Tag Archive | "economy"

Corporate Market Power And Consumer Rights

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

What Happened

  • Pointing to the fact that large foreign firms are allowed to sell used cars in Korea, domestic carmakers called for an end to restrictions on their participation in this market space.
  • The Ministry of SME’s and Startups is reportedly looking into allowing conglomerates to reenter the used car market under specific conditions.
  • 51.6% of the public is in favor of allowing conglomerates to participate in this market.

Implications: South Korean policymakers are forced to weigh between the ability of conglomerates to deliver better consumer services and the prerogative of protecting SMEs. The used car market of USD 23 billion could be quickly swallowed up by conglomerates who will likely use price competitiveness to drive out smaller competitors. Moreover, consumers have expressed frustration with the disparate pricing practices of various SME players in the market. As a result, there is widespread expectation that the entry of conglomerates into the market will not only lower prices but also increase standards. However, policymakers worry that this will help further concentrate corporate dominance over the Korean economy with potential long-term consequences on employment.

Context: Six conglomerates make up more than 70% of Korean exports. These vertically-integrated corporations also channel businesses to their subsidiaries, promoting their growth while pushing out smaller competitors. In 2011, the Fair-Trade Commission (FTC) reported that conglomerates composed nearly half of Korea’s manufacturing industry and generated 33.8% of total industry profit. In this environment, SMEs are limited in both domestic and international growth. This lopsided relationship has major consequences for employment as 80% of the labor force is in a SME. In response, the FTC has been regulating corporate expansion since 2013 – but in areas like the used car market, the poor price competitiveness and services by SMEs have led to a consumer backlash.

Korea View was edited by Yong Kwon with the help of Sophie Joo, Sonia Kim, and Chris Lee.

Picture from the flickr account of Stephan

Posted in Economics, slider, South KoreaComments (0)

Overworked and Underpaid Delivery Service Workers

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

What Happened

  • Over 4,000 delivery workers nationwide threatened to stop sorting parcels as a protest against heavy workloads ahead of the Chuseok holiday.
  • These workers backtracked from the boycott after the Labor Minister pledged to increase manpower and improve working conditions.
  • This year alone, seven parcel delivery workers died from overwork, as the coronavirus outbreak led to a sharp surge in the parcel delivery demand.

Implications: South Korean workers most exposed to the economic hardships in the pandemic economy enjoy the least amount of protection as the Moon administration’s progressive labor policies privilege full-time employees. The struggles of many delivery workers highlight the government’s lack of attention on issues of excessive work hours and unfair wages affecting part-time and gig workers. For instance, the recently introduced 52-hour workweek ceiling does not apply to these delivery workers. This reality persists despite President Moon Jae-in recognizing that delivery workers play a leading role in overcoming COVID-19.

Context: According to a report by the Korea Transport Institute, delivery workers are often on the job for more than 70 hours a week, sometimes without any breaks or time to eat a meal. Moreover, members of the Korean Confederation of Trade Unions claim that there has been a lack of preventative measures to safeguard the health of delivery service workers since the onset of the coronavirus. In fact, during the past few months, the Korean government appears to have been more focused on keeping the national economy intact by boosting the interests of both major corporations as well as small and medium enterprises (SMEs).

Korea View was edited by Yong Kwon with the help of Sophie Joo, Sonia Kim, and Chris Lee.

Picture from Wikimedia Commons account of Roadgo

Posted in slider, South KoreaComments (0)

Past Policies Shape Korea’s Green New Deal

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

What Happened

  • The Blue House confirmed that a “Green New Deal” would be a component of a Korean New Deal that President Moon announced on May 10.
  • This confirmation followed urging from the environmental group Greenpeace for Moon to set a positive example for combating climate change as South Korea addresses the economic downturn caused by the pandemic.
  • The Moon government has already pledged to implement a nation-wide emissions cap and put Korea on a path to becoming a zero-emissions country by 2050.

Implications: South Korea’s current environmental policy aims are emerging out of foundations laid by economic initiatives of previous administrations. Although Presidents Park Geun-hye and Lee Myung-bak advanced “green” plans that were primarily aimed at boosting economic growth, their initiatives ensured that the government’s pro-environment posture would be closely associated with economic growth. Moreover, it cultivated stakeholders who would push the government to do more to reduce the country’s carbon emissions. Moon Jae-in’s ongoing efforts are further helped by the widespread recognition that increased public investment is vital to the post-COVID economic recovery.

Context: In his 2008 inauguration speech, President Lee Myung-bak highlighted his vision of employing green technology to overcome the ongoing global financial crisis. During the Park Geun-hye administration, the government continued to promote green technology as a vehicle to boost the economy. During this period, the Korea Electric Power Corporation advanced an initiative to improve the country’s energy efficiency by integrating smart technology into the electricity grid. The investment in smart electrical grid helped set the stage for additional investments in renewable energy sources including solar energy, energy storage, and electron volt chargers.

Korea View was edited by Yong Kwon with the help of Gordon Henning, Soojin Hwang, Hyungim Jang, and Ingyeong Park.

Picture from flickr account of Republic of Korea

Posted in Economics, slider, South KoreaComments (0)

The Sharing Economy and Korea’s Fragile Social Safety Net

By Yea Ji Nam

In December 2018, close to a hundred thousand taxi drivers took to the streets around the National Assembly to protest against the launch of a mobile ride-sharing service from Kakao Mobility. Amid these rolling protests, two elderly taxi drivers set themselves on fire to bring attention to the challenges facing Korea’s taxi drivers.

While some might be tempted to castigate the taxi drivers as Luddites, bitter protests against the introduction of Kakao’s carpooling service reflect their persistently precarious livelihood and weaknesses in Korea’s welfare system.

When Kakao Mobility announced the launch of carpooling service on October 16, 2018, the company used language that focused on respecting taxi drivers. The company’s statement clarified that Kakao did not intend to undermine the local taxi industry and reiterated their commitment to operating only during specified commuting hours. The company also highlighted the broader social benefits of the service, promising to relieve rush hour traffic snarls.

Despite these seemingly reasonable concessions, taxi drivers opposed the launch of the carpooling service. One immediate issue was the disagreement around the meaning of commuting hours. Kakao did not specify what it meant by “commuting hours,” leaving open the potential for the ride-sharing app to operate at all times.

More fundamentally, the taxi drivers were expressing their frustration at the insecurity facing older workers in the service industry and the perceived indifference of the government to their anxieties. In addition to their low income, 54% of taxi drivers in Korea are over 60 and would face immense difficulties finding new employment. With both the welfare system and the country’s industrial policies threatening their ability to live with dignity, taxi drivers turned their anger on not only Kakao but also the Moon’s administration.

As a result of a strong backlash, Kakao Mobility backed off a little and temporarily postponed the official launch of its carpooling service. However, the Moon’s administration did not take a clear position on the taxi union’s demands for improved protection and a more robust social safety net.

To resolve this dispute, several cases from other countries can serve as a benchmark for establishing a better welfare policy for the elderly.

First, Korean taxi drivers are mad at working long hours for low pay. In the Netherlands, however, drivers earn more than the country’s average salary and they are highly respected. Social awareness of drivers in the Netherlands impacts both their income and society’s approach to issues affecting this workforce, including aging.

Second, 54 percent of Korean taxi drivers are over the age of 60 and face challenges finding a new job. Norway is a country with one of the largest elderly communities in the world (by share of the total population). The government proactively provides job opportunities to workers over the age of 65 and provides generous welfare to the elderly.

These are some policies that the Moon’s administration could consider to address the underlying anxieties of taxi drivers and soften the pushback against innovative companies like Kakao. Perhaps more importantly, the government should do more to demonstrate their concern for taxi workers – and let them know that they have not been forgotten.

Yea Ji Nam is currently an Intern at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from the Republic of Korea’s photostream on flickr Creative Commons.

Posted in Economics, slider, South KoreaComments (0)

Kim’s post-Singapore Economy—Something from Nothing Isn’t Working

By William B. Brown

Presently, the imperialists are relentlessly clinging to ideological and cultural infiltration maneuvers to destroy our socialist system. … Even though currently everything is in short supply and a penny of fund is so precious…The road to revolution … is absolutely not an easy road. Without the conviction of optimism … one cannot overcome mounting difficulties and will be easily bent by a trivial trial. 

– Rodong Sinmun, November 28, 2018.

“Our greatest duty today is to build a powerful economy. We must boldly wage war to increase production and creativity,”

– Nodong Sinmun editorial, December 18, 2018

Washington pundits seem to think Kim Jong-un has won the higher ground in a zero-sum game against the United States, with time on North Korea’s side. It might be true, but I suspect this perspective would come as a surprise to the conflicted young marshal whose Worker’s Party is voicing tough times even as he promises prosperity.  Not that he is ready to cave on de-nuclearization, but he might be having nightmares of a disgruntled Party reeling from tough sanctions that are aggravating a broken command economy that still lingers and undergirds the entire political system.  Use of money, including lots of US dollars, and private incentives are improving economic performance, but are likely threatening the structure of the state and the livelihood of millions of workers who remain on the old rations-based system.

An example comes from Daily North Korea which last month cited Party stalwarts, policemen, teachers and others in rural provinces leaving their jobs to work in markets, the latter causing consternation among parents concerned about leaderless classrooms.  The problem is quite evident.  Policemen and teachers are among the millions of workers still in the planned or rationed economy system.  As in a conscript army, or in slavery, money isn’t supposed to be important as long as essential goods and services are distributed by ration via state authorities who make procurements through the central planning mechanism.

A school teacher is in the educated elite, and well thought of, but her income is small potatoes, literally.  Fifteen kilograms of rice a month and a few potatoes, sufficient for her family perhaps, but only 3-5,000 won per month in cash. This might be adequate for some clothes in the education department’s low-priced ration store but won’t even buy a cup of coffee in the new markets that have sprouted all over.  With 8,200 won needed to buy one US dollar, and two US dollars needed to ride a taxi, probably one driven by an entrepreneurial soldier, a school teacher or similarly paid policeman can hardly participate in the growing market economy, unless they neglect their official jobs and work privately for real pay.

Estimates of private earnings vary but construction day workers, for example, are reported to earn about 20 Chinese yuan a day (or about $3.00), enough for an occasional taxi or cell phone payment.  And in a non-state textile factory that exports its product, a worker can legally earn 30,000 won per month, or about $40, but without the state rations. The socialist part of this bifurcated system has never worked well but has lingered on in North Korea even decades after a major famine pushed perhaps half the population off rations and into a poorly regulated and often illegal market economy, using all kind of monies as currency.  Now it is that economy that is growing as the state economy falters, no doubt troubling the regime’s stalwart Marist-Leninists. Loyal and ambitious party officials, and the military, as well as school teachers and policemen, must be fuming when they can’t afford $100 cell phones even as the children of lowly merchants flaunt theirs in Pyongyang streets.

Without data it is hard to get an accurate sense of how well or poorly the aggregate North Korean economy is fairing right now.  It doesn’t appear to be progressing in the way Kim promised last April, just before meeting President Trump, but neither is it collapsing in any obvious way.  Partner country trade data, although clearly biased to reflect official compliance with sanctions, would indicate the UN sanctions are very tough, with most countries showing no trade and the lone significant partner, China, showing imports from North Korea down 89 percent in the year through October.  Official exports to North Korea were down 37 percent over the same period with Chinese surpluses, North Korea deficits, running steady at about $200 million a month.  And even this excludes capped but otherwise not sanctioned crude oil that China apparently gives North Korea. [i]  Despite the large trade deficit, price data shows the monetary system to be stable, suggesting large inflows of services incomes, transfers, or much larger smuggled or otherwise off the books North Korean exports than imports. (Note—much of the anecdotal reporting on smuggled products are of imports to North Korea, not exports.)  And, a much bigger headache for Kim, likely extremely tight domestic monetary and fiscal conditions that are holding the won closely pegged to the U.S. dollar.

Still, the price stability as shown in reports from defectors and others is impressive. Imported fuels, especially gasoline, are very expensive but generally stable and fuels seem to be in high demand from a growing private transportation sector. Food prices are stable despite what South Korea estimates as a 3.4 percent drop in grain production this year – rice up 0.5 percent but corn down 10 percent, due to poor weather and lack of fertilizer, some of which is normally imported.[ii]  The International Food Organization also separately estimates a poor harvest, saying North Korea needed 647,000 tons of imported food in the 2018 crop year (Nov ‘17-Oct ‘18), compared to 457,000 tons needed in 2017.  How much of that need has been fulfilled is not known but there is little sign of grain exports to North Korea from the many countries that report such data to the UN.

Consumer goods and grain still find their way across the border from China, paid for with Chinese yuan or US dollars. These purchases despite stiff Chinese sanctions on imports from North Korea that should be drying up the Korean supply of foreign cash. Here, Chinese crude oil no doubt helps Mr. Kim. Beyond the fuel itself, government-owned Ponghua refinery (known officially as Ponghua chemical)  sells refined products in the domestic private market, sucking up currency that can help manage price levels.  Premier Pak Pong Ju publicly visited Chinese-supplied Ponghua, just a few weeks ago, interesting given the theme of self-reliance in the face of “imperialists’” sanctions (presumably including China.) [iii]

So, what is Kim thinking, promising economic advancement while dangerously raising popular expectations and toys with new summits with Moon, Trump, Abe, and Putin?  The economy is still first, at least according to a Nodong Shinmun editorial on 18 December and there are no hints of renewed militarism or nuclear tests. [iv]  And there are some hopeful signs of economic reform, reforms that would improve private property rights, especially for family farming and productive capital that could put North Korea on a Chinese reform track.  North Korean visitors to China and Vietnam, for instance, are studying such reforms and, according to some sources, are using the officially censored “reform” terminology.  And private activity even in real estate is expanding rapidly with urban entrepreneurs building private houses in the countryside, on collective land.  Simple but huge changes in electricity pricing might be coming, which would bring great economic value but devastate fixed-income state workers.

Kim’s public messaging remains stridently conservative, tending to cycle between three legendary North Korea themes—the country can prosper by working harder, working smarter through science and technology, or by increasing self-reliance, that is “don’t buy Chinese goods”.[v]  [vi]All might fit in the “something for nothing” school of economic policymaking, or in the economist’s narrative of asking for a “free lunch”.  Achieving growth by doing nothing different than one’s father or grandfather would require some magic.

So, Kim spent the summer months after Singapore visiting industrial and service facilities around the country, challenging their management to work harder and smarter in turning out goods for the public, and castigating poor management performance.  These continue but the propaganda program now has turned somewhat from the “work harder” emphasis to the “work smarter through science and technology” approach, long the favorite soundbite of socialist dictators struggling to resist capitalist incentives.  And, increasingly, the woes of the world’s “blockade” on pitiful poor Pyongyang are being advertised as pressing the country to move even further to self-reliance, and as likely excuses for delayed prosperity.  And instead of foreign investment, highlighted during the Singapore and Moon summits, the country’s own scientists now are being challenged to invent technology, the absence of which is seen as the reason behind North Korea’s poverty. [vii]

While nothing in these messages really differ from those during Kim’s father and grandfather’s rule, there does seem to be a new willingness to admit to the dire poverty of North Korea and, by implication, the failures of these long-held approaches. An optimist might even think this is all setting the stage for major new reforms that could provide the proverbial free lunch. A North Korean scholar, for instance, recently provided Nikkei News and Associated Press with an estimate of the country’s GDP in 2017, $30.704 billion, up from $24.998 billion in 2013 and $29,595 billion in 2016.  The genesis of the figures is a mystery as North Korea publishes no supporting information or data, not even NK won based information.  The scholar’s immediate intention was probably to try to generate a more positive story of GDP growth, a rise of 3.7 percent in 2017, instead of a 3.5 percent fall as estimated by South Korea’s Bank of Korea.  But the level of GDP growth is improbable.

“Live our own way” is the mantra proclaimed last week by the All Korea Worker’s Party Seminar in Pyongyang, echoing Kim’s father, Kim Jong-il.  Is that the message the young marshal wants to give his absentee teachers and policemen? Maybe not.[viii]

William Brown is an Adjunct Professor at the Georgetown University School of Foreign Service and a Non-Resident Fellow at the Korea Economic Institute of America. He is retired from the federal government. The views expressed here are the author’s alone.


[i] Chinese Customs, as provided through Global Trade Atlas.

[ii] Yonhap in English 0219 GMT 18 Dec 18

[iii] KCNA in English 0954 GMT 12 Dec 18

[iv] Hankyoreh Online in English 0802 GMT 18 Dec 18

[v] KCNA in English 1454 GMT 13 Dec 18

[vi] Rodong Sinmun in Korean 0611 GMT 05 Dec 18

[vii] Rodong Sinmun in Korean 06 Dec 18

[viii] KCNA in English 1454 GMT 13 Dec 18

Image from Wikimedia Commons via Flickr account of Russavia

Posted in Economics, North Korea, sliderComments (0)

Looking Beyond the Playbook

By Yong Kwon

There is a perception that the Moon administration’s adoption of heterodox policies has made it more difficult for South Korea to overcome the current economic downturn. In particular, the minimum wage increase has been singled out as evidence of the government’s untested approach to tackling low growth and unemployment. However, this is a mischaracterization of the government’s outlook and actions. A key factor holding back the recovery may actually be President Moon’s faithfulness to the policy tools that preceding administrations have used to address economic challenges.

An overview of the administration’s recent policy measures reveals that they are not out of sync with past efforts.

In response to weak global demand, the Korean government has acted as a buyer of last resort to keep exporters afloat, notably shipbuilders. With the glut of container vessels in the market reducing the number of new orders, the government has extended financial support to Hyundai Merchant Marines to purchase new megaships from domestic companies. Although this subsidy created frictions with the European Union and Japan, Seoul considered these measures essential to ensure the survival of local parts makers. This is reminiscent of measures that South Korea undertook during the oil crises of the 1970s and 80s to sustain the operations of national champions until global demand recovered.

Seoul is also proactively engaging with foreign governments to expand export opportunities. In addition to successfully renegotiating the Korea-U.S. Free Trade Agreement, the Korean government has been particularly focused on the Middle East. There were concerns early in President Moon’s term that his pledge to phase out domestic nuclear power plants at home would jeopardize the landmark nuclear energy project in the UAE that was secured under the Lee Myung-bak administration. However, by reaffirming commitments to broaden ties with the UAE, the Blue House assured that the project would not only proceed, but also potentially grow. Moreover, using this project as a benchmark, the Moon government has also been forward leaning on opportunities in Saudi Arabia.

Meanwhile, the government is also actively shaping regulations and providing financial resources to assist domestic firms striving to become first movers in innovative sectors. The Korean government’s long-standing support for enterprise application of Artificial Intelligence is beginning to bear fruit with the country’s nuclear reactor exporters adopting the technology for supply-side controls. This innovative solution to proliferation concerns received praise from the Bulletin of Atomic Scientists. More recently, the Moon government has turned its attention to blockchain technology. In addition to upholding the ties that cryptocurrency exchange markets have with traditional banks, Seoul is actively considering permitting Initial Coin Offerings to take place to further encourage investment in this new field. This comes despite concerns from financial regulators earlier this year that such moves may destabilize the market.

Moreover, the government is actively supporting innovative companies by showcasing their products in public institutions. Myongji Hospital, which has collaborated closely with the Ministry of Health and Welfare in the past, partnered with the technology company BICube to integrate blockchain technology in its medical exchange system. This mirrors past efforts undertaken by the government to bolster the robotics industry by integrating smart robots in classrooms, generating domestic interest and demand for the nascent industry.

As evidenced by these measures, policies undertaken by the incumbent Korean administration do not diverge greatly from those advanced by past governments. However, the problem may be that these toolsets are insufficient to jumpstart economic growth today.

The Korean government has yet to find a corrective for the country’s overexposure to global demand. More specifically, it has not found a way to transform the dependent relationship that local parts suppliers have with conglomerates that might reduce shocks that are currently transferred to small and medium enterprises when flagship exporters underperform abroad. This remains a particularly acute problem as SMEs employ most of the country’s workforce.

And while the administration continues to rely on conglomerates to act as champions of the Korean economy, not all of them have been proactive in embracing innovative sectors. For instance, the steel giant POSCO recently announced plans to retrench in their traditional industries rather than expand into emerging technologies like lithium and biopharmaceuticals. Indeed, it might not be wholly appropriate either for the government to expect companies in established industries to overextend.

Even the government’s approach to increasing the minimum wage seems misaligned with the challenges in the labor market, not necessarily because it imposes an undue burden on the private sector as is often claimed – but because institutions and processes built to adjudicate management-labor disputes remain fragile. If the administration aims to make sure that wage growth keeps pace with increases in domestic productivity, workers need stronger collective bargaining positions.

Structural reform is a daunting task. Nonetheless, these underlying conditions have to be addressed for the economy to experience a truly transformative outcome. President Moon may need to become as radical as he is often accused of being.

Yong Kwon is the Director of Communications at the Korea Economic Institute of America. The views expressed here are the author’s alone.

This image originally posted to Flickr by SarahTz and licensed by Wikimedia Commons

Posted in Economics, slider, South KoreaComments (0)

One Small (and Medium) Step for Korea’s Economy

By Nathaniel Curran

The future of Korea’s economy may depend on SMEs (Small and Medium sized Enterprises) just as much as it does on the large traditional companies, the chaebol.

The Moon administration has already announced plans to boost support for SMEs, and while the success of the initiative remains to be seen, it raises important questions about the future of Korea’s economy.

Korea’s economy today is almost synonymous with the chaebol, the enormous, family owned and vertically integrated conglomerates that possess large market share in major global industries like shipping, electronics, and automobiles. In 2015, sales revenue from the five largest chaebol accounted for almost 60% of Korea’s GDP. Samsung and its subsidiaries alone account for roughly 20% of Korea’s economy.

It’s easy to understand the public and media fascination with the chaebol; they have been hailed as an important driver in South Korea’s rapid economic development, known as the “Miracle on the Han.” The seemingly symbiotic relationship between the chaebol and the government has been hailed as both dirigisme par excellence, and as crony capitalism. But regardless of one’s opinion of the chaebol, it’s undeniable that from their humble beginnings under Japanese colonial rule, the chaebol have shown remarkable resilience as the world has changed around them.

Perhaps the greatest threat to the chaebol’s survival came in 1997 during the Asian Financial crisis, during which 97% of chaebol went into bankruptcy. Despite the blame they attracted for causing the crisis, the chaebol emerged from the 1997 crisis largely unscathed. Although the subsequent IMF bailout led to significant restructuring, the chaebols’ modus operandi of family control, high debt ratio, and opaque operating structure remained largely intact. In fact, the chaebol were able to take advantage of IMF mandated restructuring to fire approximately 40% of their employees, who could then be rehired as part-time employees.

In the shadow of the Chaebol

However, the Western media’s focus on the power of the chaebol has served to obfuscate another important facet of Korea’s economy/economic development: SME’s (Small and Medium-sized Enterprises). While the chaebol have captured the lion’s share of attention -and treasure- in Korea, SMEs played, and continue to play, a vital role in Korea’s economic narrative.

Korea today boasts 3 million micro-enterprises (businesses that have fewer than 10 employees). Furthermore, SMEs account for roughly 37% of exports, which is especially impressive when one considers that fact that Samsung alone accounts for a whopping 30% of exports. Furthermore, employment continues to rise at SMEs, all the while accompanied by a growing popular sentiment that the interests of the Korean people are not being well served by the chaebol’s business activities.

The future of SMEs

SMEs may have found a champion in President Moon, who has repeatedly pledged to help spur entrepreneurship.  In this vein, the administration has already created a ministry for SMEs and startups. This is a promising sign, as the best way to deal with the chaebols’ stranglehold on the Korean economy might be less to attempt to reign them in than to directly support SMEs. After all, attempts to impose restraints on the chaebol have repeatedly failed, and despite Korea’s overreliance on exports, the chaebol likely will remain vital to a healthy Korean economy well into the future.

It in the present, it seems unlikely that Korea will be able to completely emulate Germany’s mittelstand (Germany’s innovative, tight-knit, and highly focused SMEs that play a leading role in the economy). That being said, diversification away from the chaebol would still be useful. For decades the chaebol enjoyed privileges and government support that make it difficult for SMEs to compete in today’s neoliberal environment of unregulated markets. Putting investment into SMEs would help spur innovation and much needed domestic competition. There is certainly widespread support for such measures, as the chaebols’ interests seem decreasingly to parallel state economic and social objectives.

It won’t be easy to steer Korea away from over-dependence on the chaebol, especially when the idea of working at a chaebol has become such a deeply ingrained dream for most young Koreans. Wages at the chaebol continue to outpace their SME counterparts. There are promising signs, however: not just the Moon administration’s investment plans, but also a burgeoning startup scene that may succeed in attracting more young talent away from traditional salary-man jobs at chaebol firms.

An SME revolution could be just what Korea needs to maintain its competitive edge in the global marketplace in the coming decades.

Nathaniel Curran is a PhD student at USC’s Annenberg School of Communication and a 2017 COMPASS Summer Fellow. The views expressed here are the author’s alone.

Photo from Yeseul Ko’s photostream on flickr Creative Commons.

Posted in Economics, slider, South KoreaComments (0)

About The Peninsula

The Peninsula blog is a project of the Korea Economic Institute. It is designed to provide a wide ranging forum for discussion of the foreign policy, economic, and social issues that impact the Korean peninsula. The views expressed on The Peninsula are those of the authors alone, and should not be taken to represent the views of either the editors or the Korea Economic Institute. For questions, comments, or to submit a post to The Peninsula, please contact us at ts@keia.org.