"Corporate Startup Rate Continues to Slow... 'Scaling Up Highway' Needed"

Korea Economic Association, Korean Chamber of Commerce and Industry, and Korea Federation of Middle Market Enterprises Hold 2nd Corporate Growth Forum
Decline in New and High-Growth Companies, Increase in Companies Reverting to Small Business Status
Need to Restore the "Growth Ladder": Easing Regulations and Enhancing Rewards
Proposals: Growth Incentives, Regulatory Reform, and Activation of Productive Finance

There has been a proposal to reignite the growth engine of the Korean economy by establishing a corporate "Scaling Up Highway" through public-private cooperation.

The idea is to overturn the current "reverse incentive" structure, where benefits decrease and regulations increase as companies grow, and instead create an environment where companies are rewarded in proportion to their growth.

Jung Cheol, President of the Korea Economic Research Institute and Chief Research Officer of the Korea Economic Association, is being interviewed by The Asia Business Daily at his office in the Korea Economic Association building in Yeouido, Seoul. Photo by Younghan Heo younghan@

Jung Cheol, Chief Research Officer of the Korea Economic Association and President of the Korea Economic Research Institute, delivered a keynote speech at the "2nd Corporate Growth Forum," jointly hosted by the Korea Economic Association, the Korean Chamber of Commerce and Industry, and the Korea Federation of Middle Market Enterprises at the CCMM Building in Yeouido, Seoul, on November 20, and made these assertions.

With the theme "A Blueprint for Reigniting the Corporate Growth Engine," Jung emphasized, "We need to build a 'Scaling Up Highway' that will accelerate companies to make the next leap forward." He presented three key strategies to achieve this: "growth incentives, smart regulatory reform, and the activation of productive finance."

He explained the background for his proposal by stating, "As the number of new companies decreases and the startup rate slows, the growth foundation of our companies is weakening."

According to the "Corporate Birth and Death Administrative Statistics" released by the National Data Office, the number of new companies in Korea remained above one million, with 1,005,000 in 2019, 1,069,000 in 2020, and 1,034,000 in 2021. However, this figure fell below one million to 997,000 in 2022, and continued to decline to 956,000 in 2023. The new company rate among large corporations also dropped sharply from 4.4% in 2022 to 2.0% in 2023.

Jung pointed out, "Large corporations and mid-sized companies are experiencing a simultaneous decrease in new company rates and an increase in exit rates, which is weakening their growth momentum. In particular, the natural increase rate for mid-sized companies has remained in the 0% range for the past four years, entrenching the absence of a 'middle tier.'" He added, "Even in the manufacturing sector, which is the core of our economy, both the number and proportion of high-growth companies have decreased compared to ten years ago. Over the past three years (2021-2023), more companies (1,147) have regressed from mid-sized to small businesses than have graduated from small to mid-sized companies (931). Therefore, we must create an environment where companies can continue to grow."

Jung cited the differentiated support, tax benefits, regulations, and absence of strategic capital (such as CVC regulations) according to company size as factors hindering sustainable corporate growth. He stressed, "We need to resolve these issues and restore a virtuous cycle where rewards for growth lead to renewed investment in innovation."

The forum brought together not only leaders from the business community but also government officials, members of the National Assembly, and academics to discuss "innovative strategies for building a growth-oriented corporate ecosystem." In addition to Jung, attendees included Choi Taewon, Chairman of the Korean Chamber of Commerce and Industry; Choi Jinsik, Chairman of the Korea Federation of Middle Market Enterprises; Deputy Prime Minister and Minister of Economy and Finance Koo Yooncheol; Han Jeongae, Policy Committee Chair of the Democratic Party of Korea; Kim Doeup, Policy Committee Chair of the People Power Party; and Kim Kisik, President of the National Assembly Futures Institute.

Han Sangwoo, Chairman of the Korea Startup Forum, argued, "Large corporations and startups should move toward a cooperative, rather than competitive, relationship. We must establish a 'productive finance' structure so that the capital of large corporations can drive the experimentation and innovation of startups." He added, "If the infrastructure and capital of large corporations combine with the technology and agility of startups to create open innovation, a new axis of growth for our economy will emerge."

Joo Jinyeol, Professor at Pusan National University, pointed out, "The current fair trade system, which comprehensively regulates business group designation and inter-affiliate transactions, may discourage strategic and long-term business support at the group level." He further emphasized, "In 'deep tech' fields such as artificial intelligence, advanced biotechnology, and quantum computing, investments on the scale of tens or hundreds of trillions of won are required, but under the current system, smooth capital procurement is difficult. The Fair Trade Act must be redesigned to fit the changed environment."

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