Chaebols and Firm Dynamics in Korea

49 Pages Posted: 8 Mar 2021

See all articles by Philippe Aghion

Philippe Aghion

College de France and London School of Economics and Political Science, Fellow; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Sergei Guriev

Sciences Po; Centre for Economic Policy Research (CEPR)

Kangchul Jo

Bank of Korea - Economic Research Institute; Department of Economics, London School of Economics & Political Science (LSE)

Multiple version iconThere are 3 versions of this paper

Date Written: March 5, 2021

Abstract

English 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, labour 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. After the crisis, the non-chaebol firms also dramatically increased their patenting activity. Finally, markups of chaebol firms declined substantially, especially with industries dominated by chaebols before the crisis. 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.

Keywords: Innovation-based growth, Chaebols, Asian crisis

JEL Classification: O43, L25

Suggested Citation

Aghion, Philippe and Guriev, Sergei and Jo, Kangchul, Chaebols and Firm Dynamics in Korea (March 5, 2021). Bank of Korea WP 2021-7, Available at SSRN: https://ssrn.com/abstract=3798087 or http://dx.doi.org/10.2139/ssrn.3798087

Philippe Aghion (Contact Author)

College de France and London School of Economics and Political Science, Fellow ( email )

London
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Sergei Guriev

Sciences Po ( email )

27 rue Saint-Guillaume
Paris Cedex 07, 75337
France

HOME PAGE: http://econ.sciences-po.fr/staff/sergei-guriev

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Kangchul Jo

Bank of Korea - Economic Research Institute ( email )

110, 3-Ga, Namdaemunno, Jung-Gu
Seoul 100-794
Korea, Republic of (South Korea)

Department of Economics, London School of Economics & Political Science (LSE) ( email )

London School of Economics and Political Science
Houghton Street
London, WC2A 2AE
United Kingdom

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