The Effects of Technological Innovation on Economic Performance in the South Korean Manufacturing Industry and Its Sub-Sectors

This research investigates the contribution of technological innovation on the economic performance of South Korean manufacturing industries using a growth model. The concept of ‘patent intensity’, measured here by the number of patent applications divided by value-added, is used as a proxy of technological innovation. For the estimation of the contributions of technological innovation, this research uses a modified growth model instead of a general regression model or causality analysis. Empirical results indicate that investment in research and development (R&D) increases the level of contributions from technological innovation and that changes in R&D human resources do not affect the speed of patent intensity changes. Moreover, we find that the foreign exchange crisis brought about great changes in the Korean manufacturing industry, but these changes did not significantly influence the contributions of technological innovation to production.