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Chaebols and firm dynamics in Korea
[Distance to frontier, selection, and economicgrowth]

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Listed:
  • Philippe Aghion
  • Sergei Guriev
  • Kangchul Jo

Abstract

SUMMARYWe study firm dynamics in Korea before and after the 1997/8 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 total factor productivity 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 within industries dominated by chaebols before the crisis. These results suggest that the crisis had the virtue of helping Korea move from catching-up growth based on investment in existing technologies to innovation-based growth.

Suggested Citation

  • Philippe Aghion & Sergei Guriev & Kangchul Jo, 2021. "Chaebols and firm dynamics in Korea [Distance to frontier, selection, and economicgrowth]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 36(108), pages 593-626.
    • Handle: RePEc:oup:ecpoli:v:36:y:2021:i:108:p:593-626.
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    File URL: http://hdl.handle.net/10.1093/epolic/eiab016
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    References listed on IDEAS

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    More about this item

    Keywords

    E3; E4; E5; F3; L10; L40; O43; O53;
    All these keywords.

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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