Korea's Economy
From the Issue
Korea's Economy Volume 30About Korea's Economy
Korea’s Economy is KEI’s annual journal publication dedicated to the key issues of the day for the Korean economy. Articles in Korea’s Economy are designed to give the casual, but informed reader insight into issues related to Korea’s markets and financial institutions, economic reform, economic relations with the wider world, and North Korea. It is published jointly each year with the Korea Institute for International Economic Policy.
Korea has made fostering a “creative economy” a top priority to sustain economic development and avoid the “low-growth trap.” The goal is to shift Korea’s growth strategy from an emphasis on exports by large chaebols to one that favors innovation, including venture capital investment in new firms. Korea’s high level of investment in R&D and education give it a strong foundation for such a strategy. However, Korea’s venture capital market is still at an early stage of development and requires a comprehensive strategy to make it a growth driver. First, it is important to expand the role of business angels, who are essential both for financing and mentoring start-ups. Second, the large share of the public sector – which provides about half of venture capital investment – should be limited to avoid crowding out private investors. Third, Korea’s small market for mergers & acquisitions (M&A), which discourages venture capital investors by making it difficult for them to recover their investments, needs to be expanded. Fourth, the newly-established KONEX exchange will need to strike an appropriate regulatory stance to promote venture capital investment. Fifth, it is important to make the most of human resources, including foreign entrepreneurs and both successful and failed entrepreneurs.