This study discusses the respective roles that businesses and the government ought to play in order to enhance the competitiveness of the Korean manufacturing sector. Korean businesses continue to struggle on both domestic and overseas markets. The high-end products that Korea exports overseas still struggle against competition from their Japanese counterparts, while the low-end products face increasing challenges from similar products exported by other developing countries. In the meantime, Korean products are also forced to compete with more affordable imported goods on the domestic market. Given the current status of technology, Korean businesses do not appear to be capable of improving the quality of their products dramatically, while the rising wage pressure in Korea also makes it nearly impossible for businesses to maintain the low prices of their goods. Korean businesses continue to demand that the government provide the necessary measures of support, including the elastic application of exchange rates, lower costs of financial services and support for increasing exports. However, it is time that the businesses recognize the roles they themselves have to play in the matter.
Businesses can adjust and lower their prices by enhancing their productivity and minimizing their costs, within the parameters of the given wage level, exchange rates and interest rates. To help businesses in this process, the government should increase tax rates and property evaluations in a bid to inhibit real estate speculation. The goal of the technological research and development taking place at Korean businesses today is to increase the businesses’ capacity to handle the core manufacturing processes phase by phase in order to help more advanced and innovative companies produce more valuable goods. The localization of parts therefore ought to begin with the development of the finished product. This approach to technological development requires more than a mere increase in the investment in research and development activities. Notably, it requires businesses to develop long-term strategies for acquiring knowledge and technology, to develop innovative management organizations and practices, to establish an innovation-oriented culture and to form effective partnerships with researchers and specialists.
In the meantime, the government should focus on providing policy support that makes up for the failures of the capital, labor and technology markets, while also minimizing governmental failures. The globalization of the economy and the advancement of the industrial structure impose increasing limits on the range and extent of the policy instruments that the government may wield, while the shortages of expertise and information, the influence of interest groups and the rigidity of the bureaucratic structure increase the risk of policy failures. The Korean government is no longer the sole patron of businesses in Korea. It is required more than ever to establish organizations, institutions and systems of competition that provide businesses with the technological, human and informational resources they lack, and also with incentives that successfully induce businesses to enhance their competitiveness. The role of the government, in other words, is to build and maintain a substructure that supports the continued accumulation of management resources in businesses as well as the advancement of the industrial structure.
경쟁력 제고(Enhancing competitiveness)
기업의 역할과 정부의 역할(Respective roles of businesses and government)
|Series Title; No||정책연구시리즈 / 91-39|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Industry and Technology < Entrepreneurship|
|Holding||KDI; KDI School|