This study investigates the national economic importance of government-invested agencies and identifies problems of management of government agencies, as well as ways to improve those problems, with regards to transitional management reforms by the Framework Act on the Management of Government-Invested Institutions.
The total assets held by 24 government-invested agencies amount to KRW 32.8485 trillion, and their annual average of fixed capital formation accounts for about 30 percent of total fixed capital formation. The public fixed capital is primarily in equipment and facilities, while that of the private sector is concentrated in buildings and structures. In addition, government-invested institutions have much greater forward linkage effects than the annual average of linkage effects of all industries. This means that government-invested agencies have stronger corporate elements than public ones as state-run companies. However, Korea’s government-invested institutions exhibit less gross productivity of capital, as well as a lower ratio of operating income to working capital, compared to the private sector.
Even though the corporate elements of government-invested agencies should be emphasized, their management organization has strong bureaucratic characteristics as they have long been under the governmental supervision. That is, power is concentrated at the top of the hierarchy, and the horizontal division of the organization is based on division of responsibilities and mechanical grouping of functions. In terms of managing the organization, hierarchical governance is inflexible, with an emphasis on confidentiality, closeness, and scrutinizing, which has little to do with building trust.
The government should guarantee freedom of decision-making, which is required when establishing economic strategies and executing responsibilities, and should make clear the boundary of responsibility and compensation regarding affairs they handled voluntarily and freely. This would introduce a responsible management system to increase managerial efficiency.
The government needs to restructure its invested agencies while reforming the perceptions of member staff. As a short-term project of changing personnel perceptions to realize responsible management, new management training can be carried out. However, it is more necessary to secure and develop competent mid-level managers. Moreover, the Framework Act on the Management of Government-Invested Institutions stipulates that executive members should be selected from internal staff. Thus, the development and securing of capable mid-level managers decide on the success or failure of the responsible management systems for government-invested agencies in the long run.
The structure of government-invested institutions should be reformed for the success of the responsible management system which will be adopted as the Framework Act on the Management of Government-Invested Institutions takes effect.
정부투자기관경영조직 개편방향(Reformation of management organization for government-invested agencies)
|Series Title; No||정책연구시리즈 / 84-04|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Industry and Technology < Entrepreneurship|
|Holding||KDI; KDI School|