Discussion paper

DP13825 Chaebols and firm dynamics in Korea

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.


Aghion, P, S Guriev and K Jo (2019), ‘DP13825 Chaebols and firm dynamics in Korea‘, CEPR Discussion Paper No. 13825. CEPR Press, Paris & London. https://cepr.org/publications/dp13825