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University Microfilms International 300 North Zeeb Road Ann Arbor, Michigan 48106 USA St INFORMATION TO USERS This material was produced from a microfilm copy of the original document. While the most advanced technological means to photograph and reproduce this document have been used, the quality is heavily dependent upon the quality of the original submitted. The following explanation of techniques is provided to help you understand markings or patterns which may appear on this reproduction. 1. The sign or "target" for pages apparently lacking from the document photographed is "Missing Page(s)". If it was possible to obtain the missing pagels) or section, they are spliced into the film along with adjacent pages. This may have necessitated cutting thru an image and duplicating adjacent pages to insure you complete continuity. 2. When an image on the film is obliterated with a large round black mark, it is an indication that the photographer suspected that the copy-may hav€! moved during exposure and thus cause a blurred image. You will find .a good image of the page in the adjacent frame. 3. When a map, drawing or chart, ete., was part of the material being photographed the photographer followed a dafinite method in "sectioning" the material. It is customary to begin photoing at the upper left hand corner of a large sheet and to continue photoing from ieft to right in equal sections with a small overlap. If necessary, sectioning is continued again - beginning below the first row and continuing on until complete. 4. The majority of users indicate that the textual content is of greatest value, however, a somewhat higher quality reproduction could be made from "photcqraphs" if essential to the understanding of the dissertation. Silver prints of "photographs" may be ordered at additional charge by writing the Order Department, giving tha catalog number, title, author and specific pages you wish reproduced. 5. PLEASE NOTE: Some pages may have indistinct print. Filmed as received. University Microfilms International 300 North Zeeb Road Ann Arbor, Michigan 48106 USA St. John's Road, Tyler's Green High Wycombe, Bucks. England HP10 8HR 78-1051 LEE, Ka-Jong, 1940~ TECHNOLOGY,TRANSFER AND DEVELOPMENTAL STRATEGIES:' THE ROLE OF LARGE FIRMS IN KOREA •. University of Hawaii, Ph•D.,. 1977 . Political Science, general University Microfilms Intemational, Ann Ar.bor. Michigan 48106 TECHNOLOGY TRANSFER AND DEVELOPMENTAL STRATEGIES: THE ROLE OF LARGE FIRMS IN KOREA A DISSERTATION SUBMITTED TO THE GRADUATE DIVISION OF THE UNIVERSITY OF HAWAII IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY IN POLITICAL SCIENCE AUGUST 1977 by Ka-Jong Lee Dissertation Committee: Robert B. Stauffer, Chairman Youngi1 Lim Douglas Bwy Michael Haas Harry Friedman iii ABSTRACT Technological Change grows and flourishes in specific social settings. Once it comes into being, it plays a pivotal role in trans­ forming society. Therefore, technology transfer and developmental strategies should be examined in terms of current international circum­ stances in which technology is overwhelmingly concentrated in the hands of a small number of multinational corporations. The problems of technology transfer to developing countries stem not only from the widened technological gap but also from the very nature of the world system which has been shaped by modern technology. This study concen­ trates on technology's impacts on industrial concentration and the international division of labor with the support of empirical data drawn by means of a questionnaire administered to 40 large manufacturing firms in South Korea. Modern technology, which is available to a developing country through technology transfer from industrialized countries, requires a sizable commitment of resources and consequently results in industrial concentration. An empirical analysis showed that the more modem the technology transferred (technological dependence), the higher the degree of industrial concentration in a developing country. Exportation of manufactured goods from a developing country is considered as one possible outlet of economies of scale demanded by technological efficiency. Export, however, pushes a developing country to participate in the international division of labor, hierarchically structured in terms of technological change, which costs a developing country formidably. An empirical assessment showed that exports of a iv developing country concentrate in the low level skill-intensity category. It was also revealed that the higher the degree of technological dependence of an industry, the lower the export perfomance. In this situation technological demand for resource concentration and giantism calls for state intervention and ~onsequently results in centralization of political power, which is, in tum, likely to take the fom of collective measures. In this respect, the pandora box of technology seems to promise no progress for human civilization: it is technical regression, viewed from the moral and humanistic standpoint. We all must grapple with the technological issue. v TABLE OF CONTENTS ABSTRACT •••• •• ... .. .. .. .. · .. · . iii LIST OF TABLES ... .... ·.·. ·.. ·. ·.. vii LIST OF FIGURES .... ... · . ·... .. viii Chapter I. Introduction ••• eo. •••••••• 1 Chapter II. Social Function of Technological Change 2 (1) The Meaning of Technology ••••• 2 (2) The Theory of Technological Lead • • • • • • 10 (3) Modern Technology and Science Policy •• 19 Chapter III. Conceptualization: Technology Transfer 28 (1) Vertical Process •••••••••• 28 (2) Horizontal Process ••••••••• 37 (3) The Late-Camer Thesis and the Technological Gap • • • • • • • • •••••• 41 Chapter IV. Technological Dependence • ·. ·.. · .. 47 (1) Internationalization of Science and Technology •••••••••••• 47 (2) Consumption Patterns and Technology · . · . Transfer ••••••••••••• 54 (3) Local Innovative Activities and Royalty· . ·. Payments ••••••••••••• · . 63 Chapter V. Technology Transfer and Monopoly · .. · . 81 (1) The Theory of Product-Life Cycle •••• 81 (2) The Nature of the Market for Technology 91 (3) Industrial Concentration •••••••• 98 Chapter VI. Technology and the International Division ·.. 113 (1) International Trade Pattern • • • 114 (2) Technological Activities and Export· · · · · Performance . • • • 118 (3) Implications of the· ·International· ··· ··· ·· Division of Labor for Power and Wealth Distribution • • 125 (4) International Division··· of· ·Labor· ··and· · · · · Choice .... ·· · · · · · · · · 131 Chapter VII. Politics of Technological Change and Modernization ••••••••••• ·.. .. 141 vi (1) Politics of Modernization G • G • • • 141 (2) Political Goals and Modernization· • ·• ··•• 154 (3) Guided Capitalism: The Korean Style of· · Modernization. • .. • . • . ••• · • · • 158 (4) The Perspectives . •• • • . · • · · • · • 173 Chapter VIII. Conclusion •••• 0.0 ••••••• 0.000 182 Appendix 1. Correlation Analysis of Technological and Economic Activities of Selected Industries (1975) ••.••• 0••••••••••• ·. .. 187 Appendix 2. Indexes of Teclmo1ogica1 and Economic Activities of Selected Industries (1975) · ... 189 Appendix 3. Statistics of Teclmo1ogica1 and Economic Activities of selected Industries (1975) D • D 190 Appendix 4. Survey Method and Questionnaire .00 0 • • • 0 0 191 Bibliography ••••••••••••••••••••••• •• 203 vii LIST OF TABLES Table 1 Motives of Technology Transfer ••• .. 59 2 Advantages of Foreign Technology •• . .. .. 62 3 R&D Activities and Royalty Payments of Japanese Industries •• •••••••••••• 67 4 Goal of R&D Activities of Korean Manufacturing Industries (1975) •••••••••••• .. 69 5 Foreign Investment in the Sample Industries 73 6 Technology Transfer Costs of Turn-key Projects in Korea (1970-75) •••••• 77 7 Motives of Foreign Capital Inducement . .. 86 8 GNP and Export Performance by Manufacturing Sector in Korea •••••••••• . ... 121 9 Skill-intensity .. ... ... ....... 123 viii LIST OF FIGURES Figure Page 1 Model of Vertical Technology Transfer • .. 32 2 Model of Horizontal Technology Transfer • •• 40 Chapter I Introduction In the last decade, the transfer and development of technology have acquired a prominent place and have led to growing interest among social scientists. Increasing emphasis upon the role of science and technology in the development process stems not only from the appreciation of the major contribution of technological change to the :..\ '''tQ:\1''''': •. aggregate economic growth but also from the perception that technological change exercises a decisive impact upon the socio-economic structures and the equitable distribution of wealth in the world. On the other hand, it is very difficult to dissociate any discussion of the problems of technology transfer from big businesses (or multi- national corporations), and vice versa: both are often inextricably bound together, as a persistent theme in economic theory that has praised large firms' for their technological efficiency suggests. To quote Schumpeter: "They are essentially one and the same thing."l Both began to emerge as economic phenomena around the beginning of this century and have grown with tremendous rapidity in 1950s and 1960s. The strong association of technological progress and big business has, to a great extent, upset the classical theories of social science. "The Age of Discontinuity" describes how The world has become one market, one global shopping center, yet this world economy almost entirely lacks economic institutions: the only exception is the 1 Joseph A. Schumpeter, capitalism, Socialism and Democracx, (New York: Harper & Row, 1950), p. 110. 2 multinational corporation:
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