Development and Modern Industrial Policy in Practice
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Development and Modern Industrial Policy in Practice

Issues and Country Experiences

Edited by Jesus Felipe

Development and Modern Industrial Policy in Practice provides an up-to-date analysis of industrial policy. Modern industrial policy refers to the set of actions and strategies used to favor the more dynamic sectors of the economy. A key aspect of modern industrial policy is embedding private initiative in a framework of public action to encourage diversification, upgrading, and technological dynamism to achieve development in the twenty-first century. The book reviews key questions that policymakers ask about industrial policy, such as: who selects sectors; what is the rationale for sector selection; what are the main tools to promote sectors; what is the role of human capital; and what are the mechanisms for monitoring and evaluation? Expert contributors discuss how to undertake industrial policy effectively and examine the experiences of Australia, the EU, the Republic of Korea, Malaysia, and the US.
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Chapter 10: The Republic of Korea’s financial support for small and medium-sized enterprises and venture businesses

Jung-moh Chang

Extract

Financial policies to enhance industrial performance are vital for small-and medium-sized enterprises (SMEs), which are a key source of dynamism, innovation and flexibility in both industrialized and developing countries. Small-and medium-sized enterprises are responsible for most net job creation in the member countries of the Organisation for Economic Co-operation and Development. Yet, without adequate access to external funds for investment, SMEs will have difficulty raising investment per worker, essential for improving productivity and wages. The difficulties SMEs face in accessing finance during their early and later stages of development are not easy to overcome. To improve access, many governments have developed financial policies and programs for supporting innovative businesses—and this is particularly important for restoring sustainable, long-term economic growth after recessions and financial crises.

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