Innovative growth is key

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Innovative growth is key

Korea Inc. has been fueled by adventure and innovation. Venture enterprises have become a strong pillar buttressing the Korean industry. According to the Ministry of SMEs and Startups, the number of venture enterprises generating 100 billion won ($87 million) or more in annual revenue hit 500 last year. But because of the risks, that figure can easily fall. Those that joined the 100 billion won revenue club for the first time totaled 58. Those that dropped out numbered 61. Re-entries amounted to 42.

The staggering growth implies that the Korean economy should gain its vitality for evolution in startups and innovation. In the age of the fourth industrial revolution, where creative destruction through technologies like artificial intelligence and Internet of Things is common, innovation is vital.

But new technologies have been depressed by the suffocating regulations that were put in place when factory industries led the economy. It is hard to cut out or enter a new category because either there are no related regulations or too many unnecessary ones. As result, jobs and income, as well as economic growth, have become stagnant.

President Moon Jae-in vowed to spur growth through increases in jobs and income. But because the means have mostly been dumped on employers, small merchants and enterprises struggle. In a forum among small and mid-sized enterprises held in Seoul last week, most of them said they will have to cut staff by 20 percent or move production lines overseas because they cannot afford the spike in labor costs.

In a cabinet meeting Moon ordered the government to define growth led by innovation and come up with speedy action plans. The Blue House claimed that the government targets increases in jobs and income, a fairer economy and innovation as its key economic agenda. But measures to promote innovation have been lacking. Meanwhile, youth unemployment hit an 18-year high last month. The factory operation rate in the second quarter slumped to 71.6 percent. The economy may not attain its target growth of 3 percent this year.

The government has made little headway in its promise for digitalization, and the strict privacy regulations obstruct data mining and employment. The ruling Democratic Party must hasten approvals of the services industry. It also should moderate the policy that makes employers change irregular workforce to salaried employees, double-digit growth in minimum wages, and nuclear reactor phase-out policies in order to give the business sector more breathing room.

JoongAng Ilbo, Sept. 28, Page 34
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