Title page 1

Contents 5

Acknowledgments 3

Chapter 1. Introduction 7

Chapter 2. Quantitative Comparison of Five National Innovation Systems 15

1. Performance Metrics of Innovation 16

2. Aspects of the Socio-economic System of Innovation 32

Chapter 3. The United States 42

1. U.S. Advanced Industry Performance 42

2. History and Evolution of America's NIS 47

3. Elements of the U.S. National Innovation System 55

4. U.S. Innovation System Strengths and Challenges 80

Chapter 4. Korea 90

1. Korean Economic Growth and Innovation Performance 90

2. Evolution of Science and Technology Innovation Policies 104

3. Actors and Inputs of the National Innovation System 110

4. Linkages of Innovation Actors 125

5. Weakness and Strengths of the Korean Innovation System 135

6. Strategy to Improve on the Korean Innovation System 146

Chapter 5. China 151

1. Overview of China's National Innovation System 151

2. Analysis of China's NIS Inputs & Outputs by GI Indexes 159

3. Analysis of Innovation Outcomes by Hamilton indexes 169

4. Implications and Conclusions 177

Chapter 6. Japan 184

1. History and Evolution of Japan's NIS 185

2. Analyzing Japan's Lost Decades 187

3. Landscape of Japan's NIS in the 21st Century 190

4. Japan's Performance in Advanced Technology Industries 195

5. Major Innovation Challenges 199

6. Conclusion 208

Chapter 7. Taiwan 216

1. Taiwan's Advanced Industry Performance 216

2. Taiwan's Key Innovation Inputs 219

3. History and Evolution of Taiwan's NIS 222

4. Architecture and Organization of Taiwan's National Innovation System 227

5. Taiwan's Innovation Strategy 233

6. Business Creation and Financing in Taiwan 237

7. Taiwan's Innovation Culture Today 239

8. Improving Taiwan's NIS 240

Chapter 8. Lessons from Comparative Analysis of Five National Innovation Systems 246

1. Lessons for the Areas of Improvement for Each Nation 247

2. Strategy for Innovation Alliance 261

Tables 95

Table 4.1. Global Innovation Index Comparison (2020-2022 Period Average) 95

Table 4.2. Korea's Relative Position by Innovation Categories 96

Table 4.3. Scopes of the Fifth Basic Plan of Science and Technology Policy 106

Table 4.4. Directions of the Fifth Basic Plan of Science and Technology Policy 106

Table 4.5. Destinations of Firm R&D in Korea 118

Table 4.6. Number of Firms Founded by University Students 128

Table 4.7. Korean Comparative Advantage Ratios of Innovation Categories 136

Table 4.8. Changes of Rankings of the Categories of Innovation Pillars of Korea 137

Table 4.9. Strength and Weakness Areas of Innovation of Korea 139

Table 6.1. Global market shares for Japan, 1995-2020 197

Table 6.2. Location quotient for Japan (new 2023 Hamilton Index) 198

Table 6.3. Location quotient for Japan (original 2022 Hamilton Index) 198

Table 8.1. Hamilton Industry LQ Comparison across Five Economies 265

Figures 8

Figure 1.1. National Innovation Systems 8

Figure 2.1. Number of Universities Measured by Quality as a Share of Population 17

Figure 2.2. STEM Graduates as % of Total Graduates 17

Figure 2.3. Total Researchers Per Thousand of Total Employment 18

Figure 2.4. Number of AI Researchers per Million Workers (2018) 19

Figure 2.5. Business R&D as % of GDP 20

Figure 2.6. Total R&D as % of GDP 20

Figure 2.7. Average R&D Intensity of Enterprises in 21

Figure 2.8. R&D Spending per GDP of Firms Except Software and Computer Services Sector 21

Figure 2.9. Citations Per Paper 22

Figure 2.10. IP5 Patent Applications per Million Persons 23

Figure 2.11. USPTO Granted Patents per Million Persons 23

Figure 2.12. Patents in Force per Capita 24

Figure 2.13. Venture Capital (VC) Investors, Deals/Billion PPP$ GDP 25

Figure 2.14. Financing of startups and scale-ups, 2023 (Survey question) 25

Figure 2.15. Ease of Getting Credit 26

Figure 2.16. Software spending as a percent of GDP 27

Figure 2.17. ICT Use Index 27

Figure 2.18. Unicorn Valuation to GDP 28

Figure 2.19. Share of Top 100 Most Innovative Companies 29

Figure 2.20. Labor Productivity Growth Rate 2012-2022 30

Figure 2.21. Location Quotient for Hamilton Index Industries 31

Figure 2.22. Employment Share by Firm Size 33

Figure 2.23. Top 10% Firms' R&D Spending Share 34

Figure 2.24. Top 10% Firms' R&D Spending Amount 34

Figure 2.25. Negative Public Attitude Score Toward Technological Changes 35

Figure 3.1. Hamilton Index industries' shares of the U.S. economy 43

Figure 3.2. America's global share with and without IT 44

Figure 3.3. America's LQ with and without IT 44

Figure 3.4. America's relative performance in Hamilton Index industries (2020 LQ) 45

Figure 3.5. America's relative historical performance in Hamilton Index industries (LQ trends) 46

Figure 3.6. America's net performance since 2008 (scaled to 2020 output) 47

Figure 4.1. Decomposition of Korean Economic Growth and the Role of Productivity 92

Figure 4.2. Changes of Innovation Input Indices 97

Figure 4.3. R&D Activities 98

Figure 4.4. Patents Granted 99

Figure 4.5. Production Shares of the Ten Hamilton Index Industries of Major Industrial Powers 101

Figure 4.6. Korean Shares of Hamilton Index Industries 101

Figure 4.7. Korea's Relative Performance of Hamilton Index Industries (2020 LQ) 103

Figure 4.8. Korea's LQ Trends of Hamilton Index Industries 103

Figure 4.9. Korea's Relative Performance Changes during 2008-2020 (Bubble-scaled by 2020 Output) 104

Figure 4.10. R&D Expenditure by Type of Actor in Korea 116

Figure 4.11. Number of Researchers by Actor 116

Figure 4.12. Industrial Sector Distribution of Firm R&D Investment 119

Figure 4.13. PRI's R& D Investment Allocation 124

Figure 4.14. University-Firm Technology Transfer 126

Figure 4.15. Number of University Spinoffs 127

Figure 4.16. PRI-involved Collaborative Research Projects Funded by MOTIE 129

Figure 4.17. Firm-involved Collaborative Research Projects Funded by MOTIE 129

Figure 4.18. Number and Value of Technology Transfer Agreements by PRIs 130

Figure 4.19. Government Funding Tax Incentives Support to Business R&D (% Relative to GDP) 131

Figure 5.1. Domestic Market Share Targets under Made in China 2025 153

Figure 5.2. GII Rankings (2018-2023): USA, Korea, Japan, China 160

Figure 5.3. Institutions Rankings (2018-2023): USA, Korea, Japan, China 161

Figure 5.4. Human Capital & Research Rankings (2018-2023): USA, Korea, Japan, China 162

Figure 5.5. Infrastructure Rankings (2018-2023): USA, Korea, Japan, China 163

Figure 5.6. Market Sophistication Rankings (2018-2023): USA, Korea, Japan, China 164

Figure 5.7. Business Sophistication Rankings (2018-2023): USA, Korea, Japan, China 165

Figure 5.8. Knowledge and Technology Outputs Rankings (2018-2023): USA, Korea, Japan, China 166

Figure 5.9. Creative Outputs Rankings (2018-2023): USA, Korea, Japan, China 168

Figure 5.10. Hamilton Index industries' shares of China's economy 169

Figure 5.11. China's relative performance in Hamilton Index industries (2020 LQ) 170

Figure 5.12. China's relative historical performance in Hamilton Index industries (LQ trends) 170

Figure 5.13. China's net performance in Hamilton industries since 2008 (scaled to 2020 output) 171

Figure 5.14. China's NIS Rankings Comparing 2018 and 2023 177

Figure 5.15. China Semiconductor Ecosystem 179

Figure 5.16. ICRD cases 179

Figure 5.17. NIS Rankings Comparing USA and China in 2023 180

Figure 6.1. Changes in the savings-investment balance in Japan 188

Figure 6.2. Ratio of ICT investments in GDP in major industrial countries 189

Figure 6.3. Japan's performance in advanced industries comprising ITIF's Hamilton Index 199

Figure 6.4. Average industry funding per academic researcher (2019, or the latest year available) 203

Figure 6.5. University R&D funded by business enterprises, as share of total university R&D, 1995-2019 203

Figure 6.6. Industry-university R&D investment, as a share of GDP, 1981-2019 204

Figure 7.1. Hamilton Index industries' shares of Taiwan's economy 217

Figure 7.2. Taiwan's relative performance in Hamilton Index industries (2020 LQ) 217

Figure 7.3. Taiwan's relative historical performance in Hamilton industries (LQ trends) 218

Figure 7.4. Taiwan's net performance in Hamilton industries since 2008 (scaled to 2020 output) 219

Figure 7.5. Taiwan's national R&D intensity, 2010-2021 220

Figure 7.6. Taiwan's government R&D expenditure as a percentage of total R&D expenditure, 1991-2017 220

Figure 7.7. Taiwan S&E first university degrees, by selected region, country, or economy and field, 2010-2018 221

Figure 7.8. Number of Taiwanese STEM students studying in the United States, 2001-2020 222

Figure 7.9. The Timeline of Taiwan's S&T System and Policy Development 224

Figure 7.10. 2012 Reorganization of Taiwan's S&T Structure 225

Figure 7.11. Countries' global value chain participation rate, as a share of total exports (2018) 234

Figure 7.12. Taiwan's formulation of strategic industries and "5+2+2+2 Innovation Strategy" 235