Chaebols and Firm Dynamics in Korea

Philippe Aghion (), Sergei Guriev and Kangchul Jo
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Philippe Aghion: LSE - London School of Economics and Political Science, Collège de France - Chaire Economie des institutions, de l'innovation et de la croissance - CdF (institution) - Collège de France
Kangchul Jo: BOK ERI - Bank of Korea Economic Research Institute

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Abstract: We study firm dynamics in Korea before and after the 1997/8 Asian crisis and pro-competitive reforms that reduced the dominance of chaebols. We find that in industries that were dominated by chaebols before the crisis, labour productivity and total factor productivity of non-chaebol firms increased markedly after the reforms (relative to other industries). Furthermore, entry of non-chaebol firms increased significantly in all industries after the reform. After the crisis, the non-chaebol firms also dramatically increased their patenting activity. Finally, markups of chaebol firms declined substantially, especially within industries dominated by chaebols before the crisis. These results suggest that the crisis had the virtue of helping Korea move from catching-up growth based on investment in existing technologies to innovation-based growth.

Date: 2021-10-01
New Economics Papers: this item is included in nep-eff, nep-fdg, nep-his and nep-ino
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Published in Economic Policy, 2021, 36 (108), pp.593-626. ⟨10.1093/epolic/eiab016⟩

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Journal Article: Chaebols and firm dynamics in Korea (2021)
Working Paper: Chaebols and Firm Dynamics in Korea (2021)
Working Paper: Chaebols and firm dynamics in Korea (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:spmain:hal-03878612

DOI: 10.1093/epolic/eiab016

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