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Industrial, Science, Technology and Innovation Policies in South Korea and Japan

Murat A. Yülek and Hongyul Han

Designing effective industrial and science, technology and innovation (STI) policies is still an ongoing quest for both developed and developing countries. This book examines industrial as well as STI policies in East Asian countries South Korea and Japan comparatively. Japan is one of the largest industrial economies in the world. However, it is experiencing competitiveness problems with a relative fall in its manufacturing industry indicators such as exports. Korea is, on the other hand, a rapidly rising industrial power challenging larger peers including Japan. The two economies are competing in similar markets and are on different cycles of development. This book looks at the competitive positions of the two countries in the field of industrial and STI policies in general and in the sectors of railway equipment, medical equipment, aviation equipment and electronics.

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Chapter 7: STI and Industrial Policies in Korea: Aircraft Manufacturing

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7.1 Industry Overview

Korea’s aircraft manufacturing industry started in the late 1970s by producing helicopters for defense purposes. Before the production of 500 MD helicopters under the license of a US company, Hughes, Korea’s industry remained mostly at the stage of maintenance and aviation warehouse services. In 1962, Asia’s largest aviation maintenance factory was established in the city of Daegu (located in the southeast part of the Korean peninsula where a U.S. Air Force was based) to provide maintenance and warehouse service to the US Air Force. In 1976, Korean Airline started the production of helicopters with the Hughes’ license. Entering the 1980s, the Ministry of Defense launched the FX project and designated Korean Airline to producing Korean fighters of F-5E/F followed by F16. Samsung Precision (now Samsung Aerospace Industries) started to manufacture jet engines for F5-E/F with GE license.38

Localization of aircraft industry dates back as far as 1983, when the KTX project was launched by the government think tank of National Defense Science Institute. The KTX project aimed at the development military training aircrafts by domestic industry and the Daewoo Heavy Industry was designated as the primary contractor, along with the Korean Airline, Samsung Aerospace Industries, and LG precision as partner contractors. This project gave birth to the very first Korean training aircraft (KT-1, named Woonbi-Ho). Not only was KT-1 supplied to the Korean air forces, it was exported to several countries. The success of KTX brought about follow-up projects such as...

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