The Korean government has taken various measures to promote R&D activities of small and medium-sized enterprises (SMEs) since the 1980s. It has provided a series of financial and tax incentives to reduce their financial burden, and also taken measures to enhance human resources requirements. SMEs’ performance has grown remarkably over the past three decades. Thus, the Korean government’s active promotion of SMEs’ R&D activities has led to significant outcomes. Korea’s experience in R&D promotion of SMEs presents several important policy implications for developing countries.
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Besides establishing the legal framework and building Government Research Institutes (GRIs), direct financial support was provided to SMEs with business potential. KOTEC was founded in 1989 for mitigating the financial difficulties of SMEs, especially ‘Enterprises with New Technologies’, which arise from a lack of collateral. It examines the feasibility of firms’ technology and guarantees bank lending to them. This has certainly helped SMEs thrive, particularly during the period of economic crisis in 1998–1999 ().
Some research institutes affiliated with SMEs designated as Advanced Technology Centres receive financial support of up to 600 million Korean won relating to compensation to researchers ().
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