This report presents the main findings of three major studies carried out as part of Korea and the Bank's Knowledge Partnership. It is divided into three main sections: (a) a Strategic Review which integrates, and summarizes the most important findings, and policy recommendations for Government to consider; (b) the three in depth studies regarding Korea's transition towards a knowledge-based economy, and, (c) detailed annexes. Korea faces complex challenges in moving toward a knowledge-based economy, which will require inspired corporate strategies, and government policies. The three studies represent an important 'triad' of issues that constitute a core part of the foundation of Korea's knowledge economy: the deepening of technological knowledge at the firm-level; the intensification of the use of internet enabled services by firms; and, the educational implications for upgrading of the workforce. At the firm-level, further mastery of technological knowledge is essential for firms to move further 'upstream' from their base in manufacturing, towards higher value added activities based on research, development, and new product innovation. For each of these three themes (firm-level innovation, Internet enabled services, and educational reform), new empirical data are presented for understanding, and promoting knowledge-intensive economic progress. The Strategic Review summarizes several difficulties confronting government policy makers in the aim to promote advances towards knowledge intensive activities. These include the need to ensure: (a) that any new policies are consistent with existing policies designed to ensure good corporate governance, competition, and transparency; (b) that private sector, market-based mechanisms play their proper part in any upgrading efforts (i.e. training and consultancy providers); and, (c) that further evaluation of the scope, and effectiveness of existing policies in the three areas is carried out.
