of computers and communications, competition developed between MTI and the Ministry of Communications. The government restructuring of 1994 shifted the balance of power toward the newly created Ministry of Information and Communications (MIC), which is responsible for software, information services, and information infrastructure, as well as telecommunications. Still, there is competition between the two ministries, because computer hardware and semiconductors remain under MOTIE (the former MTI). After the 1997 elections, the government was expected to clarify the roles of different ministries, which could help resolve some of the conflicts and help officials come up with a more coordinated approach to computer policy. However, Korea's financial crisis took precedence on the new government's immediate agenda.
Comments on Industrial Policy. Korea's policies for the computer industry must be judged as less than effective. There has been a lack of focus as the government has directed resources into a broad range of hardware technologies. There has been no clear emphasis on leveraging Korea's strengths in components manufacturing, nor has the government effectively addressed shortcomings in design and software capabilities. Accordingly, Korean computers and peripherals (outside of monitors) have been uncompetitive in world markets, and the software and services industries remain small. Especially damaging has been the inability to promote competition to the chaebol in the domestic market, either through SMEs or foreign companies. This has allowed the chaebol to avoid making the necessary changes to be more competitive in the global industry.
Part of the problem is that those responsible for Korea's technology policy seem fixated on following Japan and the Japanese model for computer industry promotion. Hence, Korea's policies have suffered from many of the same shortcomings as Japan's policies in the PC era. While the government and the chaebol have focused on beating Japan, the Korean computer industry has been left behind by competitors in Taiwan, Singapore, and elsewhere. Meanwhile, Korea has still failed to reduce its dependence on Japanese suppliers of key components and equipment.
It is unclear whether policies to strengthen the software industry and promote venture companies will have much impact. Innovation is not easily supported directly; it is more likely to be nourished by creating a favorable environment. The government could help do this by limiting the influence of the chaebol (especially in the distribution system), by protecting intellectual property rights, and by continuing to encourage computer use. In Korea, the software industry must have the chaebol as customers, but will be stronger if there are many independent companies free from the management hierarchies of the chaebol.
Korea's extraordinary success in high-volume semiconductors and other commodity components has contrasted with its mixed record in PCs and outright