Having witnessed more than three decades of unprecedented economic development, aptly known as the ‘Miracle on the Han River’, it can be a little perplexing to see Korea facing slow economic growth in recent years. GDP growth rates in the 1980s soared at over 10 percent, but such rates have slowed down with the stagnant growth rate of national income. Export, once the crown jewel of Korean economic growth, has been lackluster for more than 20 consecutive months.
   Neither the lack of corporate leadership nor the capability of technocrats should be to blame, as corporations like Samsung and Hyundai Motor Company (HMC) have grown to become globally recognized companies. Many banks in Korea have also transformed into global players. All the people working there are fully equipped to compete against global competitors. Indeed, Korea’s top five conglomerates have shown spectacular performances throughout the last two decades. Their sales, as well as assets, have doubled since 2001. Some of their products have taken top share in the global markets. Despite such strong competent players, however, Korea has more room for growth.
   One of the fundamental reasons for the slow growth in Korea can be attributed to the country’s small and medium sized enterprises (SMEs). Although SME employees account for more than 77 percent of the labor force in Korea, the global competitiveness of domestic SMEs has slowed down over the last two decades. insufficient capital, outdated equipment, lack of talented human resources and technological training have made it

difficult for global markets to perform on the level of Samsung or HMC. Because a majority of the labor market work at SMEs, slow SME growth translates into not enough income for expenditure, which further implies no domestic demand and sustained economic growth.
   Therefore, new economic growth can’t be achieved without the revival of SMEs. So how do we spark this growth? First, the prime focus of government policy should be less on big conglomerates and more on SMEs. Most of government budgets should be allotted to SMEs instead of funneling to big players. Second, production equipment and systems of SMEs should be replaced with cutting-edge technologies. People working for SMEs should also be constantly and regularly trained so that they can keep up with changes in the technological field.
   Third, fundamental restructuring of SMEs should take place in size and scope. Most SMEs in Korea are too small and inadequately capitalized. Most of them are self-employed and face a number of obstacles. For these “micro” SMEs, technological development or

extending its size globally is an unthinkable luxury. It thus seems imperative to transform these micro SMEs into competitive SMEs through restructuring. By restructuring these businesses, Korea’s economic growth will be closer to reaching its full potential.
   Finally, in order for these objectives to be achieved, various ministries should work together on spearheading policy initiatives. Thus, the Ministry of Strategy and Finance should work more closely with the Ministry of Trade, Industry and Energy and the Ministry of Science, ICT and Future Planning. By restructuring policies centered on SMEs, Korea's economic growth will soon be able to see more positive growth.