A Distributive Comparison of Enterprise Size in Korea and Taiwan

Research to date on the economic development of the Republic of Korea and Taiwan has frequently contrasted the two economies by depicting the former as centered on large-scale enterprises and the latter on small and medium-size enterprises (SMEs). The purpose of this study is to see if the appropriateness of this perception will also be verified by the statistical data. In Section I the authors utilized census data on the Korean and Taiwanese manufacturing sectors to compare the distribution pattern of the sizes of enterprises in the two economies. However, on examining the available data for making this comparison, the authors discovered that for Korea the statistics provided are those at the level of the establishment (a physical unit engaging in industrial activities such as a factory, workshop, office, or mine) while the statistics for Taiwan are those at the enterprise level. Mindful of this difference, the authors looked at the portion of the economy accounted for by large-scale establishments in Korea that employed 500 workers or more and by enterprises in Taiwan employing the same number of workers, and they discovered that the portion that these large-scale businesses account for, especially in the area of output, has steadily declined since the 1980s. When comparing the share of total production that these large-scale establishments/enterprises account for in the two economies, the authors concluded that those in Korea accounted for a larger share of that economy's production than did their counterparts in Taiwan. The authors then compared the portion of the economy accounted for by establishments in Korea and enterprises in Taiwan that employed less than ten workers, and they found that the portion of the two economies that these very small-scale production units accounted for has also been on the decline. Section II compares the portions of the two economies accounted for by large business groups. After comparing the percentage of GDP accounted for by the total sales of these business groups, the authors found that large business groups in Korea have played a far more important role in Korean economy than has been the case for such groups in Taiwan. This difference in the importance of such business groups in the two economies has also played an significant part in fostering the perceived dichotomy of large-scale enterprises playing the important role in Korea versus SMEs being the important players in Taiwan. Section III compares the percentage of total exports accounted for by SMEs, and shows that SMEs in Taiwan account for a larger share of exports than do their counterparts in Korea. This section also shows that in Taiwan the share of export sales for SMEs has consistently exceeded that for non-SMEs, while in Korea the relationship between enterprise size and the rate of export sales has been directly proportional. This difference in the size of the major export players is another factor fostering the perception of the Korean economy being centered on big business while Taiwan's is on SMEs. Although there were difficulties and limitations when comparing the data of the two economies, the statistical comparison undertaken in this study shows that in general big business has played the major role in the development of the Korean economy while in Taiwan's economic development this role has been played by SMEs. Thus the statistical data also verifies the perceived dichotomy of these two economies.

Trade obstacles, inventory level of inputs, and internationalization of enterprise activities : a comparison between Southeast Asia and Latin America

This paper investigates the impact of trade barriers such as customs clearance, subjective trade obstacles (customs and trade regulations), and inventory of inputs on the internationalization of enterprises in Southeast Asia and Latin America, using the World Bank's enterprise surveys. Empirical results show a negative association between the internationalization of enterprises and subjective trade obstacles, while the impact of subjective trade obstacles is not significant on enterprises already internationalized. An international comparison between Southeast Asia and Latin America suggests that enterprises in Latin America face unfavorable conditions that discourage them from becoming more closely inserted into international production networks.

Chapter 7 Clusters of Modern and Local Industries in Vietnam

Since the introduction of the Doi Moi ('renovation') economic reform in 1986, Vietnam has experienced a transformation of its economic management, from a central planning economy to a market-oriented economy. High economic growth, created by the liberalization of activities in all sectors of the economy, has changed the economic structure of the country, and the once agriculture-based and poverty-stricken land now generates a midlevel income and possesses many industrial bases. Economic growth has also changed the landscape of the country. Business complexes have been built in metropolises like Ho Chi Minh City and Hanoi, and rice fields have been converted into industrial zones. As the number of enterprises increased, areas began to emerge where many enterprises agglomerated. Some of these 'clusters' were groups of cottage industry households, while many others were large-scale industrial clusters. As Porter [1998] argues, industrial clusters are the source of a nation's 'competitive advantage'. McCarty et al. [2005] indicate that in some key industries in Vietnam, some clusters of enterprises have been created, although the degree of agglomeration differs from one industry to another. Using industry census data from 2001, they include dot density maps for the 12 leading manufacturing industries in Vietnam. They show that most of the industries analyzed are clustered either in Hanoi or Ho Chi Minh City (or both). Among these 12 industries, the garments industry has the greatest tendency to cluster, followed by textile, rice, seafood, and paper industries. The fact that industrial clusters have begun to form in some areas could be a positive sign for Vietnam's future economic development. What is lacking in McCarty et al. [2005], however, is the identification of the participants in the industrial clusters. Some argue for the importance of small and medium enterprises (SMEs) in Vietnam's economic development (e.g. Nguyen Tri Thanh [2007], Tran Tien Cuong et al. [2008]), while others stress the impact of foreign direct investments (FDI) (for example, Tuan Bui [2009]). Adding information about the participants in the above cluster study (and in other studies of spatial patterns of location of enterprises) may broaden the scope for analysis of economic development in Vietnam. This study aims to reveal the characteristics of industrial clusters in terms of their participants and locations. The findings of the study may provide basic information for evaluating the effects of agglomeration and the robustness of the effects in the industrial clusters in Vietnam. Section 1 describes the characteristics of economic entities in Vietnam such as ownership, size of enterprise, and location. Section 2 examines qualitative aspects of industrial clusters identified in McCarty et al. [2005] and uses information on the size and ownership of clusters. Three key industries (garments, consumer electronics, and motor vehicle) are selected for the study. Section 3 identifies another type of cluster commonly seen in Vietnam, composed of local industries and called 'craft villages'. Many such villages have been developed since the early 1990s. The study points out that some of these villages have become industrialized (or are becoming industrialized) by introducing modern modes of production and by employing thousands of laborers.

Economic restructuring and regional distrubution of enterprises in Vietnam

The change in the ownership structure of enterprises was one of the major features of the Vietnamese economy in the 2000s. Of the three sectors of state, private and FDI, the state sector, which employed the majority of enterprise workers at the beginning of the 2000s, became the smallest by the end of the decade. One of the factors contributing to such phenomenon was SOE restructuring. Earlier SOE restructuring in the early 1990s is said to have resulted in increased economic inequality among provinces. The purpose of this paper is to clarify the impact of the SOE restructuring and related changes in the ownership structure of enterprises on the regional distribution of economic activities in the 2000s.