The efficiency analysis, as the most important factor of decision making of R&D has been tried in theory and actual proof research. Research on total factors of productivity has been carried out in America and other developed countries since the e...
The efficiency analysis, as the most important factor of decision making of R&D has been tried in theory and actual proof research. Research on total factors of productivity has been carried out in America and other developed countries since the end of 1950's, and as a leading research there is research by Griliches(1979). Griliches explains R&D investing in the form of Cobb-Douglas production formula.
This study analysed each of different parts of research on investment of R&D on two Korean manufactoring industries on the basis of industrial classification and profit rates of government investments in the context of private and government R&D investment efficiency. Efforts have been made in order to differentiate this study to previous studies using analysis of defense industry management and public enterprise management as side material. This is the first time that analysis of defense industry management and enterprise management have been analysed in Korea and there are signs of research limitations. Fact that this study only based on the materials that has existed just for 5 years from 1994 to 1998 limits the study to only 5 years information boundary.
This study can be divided into two main issues :
First, Has government(public) R&D investments have higher efficiency than private enterprise R&D?
Second, What existing relationships are there between government (public) R&D investment and private enterprise R&D activity?
Area in which this study focuses on is the first issue, trying to analyse with actual proof and theory analysis in context of government branch revenue and measurement of private enterprise profit rate in factors such as technology costs, export costs, R&D costs.
This study can be sumed up as follows :
First, between problems of government investment and private investment, private investment in developed countries is shown as positive effect whereas information and government(public) investment is shown as negative effect. Reason for this is that public R&D is enlarged in the longrun than private R&D and investment of government(public) which are spreaded and this complicates the measurements.
In developing countries, government plays big role in enhancing the technology level of R&D. As a result, R&D and role of government and public braches increase is increased.
Secondly, R&D investment profit rate is known to be used more as an essential index than government R&D investment and public R&D investment. What is more, it showed plus sign for government R&D investment and public sector, and it's calculation value statistically showed that it is and considerably high in class compared to other variables.
Result of profit rate pooled-data showed that public manufacturing sector and government defense industy's investment profit rate was considerably low and all the government sector showed high profit rate and adjusted to plus sign.
This proposes the conclusion that as the government's input is reduced, the role of the government's role should increase.
The reason for high efficency is despite the risks, and long term factors it is able to maintain the plus sign' and plays central role in social investment such as R&D, energy, communication, trasport.
Thirdly, relationship between government(public) R&D and private sector's R&D is relativly small. Therefore, it was confirmed that there was no or very weak relationship between government investment and public investment.
This can be interpreted as a failure to acheive the objective of minimizing the government investment burden and maximizing influencial effect.
In this study, there were discrimination on the point that there was use of defense industry management evaluation material which included productive appraisal which contained market valuing on government sector's R&D activity. Limitation to this evaluation was that within alliance equation which takes into account the efficiency of R&D investment and investment scale, the size of the values in the equation were considerably small. As result of this, there is assumption that only limited content of economic system and R&D were applied. This show that they fail to gather the large area of R&D investment's effect or essential factors which has direct indirect relationship such as consumer equation, investment equation, gross domestic productivity, exporting unit cost rate, consumer price index etc.
Using the results and the limitations as the background information, reconsideration in order to look at the efficiency would be as follows.
First, it requires rise in research funds and support as a result of government R&D increase in role and support. In case of America in 1998, government provided 54.7% of R&D funds, whereas, Korean showed low ratio by providing only 16.8%. What is more, there should be rise in support and diversify to other sectors in order to move into. the future and compete in international competition.
Secondly, in order to saftguard the government run defense industries, there is need for enhancement of budget and regulation. Moreover, there is need of international cooperation in order to achieve R&D efficiency through upgraded defence technology and defence technology export by strengthening the cooperation of international defence industry.
Amount that is increase by government R&D funds that is invested into defense industry is great and through defense industry's defense product exports, there may be increase in management disbursement by increase in produtivity of the industry. Therefore, there should be continuous increase in R&D funds.
Thirdly, production of semiconductors, best aspect of Korean science technology and Korea being the leading producer of the global market, is importing technology apart from few and is adapted to Korea's internal technology development research. This is put through reconsideration of efficiency and establish associated technology, organization and system.
To sum up, foreseeing the future, R&D investment should be increase to the level of other developed countries. There is also requirement of enhancement of efficiency of R&D such as reform, mindframe, public and government's diversed development activity in order to achive upgraded research activity on each industry's R&D.