Skip to main content
SpringerLink
Log in

Small and Medium Enterprises in Korea: Achievements, Constraints and Policy Issues

  • Chapter
Small Firm Dynamism in East Asia

Abstract

This paper provides an overview of the evolution of the small and medium enterprise sector in Korea during the past quarter century. It shows how the industrial structure of Korea has changed dramatically over this period reflecting much greater shares in employment and value added by SMEs. It reviews the evidence on SME dynamism showing that SMEs have contributed to the enormous transformations that have taken place in the Korean economy since 1975, especially with regard to exports, foreign investment and productivity performance. It discusses the role of subcontracting as well as that of government and non-governmental institutions in supporting SME development. Finally, it examines the link between variations in the economic importance of SMEs, as measured by their shares in employment, and aspects of growth and inequality to assess whether SMEs function as business cycle shock absorbers and inequality-reducing mechanisms.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
eBook
USD 16.99
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Aw, Bee Yan, Sukkyun Chung and Mark J. Roberts. 1999. ‘Productivity and Turnover in the Export Market: Micro Evidence from Taiwan and South Korea’, paper prepared for the Far Western Meetings of the Econometric Society in Singapore, July 1999.

    Google Scholar 

  • Berry, Albert and Dipak Mazumdar, 1991, ‘Small-Scale Industry in the Asian-Pacific Region’, Asian Pacific Economic Literature 5(2), 35–67.

    Article  Google Scholar 

  • Bank of Korea, 1998, Statistical Monthly Bulletin, Seoul: Bank of Korea.

    Google Scholar 

  • Berry, Albert and Miguel Urrutia, 1976, Income Distribution in Colombia, New Haven: Yale University Press.

    Google Scholar 

  • Caves, Richard E., 1998, ‘Industrial Organization and New Findings on the Turnover and Mobility of Firms’, Journal of Economic Literature 36 (December), 1947–1982.

    Google Scholar 

  • Caves, Richard E. and David R. Barton, 1990, Efficiency in U.S. Manufacturing Industries, Cambridge, MA: MIT Press.

    Google Scholar 

  • Caves, Richard E. and Associates, 1992, Industrial Efficiency in Six Nations, Cambridge, MA: MIT Press.

    Google Scholar 

  • Chang, J. K., S. C. Chung and K. K. Kim, 1994, Economic Effect Analysis of R&D Investment, Seoul: STEPI. [In Korean.]

    Google Scholar 

  • Choi, Sung No, 1998, Korean Conglomerates and Business Data Base, Seoul: Center for Free Enterprise, Korean Federation of Industry.

    Google Scholar 

  • Chung, Sukkyun, 1998, Plant Turnover and Productivity Dynamics in Production and Export Markets: South Korea, 1983–1993, unpublished Ph.D. Dissertation. Pennsylvania State University, State College, PA.

    Google Scholar 

  • Deininger, Klaus and Lyn Squire, 1996, ‘A New Data Set Measuring Income Inequality’, World Bank Economic Review 10, 565–591.

    Article  Google Scholar 

  • Dollar, David and Kenneth Sokoloff, 1990, ‘Patterns of Productivity Growth in South Korean Manufacturing Industries, 1963–1979’, Journal of Development Economics 33, 309–328.

    Article  Google Scholar 

  • Economic Planning Board, 1995, Report on the Mining and Manufacturing Census, Seoul: Economic Planning Board.

    Google Scholar 

  • Feenstra, Robert C, Dorsati Madani, Tzu-Han Yang and Chi-Yuan Liang, 1997, “Testing Endogenous Growth in South Korea and Taiwan’, Working Paper 6028, National Bureau of Economic Research, Cambridge, MA.

    Google Scholar 

  • Good, David H. M., Ishaq Nadiri and Robin Sickles, 1996, ‘Index Number and Factor Demand Approaches to the Estimation of Productivity’, Working Paper 5790. National Bureau of Economic Research, Cambridge, MA.

    Google Scholar 

  • Greene, William H., 1980, ‘Maximum Likelihood Estimation of Econometric Frontier Production Functions’, Journal of Econometrics 13, 170–188.

    Google Scholar 

  • Ho, Sam P. S., 1980, ‘Small-Scale Enterprises in Korea and Taiwan’, Staff Working Paper 384. World Bank, Washington, DC.

    Google Scholar 

  • Hong, Sung-Duk and Jung-Ho Kim, 1996, Long Term Changes in Total Factor Productivity in Manufacturing 1967–93, Seoul: Korea Development Institute. International

    Google Scholar 

  • Monetary Fund, 1998, Staff Report on the Third Quarterly Review Under the Stand-by greement, Washington, DC: International Monetary Fund.

    Google Scholar 

  • Jorgenson, Dale, W. F. M. Gollop and B. Fraumeni, 1987, Productivity and U.S. Economic Growth, Amsterdam: North-Holland.

    Google Scholar 

  • Kim, Euysung, 1995, ‘Trade Liberalization and Productivity Growth in Korean Manufacturing Industries: Price Protection, Market Power, and Scale Efficiency’, mimeo. San Diego University, San Diego, CA.

    Google Scholar 

  • Kim, Jong-Il and Lawrence Lau, 1994, ‘The Sources of Growth of the East Asian Newly Industrialized Countries’, Journal of Japanese and International Economies 8, 235–271.

    Article  Google Scholar 

  • Kim, Joo Hoon, 1991, Liberalization, Subcontracting and Reorganization, Seoul: Korea Development Institute.

    Google Scholar 

  • Kim, Kwang-suk and Joon-kyung Park, 1985, Sources of Economic Growth in Korea 1963–1982, Seoul: Korea Development Institute.

    Google Scholar 

  • Kim, Linsu, 1997, Imitation to Innovation: The Dynamics of Korea’ Technological Learning, Cambridge, MA: Harvard Business School Press.

    Google Scholar 

  • Kim, Linsu and Jeffrey B. Nugent, 1999, ‘Korean SMEs and Their Support Systems’, in Brian Levy, Albert Berry  and Jeffrey B. Nugent (eds.), Fulfilling the Export Potential of Small and Medium Firms, Boston: Kluwer.

    Google Scholar 

  • Kim, Sun Koon et al., 1994, R&D and Technical Manpower of Technology Intensive SMEs, Seoul: STEPI.

    Google Scholar 

  • Korea Development Institute, 1997, Long-Term Change of Industrial Structure and Suggestions on SME Development, Seoul: Korea Development Institute.

    Google Scholar 

  • Korea Industrial Technology Promotion Association, 1991, Report on Survey of Industrial Technology Development, Seoul: Korea Industrial Technology Promotion Association.

    Google Scholar 

  • Krugman, Paul, 1994, ‘The Myth of Asia’s Miracle’, Foreign Affairs 73(6), 62–78.

    Article  Google Scholar 

  • Kuznets, Simon, 1955, ‘Economic Growth and Income Inequality’, American Economic Review 45(March), 1–28.

    Google Scholar 

  • Kwack, Sung Yeung, 1997, An Analysis of Factors and Determinants of Productivity Growth in Korean Manufacturing Sector, Seoul: Korea Institute for Industrial Economics and Trade (KIET).

    Google Scholar 

  • Lee, Byungki, 1995, Technology Policy and Technology Development Effects of the Government and Private R&D, Seoul: Korea Economic Research Institute.

    Google Scholar 

  • Lee, Kyu-Uck and Sung Soon Lee, 1985, ‘Business Integration and Concentration of Economic Power’, Research Report 85–02. Korea Development Institute, Seoul.

    Google Scholar 

  • Levy, Brian, 1991, ‘Transaction Costs, the Size of Firms and Industrial Policy: Lessons from a Comparative Case Study of the Footwear Industry in Korea and Taiwan’, Journal of Development Economics 34 (November), 151–178.

    Google Scholar 

  • Lim, Youngil, 1998, Technology and Productivity: Korean Way of Learning and Catching Up, Cambridge, MA: MIT Center for International Studies.

    Google Scholar 

  • Mazumdar, Dipak, 1991, ‘Import Substituting Industrialization and Protection of Small Scale: The Indian Experience in Textile Industry’, World Development 19(9), 1197–1213.

    Article  Google Scholar 

  • Mazumdar, Dipak, 1998, ‘Size Structure of Manufacturing Establishments and the Productivity Differentials Between Large and Small Firms: A Comparative Study of Asian Economies’, mimeo.University of Toronto, Toronto.

    Google Scholar 

  • Nam, Sang-yirl, 1999, ‘Total Factor Productivity in Korean Industry’, paper prepared for the PEO Structure Meeting in Osaka, Japan, March 1999.

    Google Scholar 

  • National Statistical Office, 1998, Korea Statistical Yearbook, Seoul: National Statistical Office.

    Google Scholar 

  • Nishimizu, Michio and Sherman Robinson, 1984, ‘Trade Policies and Productivity Change in Semi-Industrialized Countries’, Journal of Development Economics 16, 177–206.

    Article  Google Scholar 

  • Nugent, Jeffrey B., 1989, ‘Variations in the Size Distribution of Korean Manufacturing Establishments Across Sectors and Over Time’, working paper. Korea Development Institute, Seoul.

    Google Scholar 

  • Nugent, Jeffrey B., 1996, ‘What Explains the Trend Reversal in the Size Distribution of Korean Manufacturing Establishments?’, Journal of Development Economics 48, 225–251.

    Article  Google Scholar 

  • Pack, Howard and Larry E. Westphal, 1986, ‘Industrial Strategy and Technological Change: Theory Versus Reality’, Journal of Development Economics 22(1), 87–128.

    Article  Google Scholar 

  • Paek, Nak Ki, 1992, Analysis of Actual Usage and Effect of SME Support System, Seoul: Korea Institute for Industrial Economics and Trade.

    Google Scholar 

  • Pai Kim, Mi-Kyung, 1996, ‘The Variations in the Technical Efficiency of Korean Manufacturing Establishments Under Two Distinctive Industrial Policies: A Cross-Sectional and Intertemporal Approach’, unpublished Ph.D. Dissertation. University of Southern California, Los Angeles, CA.

    Google Scholar 

  • Ranis, Gustav and John C H. Fei, 1961, ‘A Theory of Economic Development’, American Economic Review 51 (September), 533–565.

    Google Scholar 

  • Rodrik, Dani, 1995, ‘Getting Interventions Right: How South Korea and Taiwan Grew Rich’, Economic Policy 20, 146–171.

    Google Scholar 

  • Scitovsky, Tibor, 1986, ‘Economic Development in Taiwan and South Korea, 1965–1981’, in Lawrence J. Lau (ed.), Models of Development: A Comparative Case Study of Economic Growth in South Korea and Taiwan, San Francisco, CA: ICS Press.

    Google Scholar 

  • Seong, Somi, 1995, ‘Small and Medium-Sized Enterprises and the Structural Adjustment of the Korean Economy’, in Eul Yong Park (ed.), Small and Medium-Sized Enterprises and Economic Development, Seoul: Korea Development Institute.

    Google Scholar 

  • Small and Medium Enterprise Authority and Federation of Small and Medium Enterprises, 1998, Survey of Small and Medium Enterprises, Seoul: Federation of Small and Medium Enterprises.

    Google Scholar 

  • Uekusa, Masu and Akio Torii, 1987, ‘The Determinants of the Level of Technical Inefficiency in Japanese Industries’, mimeo. Yokohama National University, Yokohama. [In Japanese.]

    Google Scholar 

  • Yoo, Seong Min, 1991, ‘Technical Efficiency in Korea’, Working Paper 9106, Korea Development Institute, Seoul.

    Google Scholar 

  • Yoo, Seong Min, 1992, ‘Technical Efficiency over Time in Korea, 1978–88: Exploratory Analysis’, in Richard A. Caves  and Associates (eds.), Industrial Efficiency in Six Nations, Cambridge, MA: MIT Press.

    Google Scholar 

  • Young, Alwyn, 1995, ‘The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience’, Quarterly Journal of Economics 110 (August), 641–680.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Economics, University of Southern California, University Park, Los Angeles, CA, 80089, USA

    Jeffrey B. Nugent & Seung-Jae Yhee

Authors
  1. Jeffrey B. Nugent
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Seung-Jae Yhee
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. World Bank, Washington, USA

    Farrukh Iqbal

  2. Waseda University, Tokyo, Japan

    Shujiro Urata

Rights and permissions

Reprints and permissions

Copyright information

© 2002 Springer Science+Business Media Dordrecht

About this chapter

Cite this chapter

Nugent, J.B., Yhee, SJ. (2002). Small and Medium Enterprises in Korea: Achievements, Constraints and Policy Issues. In: Iqbal, F., Urata, S. (eds) Small Firm Dynamism in East Asia. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-0963-9_6

Download citation

  • DOI: https://doi.org/10.1007/978-1-4615-0963-9_6

  • Publisher Name: Springer, Boston, MA

  • Print ISBN: 978-1-4613-5326-3

  • Online ISBN: 978-1-4615-0963-9

  • eBook Packages: Springer Book Archive

Publish with us

Policies and ethics

Search

Navigation