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The effect of industrial restructuring policy post-financial crisis

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Frame of Image 991 to 1997 before the crisis. As a result of industrial restructuring, the shareholders’ equity ratio in manuf a c t u r i n g increased to 50.3%, a level of 2.5 times larger than in 1997 and its debt ratio has declined to 99%, one-fourth of the 1997 level. Using the panel data from 21 industries during the period of 1990-2005, this paper estim a t e d the relationship between productivity growth and a proxy variable for industrial restructuring policy such as the change in shareholders’ equity ratio and debt ratio. According to the results, the reduction in the debt ratio positively affects the current and 5 year future total factor productivity growth with statistical significance. In addition, while the reduction in the debt ratio has a positive effect on present labor productivity growth, it affects 5 year future labor productivity growth negatively through the decrease in physical capital growth. Recently, the declining trend of debt ratio is becoming more moderate. However, as the Korean debt ratio is lower than that of the U.S. and Japan, the Korean gover nment will have to focus on improving its business climate and promoting entrepreneurship to encourage business investment and innovation.
1. Industrial Restructuring since the Crisis
T h e Korean financial crisis occurred in late 1997, mainly due to decreased international confidence in East Asian markets, the rapid outflow o f foreign capital and shortage of foreign reserves. However, structural weaknesses in both


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Title The effect of industrial restructuring policy post-financial crisis
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Material Type Reports
Author(English)

Kim, Won-Kyu

Publisher

[Seoul]:Korea Institute for Industrial Economics & Trade

Date 2008
Journal Title; Vol./Issue KIET Industrial Economic Review:vol. 12(no. 5)
Pages 7
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Industry and Technology < General
Holding KIET; KDI School

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