OECD: "Korea Must Improve Startup Survival Rates... Need to Streamline Support Measures"

[Asia Economy Reporter Son Sun-hee] The Organisation for Economic Co-operation and Development (OECD) suggested on the 8th that the South Korean government needs to streamline support measures to improve the growth and survival rates of startup companies.

In a report titled "Inclusive Growth in Korea: Creating Opportunities for All," jointly published with the Korea Development Institute (KDI) on the same day, the OECD introduced the achievements of Korea's innovation policies while pointing out productivity gaps by company and industry as well as survival rate issues of startups and small and medium-sized enterprises (SMEs).

The OECD stated, "Korea has successfully integrated into the global value chain through an export-led growth strategy, becoming the world's sixth-largest exporter. However, the development of conglomerate-centered manufacturing raises concerns about productivity gaps between services and manufacturing sectors, as well as between large corporations and SMEs, which could hinder innovation." It further recommended "productivity enhancement measures and tax support, as well as product market reforms that can activate the participation of SMEs and the service sector to build a more inclusive global value chain strategy."

However, the OECD positively evaluated the South Korean government's policy efforts such as the implementation of regulatory sandboxes and regulatory free zones in preparation for the Fourth Industrial Revolution era, and the strengthening of R&D support for SMEs.

Regarding the Korean New Deal policy related to the "Innovative Inclusive Nation" promoted by the Moon Jae-in administration, the OECD expressed support, saying, "It aligns with the OECD's goals of sustainable economic growth and improved distribution, and many international organizations also actively agree."

In particular, the OECD assessed that the policy paradigm pursuing a balance between "growth and distribution," moving away from a performance-centered approach, contributed to achieving sustainable economic growth. The report stated, "Various indicators have improved, such as household income and employment rates for youth and women, as well as reductions in the proportion of low-wage workers and annual working hours." It added, "Policies strengthening public education, such as free high school tuition and abolition of university entrance fees, are expected to greatly expand social participation opportunities for low-income groups. The expansion of social safety nets, including enhanced Earned Income Tax Credit guarantees and increased basic and disability allowances, contributed to improving the quality of life and stabilizing the livelihoods of vulnerable groups."

Regarding the response to COVID-19, Korea received high praise as the most successful among OECD countries. The report noted, "Early containment of infection spread through K-quarantine and active financial support for households and SMEs via supplementary budgets were effective in maintaining jobs." However, it added, "To alleviate inequality and promote economic and social participation of vulnerable groups in the future, support for childcare and education and the establishment of robust employment and social safety nets are necessary. Inclusive policies and innovation policies should be complemented to be mutually linked."

This report compiles the results of collaborative research conducted by KDI and OECD since 2019, and both organizations plan to actively seek cooperative research on topics such as post-COVID policy responses in the future.

This content was produced with the assistance of AI translation services.