The Secret to Japanese and South Korean Innovation: How Tokyo and Seoul Partner With Startups—and What Silicon Valley Can Learn

Ramon Pacheco Pardo*, Robyn Klingler-Vidra

*Corresponding author for this work

Research output: Contribution to specialist publicationArticle

Abstract

Japan and South Korea are innovation and tech powerhouses. They are home to leading firms in many of the high-tech sectors powering global economic growth and usually rank near the top of innovation indexes. To get to where they are today, both countries harnessed the combined power of their public and private sectors for decades. The innovation strategies they used challenge the model mythologized by Silicon Valley: the individual genius who comes up with a brilliant idea and receives funding from venture capitalists acting in a private capacity. In the United States, the perception is that startups should work by themselves, often with the aim of disrupting existing companies and industries.

Despite rhetorical claims about their goals to build their own Silicon Valleys, the governments and firms of Japan and South Korea believe that cooperation among new startups and existing conglomerates is crucial to boosting economic competitiveness, especially in frontier technologies, such as semiconductors, robotics, energy-efficient shipping, and electric batteries. Japan and South Korea have created an open innovation ecosystem in which government agencies, large firms, and smaller startups all support one another.

As competition between the United States and China heats up, the model pursued by Seoul and Tokyo suggests that startups are central to a competitive economy, but their potential is limited if they are working on their own. A national economy benefits more when startups work with government and existing big companies. Today, the United States is not the paradise for maverick entrepreneurs depicted in television shows and Hollywood movies. Instead, it already has traces of the approach found in Japan and South Korea. American policymakers should acknowledge this reality and lean into it to increase the United States’ economic and technological competitiveness.
Original languageEnglish
Specialist publicationFOREIGN AFFAIRS
Publication statusPublished - 7 May 2024

Keywords

  • JAPAN
  • South Korea
  • Industrial policy
  • INNOVATION
  • Silicon Valley

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