Korea's growth strategy depends on firms actually expanding, yet the firms best positioned to do so are losing momentum fastest. Among mid-stage firms aged 8 to 19, the cohort that should be entering full-scale growth, the share of high-growth firms fell from 14.4% in 2009-11 to just 7.8% in 2020-22, a steeper decline than among young firms. This trend suggests a deeper weakening in scale-up dynamism that current policy frameworks may struggle to address.
The Productivity Link Is Real, and the Stakes Are Economy-Wide
High-growth firms (HGFs), defined as firms with average annual revenue growth of 20% or more over three years, account for roughly 50% of total revenue growth and 38% of job creation in Korea despite their small numbers. A 1 percentage point increase in the revenue share of HGFs within an industry is associated with an equivalent increase in aggregate industry productivity growth, accompanied by improvements in average firm productivity and more efficient resource allocation. As the HGF share erodes, so does one of the economy's main channels for productivity gains.
Manufacturing and Services Scale Up Through Different Channels
What pushes a firm into high growth differs by sector. In manufacturing, AI adoption, export intensity, and employment growth show the largest effects, with productivity and R&D investment also significant. In services, employment expansion and intangible assets, particularly design and trademark ownership, stand out as key drivers. Productivity and intangible assets likely operate as complements, with productivity laying the foundation for growth while intangible assets drive expansion. The implication is not that any instrument should be abandoned, but that support should reflect how these factors combine across industries.
Toward an Integrated, Diagnosis-Based Support Model
The study calls for restructuring how Korea's fragmented scale-up programs, spread across 8,131 supports and roughly 981.1 billion won in 2023, are combined and delivered. Rather than firms applying separately to each program, a single diagnostic assessment would identify firm-specific bottlenecks in productivity, intangible assets, export access, or digital adoption, and assemble a tailored package from existing instruments, with delivery differentiated by urgency. This also requires consolidating overlapping programs under common performance indicators that capture both growth and capability gains, such as productivity and intangible assets, rather than simply counting supported firms or funding disbursed. Without this shift, resources will continue to flow toward low-impact programs rather than the firms driving genuine growth.
