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Is Korea’s public funding for SMEs achieving its intended goals?

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Frame of Image ng, Fellow at KDI
“Policies to support Small and Medium-sized Enterprises (SMEs) should be designed and managed in a way that SMEs are self-reliant and able to contribute to national economic goals. However, an evaluation of current public programs to support SME finance, an important policy instrument of Korea’s SME support policy, shows that they have actually lowered the productivity of recipient firms and increased the survival probability of incompetent ones, negatively impacting the national economy. To produce the desired results, the government needs to (1) redefine the purpose of SME policy by shifting its emphasis from survival to productivity; (2) introduce a regular and scientific evaluation system by using appropriate performance indicators; and (3) restructure the policy to enhance efficiency based on evaluation results.”
Scientific impact evaluations are the starting point for improving effectiveness of SME-support policies and their
Ⅰ. Introduction
A productive support policy for small and medium-sized enterprises (SMEs) should be able to correct market failures so that SMEs can grow and do so in a self-reliant manner. In doing so, SME policies must be planned and managed in such a way that SMEs can contribute to national economic goals of higher potential output growth and quality
* This article is based on “Study on the Enhancement of the Small and Medium-sized Enterprises(SMEs) Policy in Korea (Ⅰ), (Ⅱ)” written by Chang, Woo Hyun, Yang, Yong Hyeon and Woo,


Full Text
Title Is Korea’s public funding for SMEs achieving its intended goals?
Similar Titles
Material Type Articles
Author(English)

Chang, Woo Hyun

Publisher

[Sejong]:Korea Development Institute

Date 2016-02
Journal Title; Vol./Issue KDI Focus:no. 63
Pages 9
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Financial Policy
Industry and Technology < Entrepreneurship
Holding KDI; KDI School

Abstract

Policies to support Small and Medium-sized Enterprises (SMEs) should be designed and managed in a way that SMEs are self-reliant and able to contribute to national economic goals. However, an evaluation of current public programs to support SME finance, an important policy instrument of Korea’s SME support policy, shows that they have actually lowered the productivity of recipient firms and increased the survival probability of incompetent ones, negatively impacting the national economy. To produce the desired results, the government needs to (1) redefine the purpose of SME policy by shifting its emphasis from survival to productivity; (2) introduce a regular and scientific evaluation system by using appropriate performance indicators; and (3) restructure the policy to enhance efficiency based on evaluation results.

User Note

This article is based on “Study on the Enhancement of the Small and Medium-sized Enterprises(SMEs) Policy in Korea (Ⅰ), (Ⅱ)” written by Chang, Woo Hyun, Yang, Yong Hyeon and Woo, Seokjin.