South Korea and Taiwan are two of the most prominent examples of newly industrializing economies which have been remarkably successful during the last three decades. This paper gives an overview of South Koreas’s and Taiwan’s development and innovation policies, and compare between these two economies’ main strengths and weaknesses regarding innovation and technology. Conclusions drawn show that there are similiarities as well as differences in the innovation systems in the two economies. The role of the state has been fundamental in South Korea’s and Taiwan’s economic and industrial development. In South Korea there has been very strong ties between the chaebols and the state. The chaebols have been the greatest strenght of Korea’s innovation system, while the there is a lack of interplay between universities and the private sector. The role of the state in Taiwan has concentraded more on creating supporting institutions that have focused on building human resources, acquiring technology from abroad, creating science and technology capacities. In Taiwan it seems that there are more developed mechanisms to transfer research results from public research establishments to the industry, especially SMEs. The industrial policy in Taiwan has supported a rather close cooperation between industry and the state and increased connection between universities and the state. The weakest links seem to be between universities and the industry.