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A Study on Firm Size-Dependent Policies in South Korea

Author Park Yangshin, Kang Minji, Kim Youngmin Date 2016.12.27 Page
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The South Korean government’s industry policy has evolved dramatically over time in response to changes in the social environment and policy objectives. Up to and during the 1980s, the government was actively involved in the industrialization of the entire nation, based on its determination to expedite economic growth. This firm pro-growth stance is what made it possible for South Korea to achieve its remarkable socioeconomic transformation within such a short span of time, but it also led to growing polarization between large corporations and small and medium enterprises (SMEs) and increased the unfairness of market competition. The mixture of industrialization policies catering chiefly to the interests of large corporations and the more distribution-oriented protective policies for SMEs has led to the escalation of the conflict between the country’s growth policy and balance policy, making it impossible for the Korean government to implement consistent and coherent policy measures for firms of different sizes. In this study, we survey the needs of firms of different sizes in terms of policy support, and examine whether the differences in such needs reflect the particular circumstances under which the Korean economy has grown. We attempt to determine whether the past pro-growth industrialization policy has distorted the structure of market competition in Korea and whether the recently introduced business support measures can effectively cater to the different needs of firms.