A Comparative Study on Social Systems of Innovation Between Korea and Germany

Neoclassical economics assumes homogeneity in technological capabilities and institutions among nations. Contrary to that, Evolutionary economics sees their differences in technological, institutional and cultural aspects. Drawing on the concept of Evolutionary Economics as a new idea in the field of Economics, this article empirically investigates the differences or specificities in a social system of innovation between Korea and Germany, including the technological and institutional varieties, especially related to the 'noneconomic' variables. According to the empirical study, it is evident that the systems of two countries are not homogeneous, but quite different and even asymmetrical. From the theoretical point of view, those results highlight the erroneous features of the neoclassical assumption on $quot;internationally homogeneous production functions $quot;. Key political implications follow from these results. Firstly, to improve the international economic relationship between Korea and Germany, it is necessary to make a different international cooperation policy from that relevant to, for instance, the United States. Secondly, beyond the strategy of curtailing the labour cost, Korean social system of innovation is required to pay more attention to the strategy of making technological efforts, reforming institutional settings and constructing sociocultural atmosphere based on the cooperation and trust.