.
Very few local creative endevours and very few linkages with foreign
entities. Number of foreign enterprises undertaking innovation low.
} Environment to support knowledge creation non-existent.
Disincentive for foreign firms to bring in technology and knowledge.
Serious brain-drain and capital flight.
Weak REACH-factor Highly
Developed
(Foundation Condition)
Source: Nair (2008)

23. Leapfrogging in the innovation economy
Highly
Developed
Leaders in Innovation
Formation of next
generation clusters &
Knowledge centers
(Driver Condition)
RICHNESS-factor
Fusion of clusters in key
sectors of the economy.
Innovation transcend national border
Attraction of Innovation-driven people
and enterprises.
Many linkages. Formation of clusters.
Few local creative endevours. Few linkages and
fragmented. Most innovation by foreign entities.
Very few local creative endevours and very few linkages with foreign
entities. Number of foreign enterprises undertaking innovation low.
} Environment to support knowledge creation non-existent.
Disincentive for foreign firms to bring in technology and knowledge.
Serious brain-drain and capital flight.
Weak REACH-factor Highly
Developed
(Foundation Condition)
Source: Nair (2008)

24. Static to Dynamic Innovation Model
1. Static Model (Linear) – Production Economy
Research Development Commercialization
2. Dynamic National Innovation Ecosystem (NIE) – New Economy
Government Enterprises
Entrepreneurs
Research Centers
Innovation
Ecosystem
Associations
Social Networks
Knowledge Transfer Financiers
Centers

25. Static to Dynamic Innovation Model
1. Static Model (Linear) – Production Economy
Research Development Commercialization
2. Dynamic National Innovation Ecosystem (NIE) – New Economy
Government Enterprises
Entrepreneurs
Research Centers
Complex
flow of
information Innovation
& resources Ecosystem
between all
stakeholders.
Associations
Social Networks
Knowledge Transfer Financiers
Centers

26. Static to Dynamic Innovation Model
1. Static Model (Linear) – Production Economy
Research Development Commercialization
2. Dynamic National Innovation Ecosystem (NIE) – New Economy
Government Enterprises
Entrepreneurs Agile & Resilient
Research Centers
To Global
S& T shifts
A systematic
approach
to enhance Innovation
collaboration &
cooperation
Ecosystem
Ability to create
S&T&I for all
the stakeholders
in the economy
Associations
Social Networks
Knowledge Transfer Financiers
Centers

27. Innovation Ecosystem Model
Source: Nair (2010)
Vision
Value to Society
New
Break-
Through
T0 Time
(now)

28. Innovation Ecosystem Model
Source: Nair (2010)
Vision
Value to Society
Ecosystem I (7i)
T0 Time
(now)

29. Innovation Ecosystem Model
Source: Nair (2010)
Vision
Value to Society
Ecosystem I
Original Innovation
(Increasing Returns)
T0 Time
(now)

30. Innovation Ecosystem Model
Source: Nair (2010)
Vision
Value to Society
Ecosystem I
Original Innovation
(Increasing Returns)
T0 T1 Time
(now)

31. Innovation Ecosystem Model
Source: Nair (2010)
Vision
Value to Society
Ecosystem I
Original Innovation
(Increasing Returns)
T0 T1 Time
(now)

32. Innovation Ecosystem Model
Source: Nair (2010)
Vision
Value to Society
Ecosystem II New Innovation
(Increasing Returns)
Ecosystem I
Original Innovation
(Increasing Returns)
T0 T1 Time
(now)

33. Innovation Ecosystem Model
Source: Nair (2010)
Multiple clusters & innovations
Vision
Eco
system IV New Innovation
(Increasing Returns)
Value to Society
New Innovation
(Increasing Returns)
Eco
system III
Ecosystem II New Innovation
(Increasing Returns)
Ecosystem I
Original Innovation
(Increasing Returns)
T0 T1 T2 T3 Time
(now)

34. Old Economy Innovation Economy
Input Driven Model Powered by Multiple
(Labour & Capital) Innovation Ecosystems

35. 4. How have other countries leapfrogged
to the Innovation Economy?
[7i Framework]
Korean Experience

36. 7i Innovation Ecosystem
Source: Nair (2007)
Governments Enterprises
Entrepreneurs
Research Centers
Intellectual
Infrastructure
Capital
Integrity NATIONAL Interaction
Systems INNOVATION
ECOSYSTEM
Social Networks
Associations
Incentives Institutions
Knowledge Transfer Centers Financiers

37. 1. Infrastructure Development
• Broadband Convergence Network Project
– installing of backbone network linking 144
cities with optical cable (internet environment
with no speed limit)
– fibre-to-the-curb optical cable in residential
areas enabled xDSL services everywhere in
the country
– liberalisation of the telco sector (charges
reduced to flat rate of USD40/month)
– ICT education for 10 million people since
2000 (Housewife target group)

38. Broadband penetration rate per 1000 people
250 Australia
Brazil
Canada
Chile
200 China
Finland
Korea Leapfrog other OECD Germany
countries India
150 Ireland
Japan
Korea, Rep
Malaysia
100 Mexico
New Zealand
Norw ay
Singapore
50 Sw eden
Sw itzerland
Taiw an
United Kingdom
0
United States
1999 2000 2001 2002 2003 2004
Data Source: EarthTrends, World Resources Institute

39. 2. Intellectual Capital Development
(Enhancing the quantum & quality of innovators)
• Establishment of Korea Advanced Institute of Science &
Technology
– identify talented students in S&T
– increase the support of postgraduate training locally
[PhD - 1980: 3417; 1996: 36106]
– strengthen research capacity - link with priority areas
• Reverse brain drain programs
– Scheme 1: Korean S&T workers
– Scheme 2: Foreign (especially Japanese Koreans)
– Scheme 3: Joint Appointments of Koreans Abroad

40. 3. Integrity
• Transparent processes
• Instilling good governance
• Best practices
• Global benchmarks & standards
• Safety and Security
Examples
Procurement system - general tendering system based on price and
quality
Standardisation & quality control (Korea Research Institute of
Standards & the Industrial Advancement Administration)
(promote quality of industrial products, standards, measurements,
inspection and testing)

41. 4. Incentives
Commercialization Programs
• Government-Industry agencies to identify
new product development and new markets
• KOTRA and other government-industry
agencies facilitate global market penetration
• „Big-Brother programs‟ through the help of
GLCs and MNCs
• Matching local IPs with VCs, Angel Funds
and global markets

42. Nature of the Schem e Scope and Coverage
Government Grants
 National Research Program  Established in 1982
 Designed to prom ote joint R& D bet ween
- Comprehensive private firms and public R&D institutions
 Focussed on basic technology devlopment
Fiscal Incentives  Large companies: up to 50% funding
support
to support Innovation  Small enterprises: up to 80% funding
support
 Industrial Basic Technology Development  Established in 1987
Program
 Designed for the commercialization of
locally developed technologies
 Large companies: 40-50%
 Small companies: 50-60%
Government‟s Loan Program:  Industrial Promotion Fund
Government funds whic h are utilized to  Industrial Technology Prom otion Fund
Provide firms with loans at concessional rate  SMI Restructuring Fund
 National Investment Fund
 Special Facilities Fund
 Information and Communication
Technology Development Fund
 Science and Technology Promotion Fund
 Manufacturing Industry Competitiveness
Promotion Fund
 Alternative Energy Technology
Development Fund
 Excellent Demonstration Prototype Support
Fund
 SMI Start-Up Fund
Loan Financing of Special Financial Institutions  Korea Developm ent Bank Program
 Industrial Bank of Korea Program
 Citizens National Bank Program
New Technologies Financing and Start -Up  Korea Technology Bank and three other
Financing new technology financing companies
 Korea Technology Investment Corporation
and 52 other start-up support financing
companies
Technology Credit Guarant ee Fund  Credit guarantee is provided to firms
developing new technology

43. Other Incentives
• Low corporate tax for FDI (14 & 20%)
• 100% exemption for investment in high
tech zone.
• No limitation in foreign ownership in local
ICT & telecom market

44. 5. Interaction
• Communication between government agencies
• Communication between government agencies
and private sector
• Communication to the general public and social
groups
• Role of bringing organizations and knowledge
centers
• Enhancing Industrial Clusters and regional
Industrial clusters (as part of the Regional
Innovation System)

45. Seoul Gyeonggi
•Digital contents, •Information & telecommunication Chungbuk
•Information & •Life, Cultural Contents, •Bio-medical equipments
telecommunication, •International logistics
Centres of Excellence •New materials & disaster
•Bio SOUTH KOREA prevention
•Financial corporation support •Culture & tourism
Incheon Chungu
•Logistics Automobile, •Bio,
•Machinery & metal •Semiconductor,
•Informtion & telecommunication •Mobile communication
•Next generation battery
Chungnam
•Electronics & information Gyeongbuk
devices •Electronics & information
•Automobile parts, devices,
•High-end culture •New materials & parts
•Agriculture & stock bio •Biology & herbal medicine
•Culture & tourism
Daejeon
•Information & Daegu
telecommunication •Mecatronics
•Bio •Electronics & information
•Cutting edge parts & materials devices
•Mechatronics •Textile & biology
Jeonbuk Ulsan
•Automobile & Machinery •Automobile
•Biology •Urban maritime
•Alternate energy •Precision chemistry,
•Culture & tourism •Environment
Chungbuk Busan
•Bio-medical equipments Jeonnam Jeju Gyeongman •Seaport logistics,
•New materials & disaster •Biology •Tourism •Knowledge-based •Machine parts
prevention •New materials •Health & beauty machinery •Tourism contents,
•Culture & tourism ship building •Friendly agriculture •Robot, •Video IT
•Logistics •Digital contents •Intelligent home,
•Culture & tourism •Bio

46. Interaction
Priority Technology Development Plans
(Cluster Development)
• Industrial Technology Development
– To enhance short-term industrial competitiveness.
– Target technologies: machinery & parts,
semiconductor, precision equipment, non-memory
chip, ASIC, LCD & etc.
• Development of Strategic Technologies
– Target technologies: new generation semiconductor,
ICT, biotechnology, new materials and space
technology

47. Interaction
Priority Technology Development Plans
(Cluster Development) Cont’d
• Highly Advanced National (HAN) Project
– 10 year inter-ministerial program
– Develop core technologies for the future development of Korean industries
Product Technology Development Fundamental Technology Development
 Development of new drugs and  Development of ultra large-scale integrated
agrochemicals circuits
 Development of broadband integrated  Development of new advanced materials
services and data network for the information electronics, and energy
industries
 Development of high-definition television  Development of advanced manufacturing
(HDTV) systems
 Development of next-generation vehicle  Development of new functional bio-
technology materials
 Development of environmental technology
 R&D on next-generation nuclear reactors
Source: http://www.kusco.org/mirror/most/policy2.html

48. 6. Institutional Coordination
• Science Technology & Innovation Policy Council
(General Policy Framework)
• Relevant ministries and agencies for STI formulation,
regulating, financing and coordination
• RDC facilitating and modulating institutions (technology
transfer & advice agencies)
• R&D performers
• Knowledge & technology transfer centers
• Goods and service providers
• Chambers of Commerce
• Science Parks / technopoles
• Associations, Social Networks, Groups and NGOs

49. KOREAN NIS
Korean NIS

50. Institutional Coordination of Innovation –
a staged approach in Korea
1960s 1970s 1980s 1990s 2000 2002-2025
Scientific Scientific R&D and Leading role in Nationwide Global
Institution Infrastructure Private strategic areas innovation Innovation
Building Setting Research Lab creation creation
Promotion
 Establishing of  Establishment  National  HAN Project  CyberKorea  e-Korea
MOST of GRIs R&D Funds 21 (1999- Vision 2007
2002)  S&T(2007)
 S&T Promotion  R&D  Promotion of  Enhancing  Goals by
Laws Promotion establishme university 2025
Law nt of private research
labs capability
 Human  Highly  Promotion of  University-
Resource Qualified industrial industry-GRI
Development Personnel R&D linkages
Development

51. Institutional Coordination of Innovation –
a staged approach in Korea
1960s 1970s 1980s 1990s 2000 2002-2025
Scientific Scientific R&D and Leading role in Nationwide Global
Institution Infrastructure Private strategic areas innovation Innovation
Building Setting Research Lab creation creation
Promotion
 Establishing of  Establishment  National  HAN Project  CyberKorea  e-Korea
MOST of GRIs R&D Funds 21 (1999- Vision 2007
2002)  S&T(2007)
 S&T Promotion  R&D  Promotion of  Enhancing  Goals by
Laws Promotion establishme university 2025
Law nt of private research
labs capability
 Human  Highly  Promotion of  University-
Resource Qualified industrial industry-GRI
Development Personnel R&D linkages
Development
Phase I (~2005)
Leapfrog other Asian Nations
• Increase R&D Expenditures &
efficiency
• Expend Infrastructure
• Reform S&T Education
• Perform Future-oriented frontier
research

52. Institutional Coordination of Innovation –
a staged approach in Korea
1960s 1970s 1980s 1990s 2000 2002-2025
Scientific Scientific R&D and Leading role in Nationwide Global
Institution Infrastructure Private strategic areas innovation Innovation
Building Setting Research Lab creation creation
Promotion
 Establishing of  Establishment  National  HAN Project  CyberKorea  e-Korea
MOST of GRIs R&D Funds 21 (1999- Vision 2007
2002)  S&T(2007)
 S&T Promotion  R&D  Promotion of  Enhancing  Goals by
Laws Promotion establishme university 2025
Law nt of private research
labs capability
 Human  Highly  Promotion of  University-
Resource Qualified industrial industry-GRI
Development Personnel R&D linkages
Development
Phase II (~2015)
Phase I (~2005) Research Hub in Asia-Pacific
Leapfrog other Asian Nations
• World class information
• Increase R&D Expenditures & • Embrace globalization & promote
efficiency global networking system
• Expend Infrastructure • Establish and diffuse a novel S&T
• Reform S&T Education culture
• Perform Future-oriented frontier • Foster New Knowledge-based
research industries
• Advanced Basic-Science & Nurture
World Class Scientists

53. Institutional Coordination of Innovation –
a staged approach in Korea
1960s 1970s 1980s 1990s 2000 2002-2025
Scientific Scientific R&D and Leading role in Nationwide Global
Institution Infrastructure Private strategic areas innovation Innovation
Building Setting Research Lab creation creation
Promotion
 Establishing of  Establishment  National  HAN Project  CyberKorea  e-Korea
MOST of GRIs R&D Funds 21 (1999- Vision 2007
2002)  S&T(2007)
 S&T Promotion  R&D  Promotion of  Enhancing  Goals by
Laws Promotion establishme university 2025
Law nt of private research
labs capability
 Human  Highly  Promotion of  University-
Resource Qualified industrial industry-GRI
Development Personnel R&D linkages
Development
Phase III (~2025)
Phase II (~2015) Global Leader in Specific S&T
Phase I (~2005) Research Hub in Asia-Pacific Establish a system for production,
Leapfrog other Asian Nations utilization and distribtuion of
• World class information sophisticated information
• Increase R&D Expenditures & • Embrace globalization & promote • Increase public awareness of
efficiency global networking system cutting-edge S&T.
• Expend Infrastructure • Establish and diffuse a novel S&T • Establish a science-based National
• Reform S&T Education culture Management System
• Perform Future-oriented frontier • Foster New Knowledge-based • Contribute actively to the World
research industries Scientific Community
• Advanced Basic-Science & Nurture • Enhance the technological
World Class Scientists integration capacity between South
& North Korea

54. Global Innovation Marathon Race
(Check out Korea, Finland and Malaysia)
Econometric Modelling
Using the 7i Framework
Data from the
WEF-2008/2009
The Global Competitiveness Report
(Lopez-Claros, Porter, M., Sala-i-Martin and Schwab, C.)

55. Infrastructure (Physical)
Band 1 Band 2 Band 3 Band 4 Band 5 Band 6 Band 7 Band 8
United Arab
France Norway South Africa Uruguay Algeria Zimbabwe Burkina Faso
Emirates
Czech
Switzerland Luxembourg Iceland Gambia, The Ukraine Cambodia Argentina
Republic
United Macedonia,
Singapore Barbados Latvia Syria Benin Vietnam
Kingdom FYR
Dominican
Germany Spain Bahrain Greece Kazakhstan Guyana Zambia
Republic
Hong Kong
Tunisia New Zealand China Mexico Philippines Tanzania Suriname
SAR
Slovak
Denmark Portugal Chile Pakistan Montenegro Madagascar Mozambique
Republic
Kyrgyz
Finland Namibia Puerto Rico Azerbaijan Senegal Serbia Bolivia
Republic
Belgium Australia Thailand Morocco Ethiopia Bulgaria Bangladesh Ecuador
Netherlands Estonia Israel Croatia India Mali Uganda Venezuela
Trinidad and
Austria Oman Qatar Sri Lanka Romania Cameroon Libya
Tobago
United States Slovenia Saudi Arabia Ireland Colombia Armenia Tajikistan Lesotho
Bosnia and
Canada Lithuania Panama Botswana Kenya Peru Mauritania
Herzegovina
Sweden Jordan Kuwait Indonesia Poland Albania
Korea, Rep. Malta Hungary Costa Rica Brazil Burundi
Malaysia Mauritius Egypt Moldova Nicaragua
Japan El Salvador Guatemala Nigeria
Taiwan,
Jamaica Italy Nepal
China
Honduras Mongolia
FACTORS: Georgia Paraguay
• Quality of Roads Russian
Timor-Leste
Federation
• Quality of Railroads Infrastructure Turkey Chad
• Quality of Port Infrastructure
• Quality of Air Transport Infrastructure
• Quality of Electricity Supply

56. Band 1 Band 2 Band 3
Infostructure
Band 4 Band 5 Band 6 Band 7 Band 8
Hong Kong Slovak
Netherlands Italy Serbia Colombia Peru Armenia
SAR Republic
United Arab
Norway Taiwan, China Spain Chile Venezuela Moldova Zimbabwe
Emirates
Sweden Singapore Israel Latvia Uruguay Ecuador Vietnam Zambia
United
Finland Hungary Poland Greece Jordan Guyana Tanzania
Kingdom
Czech
Denmark Estonia Qatar Brazil South Africa China Bangladesh
Republic
Iceland Austria Lithuania Croatia Puerto Rico Panama Mongolia Benin
Switzerland France Portugal Malaysia Mauritius Oman Georgia Mozambique
Canada New Zealand Malta Bahrain Turkey Tunisia Egypt Madagascar
Luxembourg Germany Romania Argentina Morocco Nicaragua Mali
Macedonia,
Korea, Rep. Australia Bulgaria El Salvador Syria Burkina Faso
FYR
Russian
United States Belgium Costa Rica Suriname India Cambodia
Federation
Trinidad and
Japan Jamaica Paraguay Bolivia Tajikistan
Tobago
Dominican
Ireland Kuwait Mexico Namibia
Republic
Slovenia Ukraine Saudi Arabia Libya Azerbaijan
Bosnia and
Barbados Algeria Senegal
Herzegovina
Guatemala Indonesia
Philippines Sri Lanka
Kyrgyz
Republic
FACTORS: Mauritania
• Quality of Telephone Infrastruture Kenya
• Mobile Telephone Subscribers (Hard data) Gambia, The
• Internet Users (Hard data) Honduras
• Personal Computers (Hard Data) Nigeria
• Broadband Internet Subscribers (Hard data) Pakistan

57. Band 1
Intellectual Capital
Band 2 Band 3 Band 4 Band 5 Band 6 Band 7 Band 8
Switzerland Finland Estonia Jordan Turkey Vietnam Brazil Suriname
United States Singapore Slovenia Sri Lanka Senegal Nigeria Panama Honduras
Russian
Denmark Iceland Indonesia Kazakhstan Georgia Tajikistan Burkina Faso
Federation
France Sweden China Lithuania Italy Botswana Pakistan Guyana
Slovak
Korea, Rep. Belgium Costa Rica Serbia Zambia Guatemala El Salvador
Republic
United Arab
Ireland Canada Hungary South Africa Bulgaria Mexico Namibia
Emirates
Austria Netherlands Spain Kenya Gambia, The Argentina Mali Peru
United Kyrgyz
Japan Puerto Rico Croatia Colombia Madagascar Mozambique
Kingdom Republic
Hong Kong
Norway Luxembourg Ukraine Morocco Lesotho Venezuela Nepal
SAR
Trinidad and Macedonia,
New Zealand Taiwan, China Malta Uganda Cambodia
Tobago FYR
India Malaysia Azerbaijan Poland Albania Moldova Nicaragua
Czech
Israel Barbados Romania Uruguay Zimbabwe Ecuador
Republic
Qatar Germany Thailand Philippines Syria Libya Chad
Tunisia Portugal Greece Benin Cameroon Burundi
Bosnia and
Australia Oman Latvia Jamaica Mauritania
Herzegovina
Dominican
Saudi Arabia Montenegro Tanzania Bolivia
Republic
Kuwait Mauritius Armenia Mongolia Timor-Leste
Bahrain Ethiopia Bangladesh Paraguay
Chile Egypt
INTELLECTUAL CAPITAL Algeria
1. Quality of Education system
2. Quality of Math & Science education 6. Extent of staff training
3. Quality of Management schools 7. Brain drain
4. Internet Access in schools 8. Availability of scientist & engineers
5. Local availability of specialized research & training services 9. Quality of research institutions

58. Incentives
Band 1 Band 2 Band 3 Band 4 Band 5 Band 6 Band 7 Band 8
Hong Kong SAR Sweden United Kingdom Georgia Gambia, The Romania Macedonia, FYR Lesotho
Singapore Denmark Czech Republic Guatemala Costa Rica Azerbaijan Syria Uruguay
Dominican Bosnia and
Switzerland Finland India Morocco El Salvador Italy
Republic Herzegovina
United States Netherlands Canada Turkey Panama Pakistan Albania Libya
United Arab
Austria Tunisia Poland Latvia Philippines Benin Algeria
Emirates
Taiwan, China Israel Indonesia Mexico Nigeria Colombia Guyana Mozambique
New Zealand Norway China Bulgaria Vietnam Zambia Paraguay Burundi
Trinidad and Russian
Luxembourg Ireland Sri Lanka Kenya Honduras Timor-Leste
Tobago Federation
Estonia Australia Puerto Rico Namibia Jamaica Bangladesh Madagascar Venezuela
Slovak Republic France Malta Peru Senegal Mauritania Ecuador
Korea, Rep. Germany Slovenia Montenegro Kazakhstan Cambodia Bolivia
Malaysia Belgium Japan Botswana Uganda Tajikistan Argentina
Qatar Jordan Greece Moldova Nicaragua Zimbabwe
Chile Spain Croatia Ukraine Serbia Chad
Bahrain Mauritius Barbados Brazil Burkina Faso
Oman South Africa Egypt Suriname
Saudi Arabia Lithuania Mali
Iceland Thailand Tanzania
Kuwait Armenia
Portugal Ethiopia
Hungary Nepal
FACTORS:
Kyrgyz Republic
1. Intensity of local competition 9. Flexibility of wage determination
2. Extent & effect of taxation 10. Pay and productivity Mongolia
3. Prevalence of trade barriers 11. Financing through equity market Cameroon
4. Business impact of rules on FDI 12. Ease of access to loans
5. Burden of custom procedures 13. Venture capital availability
6. Degree of customer orientation 14. Extent of incentive compensation
7. Extent of regional sales 15. Company spending on R&D
8. Breath of international markets

59. Band 1 Band 2 Band 3
Interaction
Band 4 Band 5 Band 6 Band 7 Band 8
Singapore Ireland Costa Rica Portugal Serbia Colombia Kuwait Bulgaria
United Arab
United States Malaysia Sri Lanka South Africa Lithuania Burkina Faso Suriname
Emirates
Switzerland Luxembourg Estonia Mauritius France Senegal El Salvador Lesotho
Kyrgyz
Denmark Canada New Zealand Kenya Jamaica Mexico Armenia
Republic
Sweden Belgium Tunisia Brazil Uganda Nigeria Ukraine Ethiopia
Netherlands United Kingdom Hungary Jordan Turkey Botswana Tajikistan Venezuela
Austria Australia Thailand Panama Romania Vietnam Albania Bangladesh
Trinidad and
Taiwan, China Qatar Indonesia Philippines Zambia Slovenia Paraguay
Tobago
Hong Kong
Israel Guatemala Egypt Montenegro Moldova Kazakhstan Zimbabwe
SAR
Slovak Russian
Norway Czech Republic Honduras Poland Syria Nepal
Republic Federation
Japan Puerto Rico Saudi Arabia Spain Tanzania Latvia Madagascar Ecuador
Macedonia, Bosnia and
Finland Korea, Rep. Oman Gambia, The Cameroon Pakistan
FYR Herzegovina
Dominican
Germany China India Croatia Peru Benin Timor-Leste
Republic
Iceland Barbados Mali Mozambique Morocco Nicaragua Bolivia
Azerbaijan Bahrain Uruguay Georgia Mauritania Algeria
Chile Cambodia Libya Chad
Malta Argentina Mongolia
FACTORS: Greece Burundi
1. Cooperation in labor-employer relations Italy Guyana
2. FDI and technology transfer Namibia
3. Prevalence of foreign technology licensing
4. University-industry research collaboration

60. Band 1 Band 2 Band 3
Institutions
Band 4 Band 5 Band 6 Band 7 Band 8
Denmark Estonia South Africa Panama Egypt China Uganda Serbia
Russian
Sweden Japan Puerto Rico Sri Lanka Morocco Burkina Faso Kazakhstan
Federation
Finland Qatar Malta Botswana Zambia Romania Tajikistan Lesotho
Singapore Malaysia Chile Slovenia Indonesia Kenya Macedonia, FYR Nepal
United Arab
Switzerland Portugal Thailand Nigeria Senegal Ethiopia Mozambique
Emirates
Dominican
Austria Barbados Israel Kuwait Uruguay Azerbaijan Ukraine
Republic
Germany Korea, Rep. Spain Hungary Turkey Benin Madagascar Cambodia
Australia Bahrain Mauritius Greece El Salvador Vietnam Moldova Albania
Norway Jordan Namibia Lithuania Poland Pakistan Libya Argentina
Canada Tunisia India Czech Republic Peru Honduras Guyana Algeria
Hong Kong SAR Oman Latvia Mali Suriname Bangladesh
Netherlands Taiwan, China Brazil Tanzania Armenia Kyrgyz Republic
New Zealand Saudi Arabia Slovak Republic Syria Nicaragua Mongolia
Iceland Costa Rica Guatemala Cameroon Burundi
Luxembourg Jamaica Bulgaria Zimbabwe Venezuela
Ireland Colombia Georgia Mauritania Ecuador
Bosnia and
United States Philippines
Herzegovina
France Montenegro Timor-Leste
United Kingdom Croatia Paraguay
Trinidad and
Belgium Chad
FACTORS: Tobago
1. Property rights Mexico Bolivia
2. IP protection
Italy
3. Judicial independence
4. Burden on government regulation
5. Efficiency of legal framework 10. Effectiveness of anti-monopoly policy
6. Reliability of policy services 11. Financial market sophistication
7. Strengths of auditing and reporting Standards 12. Soundness of banks
8. Protection of minority shareholders intersets 13. Regulation of securities exchange
9. Stringency of environmental regulations 14. Laws relating to ICT

61. Integrity
Band 1 Band 2 Band 3 Band 4 Band 5 Band 6 Band 7 Band 8
Finland Australia Malta Montenegro Morocco South Africa Macedonia, FYR Mozambique
Singapore Oman Jordan China Kazakhstan Peru Turkey Pakistan
Sweden Ireland Spain Thailand Syria Burkina Faso Mali Italy
Denmark Canada Taiwan, China Kuwait Vietnam Colombia Romania Uganda
Norway Tunisia Estonia Azerbaijan Tajikistan Madagascar Algeria Lesotho
Iceland Belgium Saudi Arabia India Libya Guatemala Ukraine Bulgaria
New Zealand Korea, Rep. Uruguay Indonesia Greece Honduras Armenia Kyrgyz Republic
Switzerland Barbados Chile Lithuania Croatia Kenya Serbia Bangladesh
Netherlands France Botswana Egypt Ethiopia El Salvador Mauritania Burundi
Hong Kong SAR Gambia, The Portugal Georgia Moldova Mexico Suriname Nepal
Austria United Kingdom Israel Latvia Benin Philippines Poland Argentina
Luxembourg Malaysia Mauritius Czech Republic Cambodia Guyana Cameroon Mongolia
Qatar Bahrain Puerto Rico Slovak Republic Hungary Brazil Nicaragua Timor-Leste
Bosnia and
Germany United States Namibia Sri Lanka Albania Nigeria Zimbabwe
Herzegovina
United Arab Russian Trinidad and
Japan Slovenia Tanzania Ecuador
Emirates Federation Tobago
Dominican
Costa Rica Panama Senegal Jamaica
Republic
FACTORS Zambia Bolivia
1. Diversion of public funds Chad
2. Public trust of politicians 7. Organized crime Venezuela
3. Favoritism in decisions of Government officials 8. Ethical behaviour of firms
Paraguay
4. Wasteful of government spending 9. Efficacy of Corporate Boards
5. Transparency of government policy making 10. Reliance on Professional Mgt
6. Business costs of crime and violence

62. Innovative Capacity
Band 1 Band 2 Band 3 Band 4 Band 5 Band 6 Band 7 Band 8
Japan Singapore Australia Estonia Greece Romania Benin Lesotho
Switzerland United Kingdom Malaysia Kuwait Poland Argentina Georgia Uganda
Trinidad and
Germany Iceland Puerto Rico Malta Hungary Botswana Tanzania
Tobago
United States Norway New Zealand Costa Rica Mexico El Salvador Burkina Faso Mongolia
Sweden Belgium Spain Lithuania Croatia Kazakhstan Serbia Bangladesh
Denmark Hong Kong SAR Czech Republic Jordan Nigeria Uruguay Armenia Mauritania
Finland Canada Slovenia Barbados Jamaica Latvia Cambodia Nicaragua
Austria Luxembourg South Africa Turkey Azerbaijan Egypt Guyana Nepal
United Arab
France Ireland Thailand Kenya Gambia, The Zambia Albania
Emirates
Netherlands Italy Chile Panama Colombia Honduras Tajikistan Moldova
Russian
Taiwan, China India Oman Morocco Ecuador Ethiopia
Federation
Korea, Rep. Tunisia Philippines Ukraine Namibia Madagascar Burundi
Israel Saudi Arabia Slovak Republic Peru Bulgaria Venezuela Mozambique
Dominican
Portugal Mauritius Vietnam Macedonia, FYR Zimbabwe
Republic
Brazil Guatemala Syria Kyrgyz Republic Paraguay
Bosnia and
China Senegal Montenegro Suriname
Herzegovina
Qatar Pakistan Cameroon Chad
Indonesia Mali Timor-Leste
Bahrain Libya Algeria
FACTORS
1. Firm-level technology absorption Bolivia
2. Local supplier quality 7. Production process sophistication
3. State of cluster development 8. Extent of marketing
4. Nature of competitive advantage 9. Local availability of process machinery
5. Value chain breadth 10. Capacity of innovation – licensing vs own technology
6. Control of international distribution 11. Utility Patents (Hard data)

63. Global Marathon Race in the new economy (2008/2009)
Japan
Hot Spots Pace-Setters Switzerland
Germany
USA
Strong Australia Sweden
Malaysia
Developed Denmark
Puerto-Rico Finland
New Zealand Austria
Spain Singapore France
Czech Rep UK Netherlands
Degree of Competitiveness
Slovenia Iceland Taiwan
South Africa Norway Korea
Estonia UAE Belgium Israel
Kuwait Chile Hong Kong
Malta India Canada
Costa Rica Tunisia Luxembourg
Lithuania Saudi Arabia Ireland
Jordan Portugal Italy
Barbados Brazil
Turkey China
Panama Qatar
Oman Indonesia
Philippines Bahrain
Slovak Rep
Weak Highly
Developed
Development Stage of NIE

64. Challenge 1
Japan
Hot Spots Pace-Setters Switzerland
Germany
USA
Strong Australia Sweden
Malaysia
Developed Denmark
Puerto-Rico Finland
New Zealand Austria
Spain Singapore France
Czech Rep UK Netherlands
Degree of Competitiveness
Slovenia Iceland Taiwan
South Africa Norway Korea
Estonia UAE Belgium Israel
Kuwait Chile Hong Kong
Malta India Canada
Costa Rica Luxembourg
Tunisia Challenge 1 Ireland
Lithuania Saudi Arabia
Jordan Portugal Gap Widening Italy
Barbados Brazil
Turkey China
Panama Qatar
Oman Indonesia
Philippines Bahrain
Slovak Rep
Weak Highly
Developed
Development Stage of NIE