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Comparative Analysis of Firm Dynamics by Size: Korean Manufacturing

Inha Oh (), Almas Heshmati (), Chulwoo Baek () and Jeong-Dong Lee ()

No 94, Ratio Working Papers from The Ratio Institute

Abstract: The Korean economy severely suffered from the Asian financial crisis, and is well known for rapid recovery in the years following. However, the recovery was mainly due to successful restructuring by a limited number of large-sized enterprises (LSEs). The small and medium sized enterprises (SMEs) are still suffering from the depression. The crisis and subsequent unequal size related recovery patterns have aggravated the pre-crisis gap between LSEs and SMEs. In this paper, the total factor productivity (TFP) of the South Korean manufacturing industry is calculated, at the firm level, and comparative analysis is performed by size classes. The sources of the TFP growth are decomposed into various effects related to entry, exit, and survival of firms. Additional survival analyses are used to investigate internal and external determinant variables for the survival of LSEs and SMEs. The results indicate that the exit of SMEs with higher productivity rates represented a major problem in Korean manufacturing, particularly in the post-crisis period. Non-selective government support for SMEs appears to have caused disorder in the SME sector.

Keywords: Firm dynamics; TFP; survival analysis; SME; Korean manufacturing (search for similar items in EconPapers)
JEL-codes: C33 C41 D24 L60 O30 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2006-04-25
New Economics Papers: this item is included in nep-eff, nep-ent and nep-sea
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Forthcoming in The Japanese Economic Review.

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Journal Article: COMPARATIVE ANALYSIS OF PLANT DYNAMICS BY SIZE: KOREAN MANUFACTURING (2009) Downloads
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