"Loss of Vitality Due to Overlapping Regulations... South Korea's 'Entrepreneurship' Index Ranks Low in OECD"

FKI Analysis and Output Results: 27th out of 37 Countries

Data provided by the Federation of Korean Industries

[Asia Economy Reporter Kim Heung-soon] An analysis revealed that South Korea's 'Entrepreneurship Index' ranks among the lower tier of countries belonging to the Organisation for Economic Co-operation and Development (OECD). The Entrepreneurship Index is a composite ranking derived from survey results across three main categories: business vitality, institutional environment, and entrepreneurial perception.

The Federation of Korean Industries (FKI) announced on the 1st that, based on the Entrepreneurship Index calculated for OECD member countries, South Korea ranked 27th out of 37 countries as of 2019.

"South Korea's Entrepreneurship Index Lower Than Lithuania, Whose GDP is One-Thirtieth of Korea's"

According to FKI's analysis of data from the OECD and the Global Entrepreneurship Monitor (GEM), South Korea's Entrepreneurship Index scored 90.7. This is lower than G5 countries such as the United States (119.9, 4th), Germany (111.7, 10th), the United Kingdom (105.3, 16th), France (93.3, 24th), and Japan (92.6, 26th). It also ranked below Lithuania (98.2, 23rd), whose gross domestic product (GDP) is only one-thirtieth that of South Korea.

The Entrepreneurship Index is composed of six detailed items across three categories: ▲'Business Vitality' based on the number of businesses per 100,000 population and the proportion of large enterprises, ▲'Institutional Environment' reflecting the level of economic institutions and the rule of law index, and ▲'Entrepreneurial Perception' including entrepreneurial career preference and social reputation.

Data provided by the Federation of Korean Industries

Regulations Surge with Business Growth... Decline in Business Vitality Due to Weakened Growth Will
Low Levels of Economic Institutions Such as Business Regulations and Government Policy Stability, and High Negative Perception of Entrepreneurs
"Passing of Three Business Regulation Laws Raises Risk of Future Decline in Entrepreneurship"

By category, South Korea ranked 27th in the Business Vitality category. Looking at detailed items, South Korea ranked 8th in the number of businesses per 100,000 population, placing it in the upper tier among OECD countries, but ranked 33rd in the proportion of large enterprises, placing it near the bottom. The FKI evaluated that "the business distribution is centered on small and medium-sized enterprises (SMEs), and as companies grow, regulations increase sharply, indicating that the business environment deteriorates as scale increases, making growth into large enterprises vulnerable."

In the Institutional Environment category, South Korea ranked 23rd, placing it in the lower-middle tier among OECD countries. Detailed items such as business regulations and government policy stability, which represent the level of economic institutions, ranked 27th. The rule of law index, reflecting property rights protection and judicial fairness, ranked 21st, indicating a lower-middle level business management environment.

The Entrepreneurial Perception category also ranked 21st, placing South Korea in the lower-middle tier among OECD countries. By detailed items, South Korea ranked 23rd in entrepreneurial career preference and 19th in social reputation. The FKI interpreted this as indicating a relatively high negative perception of entrepreneurs. They also expressed concern that "with the passage of the three business regulation laws and the Serious Accident Punishment Act at the end of last year, there is a significant possibility of a further decline in entrepreneurship."

An FKI official emphasized, "It is a situation where extraordinary measures are needed to raise entrepreneurship, such as creating a business-friendly management environment through future deregulation."

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