Research and Development Budget Significantly Increased Under Moon Jae-in Administration

Annual average growth of 7.2%, nearly double the 4.0% during the Park Geun-hye administration
Increase in local and small-medium enterprises' share supports pledge to close the gap

[Asia Economy Reporter Kim Bong-su] Under the Moon Jae-in administration, financial investment in national research and development (R&D) has significantly increased compared to previous governments. In particular, the proportion of local and small-to-medium enterprises (SMEs) has risen, effectively supporting the Moon Jae-in administration's key national policy tasks of regional balanced development and expanded support for SME R&D, the government self-assessed.

According to the results of the 2022 National R&D Project Survey and Analysis reported by the Ministry of Science and ICT at the 31st National Science and Technology Advisory Council held on the afternoon of the 21st, the R&D budget executed by the government in 2020 was KRW 23.8803 trillion, a 15.8% increase from the previous year (KRW 20.6254 trillion). The average annual growth rate of R&D budget execution from 2017 to 2020 was 7.2%. This figure is nearly double the 4.0% average annual increase during the Park Geun-hye administration from 2013 to 2017. It also more than doubled compared to KRW 10.9936 trillion in 2008.

By year, the budget increased from KRW 19.3927 trillion in 2017 to KRW 19.7759 trillion in 2018, and in 2019, it surpassed KRW 20 trillion for the first time at KRW 20.6254 trillion. In 2020, KRW 23.8803 trillion was executed, a 15.8% increase from the previous year. The number of research projects also increased from 61,280 in 2016 to 63,697 in 2018, 70,327 in 2019, and 73,501 last year.

By ministry, the top five ministries?Ministry of Science and ICT (32.3%), Ministry of Trade, Industry and Energy (16.8%), Defense Acquisition Program Administration (15.8%), Ministry of Education (9.1%), and Ministry of SMEs and Startups (5.9%)?accounted for 79.8% (KRW 19.0657 trillion) of the total executed budget.

By research performing entity, the budget executed by SMEs and mid-sized companies steadily increased. Government-funded research institutes executed KRW 8.7 trillion, accounting for the largest share at 36.3%, but this was a 0.7 percentage point decrease from the previous year. Instead, companies ranked second, executing KRW 6.2 trillion (25.9%), a 2.2 percentage point increase from the previous year. Notably, large companies spent about KRW 400 billion, accounting for 1.6%, a decrease from 1.8% the previous year, while SMEs and mid-sized companies executed KRW 5.8 trillion (24.3%), 2.8 percentage points more than the previous year's 21.9%. Universities executed about KRW 5.8 trillion, accounting for 24.1% (a 0.3 percentage point decrease), and others accounted for KRW 3.3 trillion (13.8%, a 1.9 percentage point decrease).

By research field, development research led with KRW 7.8754 trillion (46.8%), followed by basic research at KRW 5.0714 trillion (30.1%), and applied research at KRW 3.8907 trillion (23.1%). Although the budget increased in all fields, the share of basic research decreased by 2.6 percentage points compared to the previous year, while applied research and development research increased by 1.6 and 1.0 percentage points, respectively.

By region, with the continued relocation of major public research institutions to local areas, local regions have surpassed the metropolitan area. As of last year, the metropolitan area's share of R&D budget execution was 31.7% (KRW 7.2 trillion), down about 3.2 percentage points from 34.9% in 2016. In contrast, local regions accounted for 39.6%, surpassing the metropolitan area. This trend began in 2018, shortly after the Moon Jae-in administration took office, when the local R&D execution share was 37.8% (up from 34.5% in 2016), already ahead of the metropolitan area's 33.2%. In Daejeon, where the Daedeok Research Complex is located, the share was 30.6% in 2016, 28.9% in 2018, and 28.7% last year.

By technology field, mechanical engineering led with KRW 4.2 trillion (18.6%), followed by information and communications at KRW 2.4 trillion (10.6%), electrical and electronics at KRW 2.2 trillion (9.9%), and health and medical at KRW 2.1 trillion (9.3%). The budget for convergence research surged by 24.6% (KRW 632.9 billion) from the previous year to KRW 3.2038 trillion (14.3%).