Real Causes of Income Disparity and Struggles of SMEs in Korea

Korea’s income disparity in Korea has grown over the years.  Some have identified factors like technology, currency arbitrage and the growing importance of China.  While those factors may have played a role, one has to see the overriding factors that are the real cause of income disparity.

Korea’s economic model has been closely associated with Korea’s innovation model.  Therein lies the fundamental problem of Korea’s innovation undertaking.  Korea has pursued the export-dependent, chaebol-centered economic model.  Since its economic model was flawed from the start, it was bound to hit the wall at some point.  And it has, indeed.

What kind of country Korea wishes to be?  Its economic and innovation model should be geared toward serving the broader social interest.   Korea has to transition its economic model to more domestic consumption-based one with stronger economic principles including proper capital market structure.  Korea should have corrected the flaws of its economic model and dismantled Korea Inc.  It should have recognized the fragile foundation of Korea’s rapid rise in the course of industrialization as well.  Along this line, its innovation apparatus has to be more centered around SMEs.

The real causes of Korea’s income inequality and struggles of SMEs stem from those overriding factors.  Instead of working on these issues, Korea has pushed off genuine reforms and employed quick fixes such as credit and property bubbles with little regard to long term consequences.

 if Korea wishes to stop SMEs from declining, it needs to work on the real causes of income inequality since a decrease in median income and purchasing power has hampered SME’s’ growth and sustainability.  This is what makes the Park administration particularly disappointing, despite its efforts to boost the Korean SMEs.  If this administration is really serious about turning the economy around, it has to take a holistic approach.

What concerns us most is that the price for the flawed model and policies falls heaviest on the broader public.  The solid middle class and democracy go hand in hand.  History has taught us that we cannot have one without the other.

제가 현정권이 지향하는 방향을 알고 있기에 애정을 갖고 여러 번 정책관련 포스팅을 했습니다.  큰 그림을 보고 국가의 목적이 무엇이 되어야 하고, 이와 연계해 경제 모델이 어떻게 수정, 보완되어야 할 것이며, 혁신의 역할을 정립하고, 중소기업 관련 세부 정책을 펼쳐 나가야 할 것입니다.  이것이 통합적으로, 총체적으로 이루어져야 함을 다시 한 번 강조하고 싶습니다.  세부적인 내용은 이미 여러 번 다루었기에 여기에서는 핵심 요지만 다루고 있습니다.    관련된 포스팅들은 다음의 링크를 클릭하면 보실 수 있습니다.

How Korea Has Changed Since 1997 (IMF 위기이후 한국은 어떻게 변했는가)

http://innovationandeconomicanalysis.blogspot.kr/2012/11/how-korea-has-changed-since-1997-imf.html

The Decline of the Middle Class Both in the U.S. and Korea (미국과 한국의 중산층 쇠퇴); 박근혜 정부는 중산층 재건에 총력을 다해야

http://innovationandeconomicanalysis.blogspot.kr/2013/03/the-decline-of-middle-class-both-in-us.html

 “The fallacy of Korea’s Economic and Innovation Model (한국 경제와 혁신 모델의 오류)” http://innovationandeconomicanalysis.blogspot.kr/2012/10/the-fallacy-of-koreas-economic-and.html )

Why Korea’s Manufacturing Share Of Total Employment Has Dwindled (왜 한국 제조 일자리는 쇠퇴해 왔는가)

http://innovationandeconomicanalysis.blogspot.kr/2012/12/why-koreas-manufacturing-share-of-total.html

Comparison of Two Critical Regimes in Korea: The Park Chunghee Regime vs. Kim Daejung Regime (박정희 정권과 김대중 정권의 비교)

http://innovationandeconomicanalysis.blogspot.kr/2012/09/comparison-of-two-critical-regimes-in.html

Park Urges Chaebols To Share Growth With Community and Promises SMEs Support; 박 당선인 중소기업 대통령 되겠다

http://innovationandeconomicanalysis.blogspot.kr/2012/12/park-urges-chaebols-to-share-growth.html

박근혜 정부의 중소기업 정책에 바란다

http://innovationandeconomicanalysis.blogspot.kr/2013/01/blog-post_20.html