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Academic literature has examined how change in a regional system of innovation involves interactions between various actors that participate in regional economic development. This thesis examines similar processes, but also explores the ways in which various factors characterize change in regional systems of innovation. Without making assumptions about the political nature of the interactions among actors and the contexts surrounding them, the thesis advances the idea of a non-economic approach to the processes of regional development and industrial policy. In this thesis, a strategic relational perspective to regional systems of innovation comprises the conceptual framework that provides an in-depth explanation of the analysis of experiences. The single case study is employed for the operationalization of the strategic-relational perspective in the context of Gyeonggi province, South Korea, as a highly industrialized region in a post catching-up economy. The fieldwork is based on the collection and analysis of interviews and participant observation. The interpretation of empirical evidence through the strategic relational perspective reveals tension in the governance context, which has not met the interests of regional policy makers concerning regional development and industrial policy in Gyeonggi province. Thus, the thesis portrays the parts played by the provincial government in the innovation system affecting innovative capacity and performance, and identifies the political tensions that emerged and that seemed to be important in these processes.

The basic assertion of this thesis is that policy makers' belief systems and economic institutions have to change their structures and contents as the nation's economic developmental stage is upgraded. Put differently, a state's economic performance or achievement of economic objectives will be facilitated if there is no cleavage or conflict among economic policy, economic belief systems, and economic institutions. This means that the utility of the developmental state is valid until a nation's economy is in a take-off position. Persistent developmentalism after this stage will result in developmentalism losing its validity and becoming a main obstacle for further economic development. At this time, more liberalised economic policies which are not only supported by changed belief systems and institutions but also compatible with the neo-liberalising international political economy are needed. In other words, this thesis does not seek to answer the question 'which is the better strategy for economic development between developmentalism and neo-liberalism?' but emphasises the importance of the proper timing of transition from developmentalism to a liberalised and deregulated economy which is compatible with a mature civil society and the neo-liberalising international political economy.

This research has analyzed how the institutions of the merit-based bureaucratic system in the Korean Government changed from 1948 to 1963, applying the gradual institutional change theory of Mahoney and Thelen (2010). Though copious research has been produced on Korean economic development, little analysis has been made on the emergence of the Korean developmental state. This research aimed to fill in the analytical gap by examining how effective bureaucratic institutions was established in the Korean developmental state to draw out implications for the institutional change theory as well as the discussion on the developmental sate and state capacity. This research has found that the merit-based bureaucratic institutions of the Korean Government positively changed in a piecemeal approach from 1948 to 1963, though once disturbed from 1955 to 1959. Contrary to the existing literature, this research also has found that the institutional setting for the merit-based bureaucracy was set from the very beginning of the Syngman Rhee Administration; however, the selective implementation and enforcement of the rules in the Syngman Rhee period hindered the Weberian bureaucracy. This research has, therefore, drawn out that for positive institutional change, the role of the change agents is critical especially the vertical chain of reformative leadership and capable practitioners. The low level of opposition is beneficial for not only positive but also negative change. In the end, in the case of Korea, the initially ambiguous institutions provided the actors with considerable discretion to manipulate or misuse rules. As a result of the institutional reform the rules and regulations became detailed reducing the gap between what the rules say and how the rules are implemented. The empirical tests of this research have confirmed the basic assumptions of the gradual institutional change theory of Mahoney and Thelen (2010). Firstly, the empirical results have shown that the institutional change has more to do with a piecemeal internal process than to do with any external shock or event. Secondly, the gap between the existence and the enforcement of an institution has also been proved valid. Thirdly, the empirical tests have confirmed the influence of three change factors producing different types of change in the theory. Based on the empirical findings, this research has identified important implications for the institutional change theory with three key areas for improvement. The first is the validity of the three modes of change in the theory. The test has identified the need to address the different magnitudes of the three factors affecting change. This research has also identified the need to clarify the definition of gradualness and the concept of the change agents to solidify the theory. This research has also enriched the discussion on the developmental state and state capacity by identifying the limitations of the merit-based institution in different contexts. Based on the analysis, this research has drawn out four key lessons for developing countries and for the donors: the importance of the enforcement of rules; the synchronized reform coalition between committed leadership and competent practitioners; the importance of understanding local contexts; and the relationship between dictatorship and development. By analyzing the emergence of the bureaucratic institutions, this research has not only broadened our understanding of development and state capacity but also presented a practical policy solution to overcome the persistent state of incapacity in the developing countries today.