Korean Paradox of Public Support for the Research and Development Investment in the Sustainable Performance of the Regional Economy

Abstract

The Swedish Paradox is a well-known phenomenon related to high research and development (R&D) investment with supposedly low aggregate economic performance owing to economic saturation. The Korean economy has not yet become an advanced economy; however, its R&D performance is negligible. Recently, also the R&D share of the GNP has become much higher, and its contribution to the economic growth rate is rapidly decreasing, implying a negative relationship between R&D activities and economic performance. This study uses slacks-based data envelopment analysis to investigate investment performance at the local government level in Korea. Our findings reveal that the average score for R&D investment performance in Korea is 64%, indicating huge potential for an efficiency enhancement of 36%. Notably, among the 16 local governments examined, Seoul and its surrounding metropolitan areas showed the lowest R&D efficiency, while Gangwon and Gwangju exhibited superior performance. Since these two regions have promoted specific missions, such as the medical hub in Gangwon and the optical fiber strategic platform in Gwangju, precise and accurate differentiation appears necessary to avoid a lack of governance. To determine the workable mechanism of R&D support policies, we further divided R&D productivity into three categories by incorporating the Malmquist Index (MI). The paper productivity of R&D shows an increasing trend over the experimental period from 2016 to 2021. However, overall, the MI shows slightly deteriorating productivity with 0.978, owing to the aggravating effect of patents and commercialization of R&D. The success in the paper comes from the harmonized partnership between the strong push factor of the government and voluntary pull factor of the R&D support receiving universities. Thus, we suggest that the Korean government should not depend on the superficial effectiveness of R&D in the term but on public–private partnerships with stronger performance-oriented responsibility.