SEOUL, May 27 (Korea Bizwire) — A recent analysis showed that South Korea’s legal framework has created very high barriers to entry compared to other Organization for Economic Cooperation and Development (OECD) countries.
Chung Man-ki, Chairman of the Korea Industry Alliance Forum, said in a forum held on Wednesday that according to the Product Market Regulation index released by the OECD, the nation’s regulatory barrier level was measured at 1.72, the second highest behind Turkey among OECD countries.
This figure is far higher than the OECD average of 1.16.
When it comes to small- and medium-sized enterprises(SMEs)-suitable industry, an area where the market economy should operate, South Korea’s regulatory environment is being strengthened due to the influence of interest groups.
Chung stressed that the strengthening of entry regulations would eventually weaken the viability and competitiveness of SMEs and existing market entities.
According to Kwon Yong-soo, a public administration professor at Konkuk University, growth of labor productivity and real productivity declined by 64.2 percent and 61.7 percent, respectively after SME-suitable industries were designated, with the growth in the number of businesses slowing by 53.1 percent.
“Interest groups are sacrificing consumers through regulations and abusing the government for their profits. This is a regulatory distortion.” said Kim Sung-jun, chairman of the Korea Society for Regulatory Studies.
He picked the ‘Tada Prohibition Act’ as an example showing that the government extended monopoly status to the taxi industry through entry regulations.
M. H. Lee (email@example.com)