Investment Vs. Output
The Hyundai Research Institute announced on April 20 that the number of Patent Cooperation Treaty (PCT) patents per R&D investment of US$100 million was 18 and the number of PCT patent applications per 10,000 researchers was 385 in 2013 for South Korea. The former was 17.7 for Germany, 12.6 for the United States, 14.3 for France, 27.3 for Japan and 29.2 for Finland while the latter was 663 for Japan, 534 for Finland, 497 for the Germany and 410 for the U.S.
The PCT is an international agreement that enables a locally-applied patent to be effective in all the member countries.
Besides, it has been found that South Korea is falling behind in terms of the utilization of intellectual properties. According to the Ministry of Science, ICT & Future Planning, South Korea recorded a R&D investment-to-GDP ratio of 4.29%, second to none in the world, in 2014 and the total R&D by the government and the private sector amounted to US$60.5 billion, the sixth-largest in the world, during the same period, when South Korea’s public research institutions posted a technology transfer ratio of 31.7%. In spite of a continuous increase in the ratio, their royalty income was limited to 140.3 billion won in 2014. On the contrary, the U.S. recorded a technology transfer ratio of 29.3% but posted a royalty income-to-investment ratio of 4.1, almost four times that of South Korea.
This has to do with sluggish investment in venture firms. In 2014, venture investment in South Korea was equivalent to 0.06% of its GDP whereas the ratio was as high as 0.28% in the U.S. and 0.38% in Israel. Furthermore, the ratio of venture investors per 1,000 owner-operators with at least one employee was 0.139% whereas that of Finland was 1.378%.
At present, South Korea’s chronic technology trade deficit is showing no sign of improvement at all due to the poor utilization of intellectual properties. Specifically, the cumulative deficit amounted to US$74.46 billion between 1990 and 2014.