education, primarily in engineering and science, where target figures are 6,000 and 1,500 Ph.D.’s, respectively. Several thousand South Koreans will continue to be trained overseas, particularly in the United States, as has been the practice for years.

Problems and Challenges

Latecomers to the manufacturing sector, particularly to the capital- and technology-intensive sectors, lack comparative advantage in technology. They tend to retain their protection mechanisms, while also requesting access to the major free markets. It is not entirely surprising that in response the United States has intermittently resorted to emergency relief protection. Hufbauer (1970) claims that imports covered by special protection in the United States (at that time) still equaled $68 billion, or 21 percent of total U.S. imports. Although South Korea has been treated generously by the United States, South Koreans believe that this is due compensation for their frontline defense of the West. Protectionist measures by the United States have been a sensitive issue.

As the closest follower of Japan, South Korea is the first Asian NIC to compete with Japan in the production of technology-intensive capital goods. With rising living standards, the comparative labor advantage will decline, although it will remain substantial for some time. Singapore has already experienced the phenomenon of “lowered motivation,” that is, the younger generation’s unwillingness to work the long hours at low wages, which their parents accepted in order to achieve prosperity and security.

The transfer of technology to South Korea may face obstacles in the future. South Korea does not have a particularly good reputation with regard to its respect for the copyright of software. Japan is already reluctant to transfer high technology, and the United States will increasingly become so as South Korean competition approaches U.S. capacity.

South Korea’s step onto the highest rung of technology will depend on the effectiveness of its current preparations for more indigenous South Korean R&D. In relying on their own innovations, the South Koreans and other Asian NICs will increasingly meet R&D problems that Australia is already facing.


Australia has a high standard of living, education, and science. Although its resource industries are highly developed, their terms of trade have deteriorated, and technology- and skill-intensive industries are intermediate between those of the NICs and the developed countries. Australia’s ability to

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