The Impact of Korean Government’s Industrial R&D Expenditure on Technological Competitiveness

In Korea, the total amount of R&D executed by the Korean government in 2019 was $16 billion. The Compound Annual Growth Rate of Korean government R&D budget is 5.04% (2010~2019). This paper studies whether the Korean government\u27s R&D expenditure effectively achieves its purpose. Assuming the purpose of government R&D expenditure is set as science and technology competitiveness based on related laws and the indicator is identified as the technology balance of payments (TBP), this study estimates the statistical correlation between government R&D expenditure and TBP. Since the characteristic of government R&D expenditure is different for each field, the correlation by field is analyzed by dividing it into nine fields (Chemicals, Earth, Material, Health and medical, Environment, Energy, Construction and transportation, Electrical and mechanic, and Food and agriculture). Basic science fields that are less related to economic performance are excluded from the analysis. According to previous studies, the total amount of government and private expenditures and exchange rate are factors that affect the performance of science and technology R&D. All data required for analysis are administrative data and are available online. As a result of multiple regression analysis, it is estimated that the correlation between government R&D expenditure and TBP is statistically significant only in the energy sector. As the correlation between government R&D expenditure and TBP is estimated to be statistically insignificant in most fields except energy, overall review and innovation of government R&D expenditure strategies in each sector are required. Combining all industries in one regression with controls for the size of the industry, greater the statistical power, results in the finding that private R&D statistically significantly raises TBP. Government R&D has no statistically significant effect, so further researc