Changes in and Insights on Potential Industry and Enterprise Insolvency in the Manufacturing Sector

Young-Seok Oh () and Sung Keun Park ()
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Young-Seok Oh: Korea Institute for Industrial Economics and Trade, Postal: Sejong National Research Complex, Korea Institute for Industrial Economics and Trade, 370 Sicheong Dae-ro C-dong 8-12F 30147, Republic of Korea, http://www.kiet.re.kr
Sung Keun Park: Korea Institute for Industrial Economics and Trade, Postal: Sejong National Research Complex, Korea Institute for Industrial Economics and Trade, 370 Sicheong Dae-ro C-dong 8-12F 30147, Republic of Korea, http://www.kiet.re.kr

No 21/7, Research Papers from Korea Institute for Industrial Economics and Trade

Abstract: This paper takes the spectrum approach to identify possible industrial and enterprise insolvency and goes on to conduct a composite analysis of both the potential industry insolvency spectrum and enterprise insolvency spectrum. Recently, the proportion of industries and enterprises showing signs of insolvency in Korea’s manufacturing sector has been on the rise. From an industrial perspective, uncompetitive industries, such as those that show negative growth in both the domestic and export markets, are increasing, while the proportion of segments that are recording positive growth in production are decreasing. Moreover, segments with healthy competitiveness are concentrated in only a few segments, such as semiconductors. From an enterprise perspective, on the spectrum from insolvent to healthy, the degree of insolvency increased for all corporations, while the degree of healthiness decreased. By combining these analyses, it was found that, as of 2019, the pattern of enterprises being active in a “competitive segment” is very weak for both healthy and insolvent enterprises. Based on the findings of the spectrum analysis, this study identifies implications for preemptive restructuring policy.

Keywords: spectrum analysis; corporate insolvency; bankruptcy; zombie firms; manufacturing; industrial restructuring; restructuring; COVID-19; interest rates; industrial policy; restructuring policy; competition; competitiveness; competition policy (search for similar items in EconPapers)
JEL-codes: G33 G34 G38 H81 H84 L11 L25 L50 L52 L53 L60 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2021-05-21
New Economics Papers: this item is included in nep-cse and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:ris:kietrp:2021_007

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