Government R&D Support for SMEs: Policy Effects and Improvement Measures
Lee, Sungho | April 2018
Forty percent of the entire national annual R&D budget (19 trillion won) is allocated for economic growth―including industrial and infrastructure development. In 2016, 3 trillion of the 8.1 trillion won was earmarked for the innovation of SMEs in the form of R&D grants, making Korea the second biggest spender next to the US among OECD members, ahead of Germany and Japan in absolute amount. And, thanks to the government's direct grants and indirect tax benefits, the yearly R&D investment of Korean SMEs exceeded 13 trillion won in the same year (36,026 affiliated research institutes). Korea ranks fourth, or fifth when China is included, in total corporate R&D and second1) in SME R&D among OECD nations as shown in <Table 1>. In particular, small firms with less than 50 employees, including start-ups, were found to invest more actively in R&D than medium-sized firms. Preceding literature on the performance evaluation of R&D support projects have mainly focused on how support contributes to increasing corporate R&D investment and intellectual property rights, and the majority of outcomes have been positive. However, with the exception of Oh and Kim (2017), very few studies deal with the economic gains of R&D support. Indeed, with the government’s R&D grant for SMEs at the 3 trillion won mark, this study attempts to comprehensively assess government support projects and seek ways to enhance their effectiveness.
CitationLee, Sungho. 2018. Government R&D Support for SMEs: Policy Effects and Improvement Measures. © Korea Development Institute. http://hdl.handle.net/11540/13228. License: CC BY-NC-ND 2.0.
Small Business Finance
Regional Economic Integration
Small to medium sized enterprises
Communication in economic development
Restraint of trade
International economic integration
Economic development projects
Success in business
Separation of powers
Transparency in government