From developmental to network state: Government restructuring and ICT-led innovation in Korea

• South Korea's development since 1980 harnessed the power of digital networks, transforming its developmental state into a network state.
• Despite the increased power of chaebol industry groups the state continues to play an important leadership role.
• Developmental state theory, including the concept of a pilot agency, and a highly competent bureaucracy, help explain the Korean case.
• The study documents key government restructuring efforts since 1980 with a focus on their impact on Korea's ICT sector.
• Korea's experience underscores the importance of long term policies, education and the growing priority of content in the “creative economy.”

This study examines the government leadership and strategic restructuring that guided The Republic of Korea's remarkable ICT-led development from 1980 to the present. That time span coincided with tumultuous political, social and economic transformation inside Korea including the growth of such powerful chaebol industry groups as Samsung, LG and SK. Globally, the period covered by this study featured the growth of new and more powerful digital networks epitomized by the internet. It also marked South Korea's transition from a development to a network state, allowing assessment of what the experience implies for developmental state theory.This research shows that the most convincing explanation for the decline of the Korean developmental state lies in its transformation into a network state. Nevertheless, it illustrates the continuing explanatory power of key concepts from the developmental state model, including a competent bureaucracy, a political system that allows the bureaucracy sufficient autonomy, market conforming methods for state intervention, and a “control tower,” to guide industrial policy in the networked era. Korea's success suggests the value of technically trained leaders in the ICT sector, and in sharp contrast with Japan, the importance of the cross cultural experience and global outlook that many of them gained while studying at top universities in the U.S.For most of the three-plus decades in this study, the MIC served as Korea's control tower for the ICT sector, guiding policy and technology projects, and culminating in the 2006 U-Korea Master Plan, an ambitious blueprint for becoming the world's first ubiquitously networked nation. However, only two years later the Lee Myung-bak administration dismantled the ICT control tower in favor of a five year experiment with a liberal, market oriented approach to the ICT sector, much like policy in the United States. It was widely considered a failure and in 2013 President Park Geun-hye restored the control tower function within the new “super” Ministry of Science, ICT and Future Planning.The Korea experience also has more general implications for policymakers in the information age. These include the need for national, long-term policies, the vital role of education, ranging from highly specialized R&D to broadly-based public-private sector efforts to ensure demand for services. While Korea's past success depended heavily on the manufacture and export of hardware and infrastructure, the President Park Geun-hye administration, with its emphasis on building a “creative economy” signaled recognition that software, content and services will be more important than hardware in the future.