This study aims to grasp and analyze the current state of subcontracting in Korea’s machinery sector as part of a study on the ways to reform the country’s industrial structure assistance programs.
Due to the radical innovation of production technologies beginning from the 1960s and input prices volatility caused by the two oil shocks in the 1970s, industrial structure adjustment has emerged as one of the most pressing economic imperatives that every country faces. Nurturing specialized subcontractors as sources of production process improvements and technological innovation can lead to the expansion of subcontracting and roundabout production, and improved product quality, thereby expanding export through import substitution and enhanced international competitiveness. Expanding and deepening of subcontracting can lead to the sophistication of industrial structure.
As subcontracting is an economic transaction, there is a demand and supply side. Therefore, expansion and deepening of subcontracting must be accomplished through increased demand and supply to have meaningful benefits. Policies to help expand subcontracting must be focused on boosting its demand and supply. Expanding subcontracting requires certain market conditions and technology conditions. Subcontracting means division of labor in production between a contractor and a subcontractor. The division of labor is possible only when there is a sufficient size of market that can generate significant economies of scale. Due in part to subcontractors’ low level of technology, there is a lack of research on the global subcontracting market.
Promotion of subcontracting in Korea’s machinery sector requires addressing a variety of issues; securing a sufficient size of market, advancing technologies, securing cooperation and harmony between contractors and subcontractors, and export-driven economic growth strategy. To achieve these conditions, the Korean government should set up technological/managerial advice centers across the nation, establish organizations to moderate and to provide information on markets and technologies of home and abroad, liberalize the establishment of small local banks, strengthen the fidelity guarantee system, promote export companies specializing in products produced by small and medium-sized enterprises for expanding international subcontracting, and stronger support policies.
도급조직의 현황 및 도급거래의 증진방안
[서울] : 한국개발연구원
|Series Title; No||연구보고 / 83-06|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Social Development < Employment|
|Holding||KDI; KDI School|