Is Korea's Public Funding for SMEs Achieving Its Intended Goals?
10 Pages Posted: 10 May 2016
Date Written: February 3, 2016
Abstract
Policies to support Small and Medium-sized Enterprises (SMEs) should be designed and managed in a way that SMEs are self-reliant and able to contribute to national economic goals. However, an evaluation of current public programs to support SME finance, an important policy instrument of Korea’s SME support policy, shows that they have actually lowered the productivity of recipient firms and increased the survival probability of incompetent ones, negatively impacting the national economy. To produce the desired results, the government needs to (1) redefine the purpose of SME policy by shifting its emphasis from survival to productivity; (2) introduce a constant and scientific evaluation system by using appropriate performance indicators; and (3) restructure the policy to enhance efficiency based on evaluation results.
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