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KDI FOCUS Enhancing the Prudential Framework for Securities Firms

To enhance risk sensitivity, the NCR framework should revert to its pre-2016 structure for large firms and adopt tailored regulations for smaller firms.

December 17, 2025
Economic Outlook KDI Economic Outlook 2025-2nd Half

The Korean economy is expected to grow by around 1.8% in 2026, as export growth slows but domestic demand recovers.

November 11, 2025
KDI News What‘s Up Newsletter Vol.28

The 28th issue of the KDI What's Up newsletter is now available!

December 16, 2025
KDI FOCUS Improving Regulations on Abuse of Superior Bargaining Position by Digital Platforms

In regulating the unfair practices of online platforms, it is necessary to improve the institutional framework by alleviating the burden of identifying victims and considering the potential for enhancing the efficiency of platform intermediation.

October 22, 2025
KDI NEWS 2025 Knowledge Exchange Days (KED) Event Successfully Concludes with Vibrant Participation

Hosted by the Ministry of Economy and Finance (MOEF) and managed by the KDI GKEDC Operating Team, successfully took place on November 6-7, focusing on “Integrated Solutions for Climate Action”

December 09, 2025
KDI FOCUS The Impact of Demographic Change on Household Debt

Korea's household debt-to-GDP ratio, which has risen over the last two decades due to intergenerational asset and housing accumulation, is expected to reverse as population aging slows longevity gains, requiring coordinated financial and labor reforms for stability.

August 05, 2025
KDI News 2025 KDI GKEDC Capacity-Building Program

Enhancing Sustainable Urban Mobility in Cambodia

September 22, 2025
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Analysis on critical pending issues of the Korean economy
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Summary

KDI FOCUS Enhancing the Prudential Framework for Securities Firms
Despite increasing risk exposure from expanding assets and leverage among large securities firms, the current Net Capital Ratio (NCR) framework does not adequately capture these risks. To strengthen risk sensitivity while maintaining a balance between financial soundness and industry growth, the NCR formula for large securities firms should revert to its pre-2016 structure, and a differentiated regulatory approach tailored to business scope and risk characteristics should apply to small- and medium-sized firms. - As securities firms continue to grow rapidly in both asset size and functional scope, concerns have been raised that the current NCR framework may not adequately reflect the risks associated with this expansion, potentially creating regulatory gaps with implications for financial stability. - The IMA system, scheduled for end-2025, is expected to expand short-term funding capacity at large securities firms, potentially reinforcing further growth in asset size and market influence. - The March 2020 margin call episode provides a clear illustration of how prudential vulnerabilities at securities firms can propagate across the broader financial system. - Led by large securities firms, assets and leverage have expanded rapidly, accompanied by increased derivatives investment and growing reliance on shortterm funding instruments, including RP and shortterm notes. - In 2016, Korea revised the NCR formula, shifting the prudential orientation for securities firms from agoing-concern to a goneconcern basis. - Under the current NCR framework, rising leverage is not adequately reflected in the indicator, weakening its role as a warning signal. - The systemic importance of large securities firms has steadily increased alongside their expanding assets and leverage. - To accurately reflect the risks associated with asset and leverage expansion at large securities firms, the NCR formula should return to “net operating capital ÷ total risk.” - Regulatory intensity should vary with firm size and business characteristics to balance financial stability with market dynamism. - As the scale and functional scope of securities firms expand, NCR reform should be the starting point for broader regulatory reforms to preempt the excessive accumulation of systemic risk.

Summary

KDI FOCUS Enhancing the Prudential Framework for Securities Firms
Despite increasing risk exposure from expanding assets and leverage among large securities firms, the current Net Capital Ratio (NCR) framework does not adequately capture these risks. To strengthen risk sensitivity while maintaining a balance between financial soundness and industry growth, the NCR formula for large securities firms should revert to its pre-2016 structure, and a differentiated regulatory approach tailored to business scope and risk characteristics should apply to small- and medium-sized firms.

- As securities firms continue to grow rapidly in both asset size and functional scope, concerns have been raised that the current NCR framework may not adequately reflect the risks associated with this expansion, potentially creating regulatory gaps with implications for financial stability.

- The IMA system, scheduled for end-2025, is expected to expand short-term funding capacity at large securities firms, potentially reinforcing further growth in asset size and market influence.

- The March 2020 margin call episode provides a clear illustration of how prudential vulnerabilities at securities firms can propagate across the broader financial system.

- Led by large securities firms, assets and leverage have expanded rapidly, accompanied by increased derivatives investment and growing reliance on shortterm funding instruments, including RP and shortterm notes.

- In 2016, Korea revised the NCR formula, shifting the prudential orientation for securities firms from agoing-concern to a goneconcern basis.

- Under the current NCR framework, rising leverage is not adequately reflected in the indicator, weakening its role as a warning signal.

- The systemic importance of large securities firms has steadily increased alongside their expanding assets and leverage.

- To accurately reflect the risks associated with asset and leverage expansion at large securities firms, the NCR formula should return to “net operating capital ÷ total risk.”

- Regulatory intensity should vary with firm size and business characteristics to balance financial stability with market dynamism.

- As the scale and functional scope of securities firms expand, NCR reform should be the starting point for broader regulatory reforms to preempt the excessive accumulation of systemic risk.

Summary

KDI FOCUS Improving Regulations on Abuse of Superior Bargaining Position by Digital Platforms
Applying the current regulatory framework for abuse of superior bargaining position to abusive conduct (gapjil in Korean) by digital platforms presents two key challenges: identifying harmed parties (victims) and incorporating efficiency considerations. Requiring the identification of each harmed party imposes significant procedural burdens in handling platform abuse cases and may be inadequate to remedy actual harm. In addition, given the intermediary nature of platform services, unfair trading practices may yield direct benefits for other user groups besides victims. Therefore, it is necessary to improve the relevant systems to reduce the burden of identifying victims and to examine possibilities for efficiency gains.

- Concern over platform abuse runs high, yet regulatory frameworks premised on the superior bargaining position of traditional firms fail to capture the inherent nature of platform businesses, which generate both economic harm and efficiency gains.

- Discussions on platform regulation have increasingly focused on ex-ante solutions. However, given the complementarity between new and existing frameworks, strengthening ex-post enforcement against abuse of superior bargaining positions remains crucial to reflect the distinctive characteristics of digital platforms.

- In assessing superior bargaining position, key factors are the extent of dependence by the counterparty (Party B) on the superior firm (Party A) and disparities in their scale or capacity.

- The superior data capabilities of digital platforms increase the potential for abuse of superior bargaining position.

- The rapid pace of market change amplifies the risk of abuse through expanding monopsony power.

- Conversely, the smaller scale of platform-specific investment mitigates the risk of abusing bargaining position.

- Whereas market-dominant position is absolute, allowing firms to change trading terms regardless of counterparties, bargaining position is relative, varying with counterparties.

- Earlier rulings under the Large Retail Business Act imposed a lighter burden in identifying counterparties(Party B) when establishing a superior bargaining position, but the Seoul High Court has recently required individual specification of harm for each victim.

- For platforms, the authority to set and revise transactional rules substantially amplifies the potential for abusing their bargaining position through changing trading terms, but their role as general rulesetters limits their ability to exploit counterparties individually.

- Mandating the specification of Party B in cases involving abuse of a superior bargaining position by platforms is misaligned with the economic realities of platforms with general rule-setting authority.

- The intermediary role of platforms broadens the scope of direct stakeholders in platform transactions, creating the possibility that conduct seemingly exploitative toward certain users may instead yield direct and substantial benefits for users on the opposite side or in related positions.

- Because abuse of superior bargaining position by platforms can cause widespread harm across many parties, the burden of identifying harmed parties should be eased when common circumstances among them are sufficiently established.

- When harm among users becomes widespread, regulation should consider the impact on the trade practice to ensure that it reflects real economic conditions.

- Given the possibility for directly affected third parties to benefit from abusive practices by platforms, efficiency-enhancing effects should be examined during case review.

- Because the authority of platforms to set and revise general rules endows the absolute dominant position, it will be necessary to shift toward regulating
abuses of market-dominant positions in the long term.

Summary

KDI FOCUS Korea’s Trade Structure since 2010 and Implications for Economic Security
Recent shifts in Korea’s trade structure are characterized by a broad-based rise in imports from China and a concentrated expansion of exports to the United States in a small set of products, resulting in deeper bilateral trade dependence with both economies. These structural shifts introduce multiple risks, including supply chain vulnerability, job losses in sectors competing with Chinese imports, exposure to U.S. protectionism, and macroeconomic instability. Proactive trade diversification through coordinated policies and targeted export promotion initiatives is essential, alongside institutional reforms to shield affected industries and workers. This agenda should remain a policy priority even after the current trade negotiations with the U.S. are concluded.

- Responses to U.S. tariffs dominate attention while Korea’s shifting trading structure remains overlooked.

- Korea’s recent trade features a shift to a deficit with China, a growing surplus with the U.S., and rising dependence on both.

- Korea’s trade balance deterioration with China stems from net import growth in broad manufactured products, while its U.S. trade surplus expansion is driven by exports of a few products, including automobiles and semiconductors.

- Korea’s import and export shifts have elevated its country-level import concentration and product-level export concentration above other major economies.

- Technological, industrial, and policy shifts of the U.S. and China, alongside their escalating geopolitical tensions, continue to shape Korea’s trade patterns.

- Rising supply chain dependence on China poses the risk of negative spillover effects not only on Korea’s current key industries but also on future strategic ones.

- Intensified competition from Chinese imports raises concerns about employment declines and deteriorating job quality in Korea’s manufacturing sectors.

- Korea’s export growth to the U.S., concentrated in a few products, increases the likelihood of becoming the target of U.S. tariff measures.

- Deepening trade dependence on a few countries and products may increase macroeconomic instability.

- Export and import diversification calls for stronger national economic diplomacy and trade cooperation, alongside accelerated CPTPP accession.

- Expanded support is needed for export and import firms to diversify trading partners and product portfolios, prioritizing policies with proven effectiveness.

- Protecting domestic industries calls for stronger monitoring and response systems for unfair trade practices, alongside assistance that helps affected firms and workers adapt swiftly to the changes.

Summary

KDI FOCUS Reforming Korea’s Wholesale Electricity Market amid Renewable Expansion
As the share of variable renewable energy such as solar and wind rises rapidly, ensuring adequate investment in facilities that prevent outages and maintain reliable supply has become more important. Yet, Korea’s wholesale electricity market relies on rigid pricing rules that fail to provide appropriate investment incentives, delaying the expansion of required resources. It is therefore desirable to reform the pricing framework so that market prices reflect demand and supply conditions effectively as signals for investment and system operation.

- The growing share of renewables raises the question of whether the current wholesale market framework can continue to reliably meet power demand.

- As the renewable share grows and output varies with weather conditions, the electricity system is experiencing greater volatility.

- Renewable expansion is a factor increasing output variability in existing power facilities.

- Reduced utilization of existing generating facilities, limited transmission capacity, and curtailed renewable output indicate declining
efficiency in the wholesale electricity market.

- Investment in new flexibility resources, including ESS, requires appropriate price mechanisms.

- The wholesale electricity market should be designed to reliably meet projected demand while minimizing costs.

- To achieve this, Korea’s wholesale market compensates separately for energy supply, standby capacity, and frequency and voltage control.

- Rising renewable shares erode the profitability of existing generators and increase uncertainty, weakening their incentives to maintain capacity.

- Ensuring a stable electricity supply requires stronger investment incentives for new generation capacity.

- Capacity prices fall when SMP rises, for instance, due to higher natural gas prices.

- SMP, which reflects shortrun variable (fuel) costs, does not serve as an effective market signal for efficient system operation.

- Capacity prices based on fixed investment cost assessments fail to reflect technological and market developments.

- The rigid capacity pricing structure can hinder efforts to secure sufficient reserve capacity as renewable shares expand.

- By tying a fixed compensation pool to last year’s supply, ancillary service prices fall counterintuitively when demand rises.

- Rigid pricing mechanisms risk delaying investment in facilities critical to system flexibility and stability.

- Reforms should enable energy, capacity, and ancillary service prices to be determined by market mechanisms.

- Strengthening market oversight through an independent regulator should be accompanied by efforts to bring wholesale and retail pricing into closer alignment.

Summary

KDI FOCUS Health Insurance Expenditure Growth: Driving Factors and Policy Implications
As financing tools such as higher premiums and government subsidies are increasingly unsustainable, national health insurance system faces growing pressure to optimize spending. Empirical analysis of health insurance expenditure drivers identifies price increases as the dominant factor. In particular, rising service prices in local primary care clinics rather than utilization rates are disproportionately contributing to overall expenditure growth. For efficient management of health insurance resources, policy efforts should focus on strengthening the primary care function of local clinics by reforming the current fee-for-service payment model, while also institutionalizing a robust expenditure review framework.

- Despite a sharp rise in healthcare expenditure, Korea’s health insurance system lacks mechanisms to control spending.

- Premium increases and subsidy expansions are becoming unsustainable as financing tools, underlining the need for effective expenditure control.

- Effective expenditure management requires understanding the drivers of health insurance spending.

- From 2009 to 2019, price accounted for 76.7% of the increase in health insurance expenditure, with quantity and demographics contributing 14.6% and 8.6%, respectively.

- The price contribution to health insurance expenditure growth has increased over time.

- While the demographic contribution remains significant, it has declined.

- In 2019, the contribution of price in outpatient services accounted for 38.7% of health insurance expenditure growth, making it the largest contributor.

- As inpatient utilization slows and price gains greater influence, the inpatient quantity contribution to health insurance expenditure growth has declined.

- In 2019, price in primary care clinics accounted for 24.9% of the increase in health insurance expenditure―the highest among all institution types.

- Quantity contributions have declined most noticeably in primary care clinics and tertiary hospitals.

- Among individuals aged 65+, demographic change was the primary contributor to health insurance expenditure growth, while the influence of price has expanded in recent years.

- Among the young-old population (65-74), a decline in quantity contribution has moderated the growth of health insurance
expenditure.

- For those aged 85+, the demographic and quantity factors remain the primary contributors to health insurance expenditure growth.

- The decline in healthcare utilization among the young-old population and the gradual slowdown in health insurance expenditure growth suggest the possibility of healthy aging.

- Managing health insurance expenditure requires exploring ways to supplement the current fee-for-service payment system.

- Supplementing the fee for-service model is also necessary to strengthen the primary care role of local clinics.

- Proactive investment to promote health among the young-old population is required.

- For those aged 85+, management strategies for end-of-life care, including the use of life-sustaining treatments, are needed.

- A formal evaluation framework for health insurance expenditure should be established to support fiscal management strategies.

Summary

KDI FOCUS The Role of Capital Structure in Real Estate Project Financing: Risk, Cost, and Policy Implications
By examining project-level data on real estate project financing (PF), I find that higher equity ratios are associated with lower overall risk and reduced project costs. This finding supports policy measures aimed at strengthening capital structures without unduly constraining PF activity. If regulatory lending limits are to be introduced, they should target only low-equity PF projects. Moreover, preferred shares should be recognized as regulatory-eligible equity capital, and the deferral of capital gains tax should be made permanent to encourage in-kind land contributions. It is equally important to address regulatory arbitrage involving Project Finance Vehicles (PFVs), which are often exploited to pursue large-scale developments with minimal capital.

- The government has announced measures to expand PF equity capital, but without disclosing project-level data, there is no empirical basis to assess whether this expansion sufficiently reduces risk.

- Empirical analysis finds that expanding PF equity capital lowers risks across presale, default, postdefault recovery failure, and post-completion refinancing failure.

- PF capital expansion reduces construction, f inancing, and other costs, which in turn lowers total project costs.

- Increases in PF equity ratios diminish contractors’ guarantee risk, reduce construction costs, and thereby lessen completion risk.

- The current plan properly combines capital requirements with incentives, but specificity and effectiveness should be improved.

- PF lending caps should apply only to loans on low-equity projects, not to all PF loans.

- Policy incentives should extend to preferred shares as eligible PF equity capital to attract more equity investors.

- The capital gains tax deferral for in-kind land contributions should be permanent.

- PFVs have enabled undercapitalization in large projects, and prudential regulation and supervision on par with project REITs should be introduced in stages for PFVs to close regulatory arbitrage and strengthen the capital base.

Summary

KDI FOCUS The Impact of Demographic Change on Household Debt
Over the past two decades, Korea’s household debt-to-GDP ratio has trended upward, reflecting greater incentives for asset accumulation amid rising life expectancy. Household debt has increased through different asset accumulation patterns across generations: older cohorts prepare for longer post-retirement years by building financial assets that supply funds, whereas younger cohorts borrow them mainly to acquire housing. However, this trajectory is forecast to reverse in the coming years as longevity gains slow and accelerating population aging reshape intergenerational financial flows. Maintaining stability in the short to medium term will require close coordination between prudent financial policies and non-financial reforms, such as improving labor market flexibility.

- Korea’s household debtto-GDP ratio has risen steadily over the past two decades, pointing to structural rather than cyclical drivers.

- Declining interest rates amid sustained debt growth suggest that fund supply has outpaced demand.

- This study examines whether rising life expectancy can explain the sustained co-occurrence of increasing household debt and declining interest rates.

- The sustained rise in household debt over the last decade, despite income and wealth inequality remaining broadly unchanged, suggests structural drivers
beyond inequality.

- Household debt ratios tend to rise with longer remaining life expectancy and decline with higher old-age dependency ratios, suggesting demographic shifts as a major driver in shaping debt dynamics.

- Life expectancy has risen rapidly, but with the retirement age unchanged, the postretirement phase has lengthened, strengthening incentives for asset accumulation.

- Middle-aged and older cohorts primarily invest in financial assets and supply funds, while younger cohorts build housing assets by borrowing from them,
accumulating debt.

- In the past decade, per capita debt has increased among younger cohorts and decreased for older cohorts.

- Changes in age profile have influenced household debt dynamics.

- A declining share of younger cohorts borrowing for housing, combined with a rising share of older cohorts drawing down assets for consumption, may lower the household debt-to-GDP ratio.

- A one-year increase in life expectancy raises the household debtto-GDP ratio by about 4.6%p, while a 1%p shift in population share from the younger (2544) to the elderly (65+) cohorts reduces it by roughly 1.8%p.

- The empirical analysis indicates that rising life expectancy explains most of the increase in Korea’s household debt-to-GDP ratio over the past two
decades.

- The household debt ratio is projected to peak in a few years before entering a downward trend.

- Stronger incentives for asset accumulation from rising life expectancy, together with portfolio differences across age groups, have been the primary drivers of household debt growth.

- With slowing gains in life expectancy amid accelerating population aging, the household debt ratio is likely to enter a downward trend.

- Flexible, performance-based wages can strengthen labor market efficiency and ease household debt pressures.

- Household debt policy should prioritize repayment capacity and soundness of financial institutions over arbitrary aggregate targets.

- Scaling back DSR exemptions will be critical.

- Excessive policy financing may lead to household debt growth, underscoring the need to recalibrate guarantee ratios and fees and examine the overall policy financing system.

Summary

KDI FOCUS Reforming the Basic Pension Eligibility Threshold
South Korea’s Basic Pension, which currently covers 70% of its older adults, does not reflect the declining elderly poverty rate as their income and asset levels rise. To ease fiscal burdens while effectively addressing elderly poverty, its eligibility threshold should shift from a fixed share of older adults to one tied to the national median income, better targeting vulnerable older adults for support. In the long term, integrating the Basic Pension with the National Basic Livelihood Security System to establish an old-age minimum income guarantee warrants consideration.

- Currently, the Basic Pension eligibility threshold sets the bottom 70% of recognized income among older adults as recipients, failing to adequately reflect their improved financial conditions.

- In 2015, the Basic Pension eligibility threshold was 50% of the national median income, but as the financial conditions of older adults have improved, it has risen to nearly match the median income by 2025.

- This study examines examines shifting the eligibility threshold from the bottom 70% of older adults to a fixed percentage of the national median income.

- Within the elderly population, more recent birth cohorts have shown improvements in poverty levels.

- The National Pension also shows higher receipt rates and benefit amounts among later cohorts, which is expected to contribute to a decline in future elderly poverty rates.

- Considering these trends, the elderly poverty rate is expected to maintain its decline.

- The national median income (NMI) is widely used as a criterion for various public assistance programs, including the National Basic Livelihood Security System, due to its representativeness.

- This study estimates the fiscal impact of the last two scenarios: adjusting the eligibility threshold for older adults with recognized income at or below 100% of the NMI and gradually lowering it from 100% to 50% of the NMI.

- In the NMI 100% and NMI 100%→50% scenarios, the share of Basic Pension recipients is projected to decrease to 57% and 37% of the 65+ population, respectively, by 2070.

- These scenarios are projected to reduce fiscal expenditure by approximately 19% and 47%, respectively, compared to the current (baseline) trajectory by 2070.

- Linking the eligibility threshold to the NMI enables more efficient poverty alleviation among low-income older adults by utilizing fiscal savings to raise the base pension amount.

- The Basic Pension eligibility threshold should be set at 100% of the NMI and gradually adjusted to 50%, progressively narrowing the recipient base from broad social coverage to older adults in poverty.

- A unified public assistance system for older adults, integrating the National Basic Livelihood Security System and the Basic Pension, should be established in the long term.

- However, it is advisable to gradually increase the Basic Pension's base amount while carefully assessing its impact on National Pension contribution incentives.

Summary

KDI FOCUS The Ascent of K-Content: Industry Structure and Growth Drivers
Korea’s cultural content industry has seen rapid growth. Key drivers include improved content quality, a maturing digital ecosystem, and increasingly interconnected business networks. As the industry takes on a more prominent role in the national economy―generating a significant production inducement effect―policy efforts should focus on strengthening copyright protection and enforcement, advancing digital transformation among small and midsize firms, and diversifying export markets through deeper industry linkages.

- This paper analyzes the structural changes and growth trajectory of Korea’s content industry, assesses its economic impact, and identifies key drivers of firm-level growth.

- The industry composition is shifting toward digital content production and online distribution.

- Knowledge information has been the largest contributor to sales growth in the content industry.

- Content exports reached $12.45 billion in 2021, continuing a streak of record highs since data collection began.

- Rising domestic production capacity and declining reliance on foreign content have boosted net exports of K-content, contributing to a surplus in intellectual property trade.

- The content industry shows higher self-input coefficients than most service industries and even some manufacturing industries.

- The content industry has grown through close integration with the diverse industries comprising the CPND value chain.

- One unit increase in final demand in the content industry generates 1.572 units of output across all industries―64% within and 36% in other sectors.

- In 2020, the total production inducement effect of the content industry amounted to 113.7 trillion won.

- The content industry’s power dispersion index ranks 19th of 33, placing it in the mid-range.

- The content industry demonstrates aboveaverage sensitivity, highlighting the need for industrial and policy responses to external market changes.

- K-content has solidified its position in global markets through high production quality and artistic merit.

- Changes in CPND factors can also significantly influence the growth of content firms.

- Copyrights increase firm revenue by 11.6%, playing a key role in revenue generation by protecting creative works.

- Development of platforms, networks, and digital devices has also contributed significantly to growth in the content industry.

- Expanding sales channels improves market access and exposure to diverse customer segments. Overseas expansion helps broaden the consumer base and stabilize firm revenue.

- Engagements with content firms generate over twice the revenue growth compared to noncontent firms.

- Copyright acquisition and protection should be embedded across the entire support system for content firms.

- Promoting digital transformation―paired with measures to enhance adaptability―can help steer policy in a more strategic direction for small and midsize content firms.

- The government should systematically develop region-specific entry strategies through the K-Content Export Council.

Summary

KDI FOCUS Path to National Champions: Transforming Support Policies for Small- and Medium-Sized Enterprises (SMEs)
South Korea’s ‘national champion policy,’ designed to foster global enterprises, has yet to deliver measurable outcomes in sales and productivity, suggesting inefficiencies in resource allocation linked to ‘the risk of picking winners.’ Accordingly, the incentive structure of growth policies for Small- and Medium-Sized Enterprises (SMEs) needs an operational shift, moving away from conventional subsidy assistance toward a bespoke model that integrates private investment, consulting, and networks to address their business challenges collaboratively. Furthermore, in order to enhance policy accountability and effectiveness, it is crucial to consolidate support details and performance outcomes while ensuring transparency through public disclosure.

- Amid intensifying competition for technological dominance, advanced countries are stepping up the reintroduction of targeted industrial policy to concentrate support in specific industries or firms.

- Korea provides substantial subsidies to firms through its national champion policy, but studies on its effectiveness remain limited.

- This study analyzes the effectiveness of Korea’s national champion policy and offers recommendations for improvement by comparing its operational approach with those of other countries.

- Korea’s flagship national champion policy program, World Class 300, provided targeted annual subsidies to 30~56 firms selected through a government-led process.

- The declining share of high-growth firms led to a large drop in the number of firms satisfying WC300’s sales growth criterion, making it harder to identify eligible firms.

- An analysis of WC300 outcomes reveals no significant impact on sales, value-added, or productivity, suggesting that resources may have been allocated to firms misaligned with the project’s objectives.

- Korea’s national champion policy aims to foster innovation and promote exports among SMEs to drive growth and job creation.

- However, concentrating resources on less competitive firms through selective support risks undermining economic efficiency and distorting market dynamics.

- Relational support is likely more effective than transactional support for high-potential firms.

- Effective business growth support requires tailored assistance that meets the diverse needs across the growth stages of individual firms rather than focusing on a single activity.

- The time has come for Korea to shift gears in its national champion

- To enhance the effectiveness of the national champion policy, its framework―including firm selection and support measures―should transition to a private-sector-led approach.

- Enhancing policy accountability and effectiveness requires centralized management of support details and performance data alongside transparent public disclosure.

- Given the low incentives for actively restructuring government support projects, institutionalizing independent evaluations is crucial for improving future outcomes.

- New policy initiatives should operate systematic pilot programs to enhance effectiveness.