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Causes of the protracted depression of Korean small & medium-sized enterprises

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Frame of Image  large scale firms and SMEs is increasingly
widening. This paper will examine the actual state of protracted depression of small and medium-sized manufacturing enterprises and analyze the causes of the prolonged dullness.
2. Korean SMEs’ Protracted Depression
It has been shown that business performance of SMEs(establishments with 5 ~ 299 employees) in the nation’s manufacturing sector has been in the state of protracted dullness since the 1997 financial crisis until recently. First of all, the operating profit to sales ratio of small and medium-sized manufacturing enterprises had been recorded at 6.0% in 1998, and continuously declined to 4.5% in 2004. This is in sharp contrast to the fact that operating profit to sales ratio of large firms in the manufacturing sector improved from 6.0% in 2001 to 9.4% in 2004. In general, we can hardly consider continuous decline of companies’ operating profit to sales ratio for long periods as a phenomenon
Unit : %
9.8 8.6 8.0 7.3 7.4 7.3 6.5 6.0 5.6 5.7 5.8 6.1 5.2 5.5 5.6 6.0 5.7 5.1 4.9 5.0 4.6 4.5 7.4 8.2 7.5 8.2 9.7 9.4
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Source : Korea Federation of Small and Medium Business, Survey on SMEs. annually.
which can be usually seen to have occurred in the business cycle. It is highly likely that some structural problems are behind the phenomenon. Second, the equipment investment of manufacturing SMEs has also been stagnant from the tiome of the financial crisis until recen


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Title Causes of the protracted depression of Korean small & medium-sized enterprises
Similar Titles
Material Type Reports
Author(English)

Cho, Deok-Hee

Publisher

[Seoul]:Korea Institute for Industrial Economics & Trade

Date 2006
Journal Title; Vol./Issue KIET Industrial Economic Review:vol. 11(no. 2)
Pages 11
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Industry and Technology < Entrepreneurship
Holding KDI School of Public Policy and Management

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