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Title: Chaebols and firm dynamics in Korea

Author(s): Philippe Aghion, Sergei Guriev and Kangchul Jo

Publication Date: June 2019

Keyword(s): Asian crisis, chaebols and Schumpeterian Growth

Programme Area(s): Development Economics, Financial Economics, Industrial Organization and Public Economics

Abstract: We study firm dynamics in Korea before and after the 1997-98 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, labor productivity and TFP 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. Finally, after the crisis, the non-chaebol firms also significantly increased their patenting activity (relative to non-chaebol firms). These results are in line with a neo-Schumpeterian view of transition from a growth model based on investment in existing technologies to an innovation-based model.

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Bibliographic Reference

Aghion, P, Guriev, S and Jo, K. 2019. 'Chaebols and firm dynamics in Korea'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13825