• Journal of Technology Innovation
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• v.16 no.2
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• pp.147-165
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• 2008

The researches on cyclical patterns of R&D investment has a long history in developed economies since the Schumpeterian hypothesis that long-term productivity-enhancing innovative activities increase during recession. But in Korea the cyclical patterns of R&D investment is one of the unexplored academic areas. Unlike theoretical explanation of R&D's cyclical pattern, empirical results has shown that R&D investment is procyclical to business cycles in developed countries. This paper investigates whether Korean R&D investment show procyclical or countercyclical pattern to business cycles. The empirical results show that Korean R&D investment in private area is procyclical to business cycles with statistical significance, which confirms the credit-constraint theory's prediction, while public area's is not sensitive to them. Public R&D investment has long-term investment characteristics and can be utilized to stabilize procyclically-fluctuating private R&D investment.

• KDI Journal of Economic Policy
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• v.37 no.1
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• pp.19-44
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• 2015

This paper examines the effect of the global financial crisis on corporate investment in Korea. Specifically, the crisis was considered to have possibly constrained firm-level investment as the negative shock to the credit supply dramatically unfolded. As Duchin et al. (2010) demonstrated, if a negative supply-side shock is evident during a crisis period, larger cash holdings before the crisis will lead to fewer constraints to corporate investment, or vice versa. In order to investigate the supply-side effect of the crisis, we use firm-level financial data, including firms listed on the Korean stock market as well as small and medium-sized enterprises. We find that corporate investment declined significantly after the crisis, even if we control for factors associated with the demand side, such as contemporaneous capital productivity and cash flow. More importantly, the decline is positively and significantly related to cash holdings before the crisis, implying the negative effect of a credit supply shock. Small and medium enterprises experienced relatively sharp investment declines compared to those of larger firms, and the relationship between pre-crisis cash amounts and the degree of investment decline is greater than that in large firms. Additionally, we examine whether the negative effect persists up to the present, finding evidence that the cash-investment relationship continues in small and medium-sized enterprises.

• KDI Journal of Economic Policy
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• v.33 no.2
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• pp.111-143
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• 2011

As the 'jobless growth' is developing into a worldwide phenomenon, many countries try to recover a virtuous relationship between the growth and employment using various wage subsidy programs. This study focuses on wage subsidy to employers, labor demand-side wage subsidy for which one can think of two types-a tax credit(a flat wage subsidy) and a social insurance premium exemption(a proportional wage subsidy). For job creation, Korean government reintroduced a tax credit to small and medium-sized enterprises(SMEs) which have increased their employment level in 2010. But many experts has continuously insisted that it should be replaced with a social insurance premium exemption arguing only a few SMEs benefit from the tax credit as most of them are actually not paying any corporate or general income tax bills. However, as the insurance premium exemption accompanies an increase in the amount of budget with the coverage widen, one cannot confirm its cost effectiveness over the tax credit. This paper aims to provide a theoretical analysis to derive some formal conditions under which a social insurance premium exemption creates more jobs than a tax credit does given a budget constraint. We show that the former's dominance over the latter depends on whether there exists a dead zone of social insurance or not. If there does not exist a dead zone, a social insurance premium exemption is more desirable in many cases, whereas one cannot guarantees its dominance over a tax credit if there exists a dead zone. Therefore in order to realize its dominance, the government should minimize a dead zone so that most SMEs effectively benefit from the insurance premium exemption. In addition, applying discriminative exemption rates which reflect each firm's job conditions such as wage level and labor demand/supply sensitivity, the government try to enhance job creation effect.

• The Journal of Society for e-Business Studies
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• v.2 no.1
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• pp.79-94
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• 1997

Commerce activities which are free form space and time constraint using a communication network are called Electronic Commerce(EC). Because of sending a commercial information using open network such as Internet in EC, they need the security of commerce information (payment information and purchase information), checking the integrity of transferring data and certifying all parts participated in commerce for a secure commerce. Recently Visa and MasterCard Co. released the Secure Electronic Transaction (SET) Protocol for secure payment card transaction on Internet. This paper proposes a Secure Electronic Commerce Transaction Model(SECTM) using SET in order to support the secure commerce on Internet. The proposed transaction model prevents merchant from abusing the cardholder's payment information (credit-card number etc.) and enables cardholder to shop securely in Electronic Shopping Mall.

• The Journal of Economics, Marketing and Management
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• v.3 no.3
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• pp.7-23
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• 2015

Women are more disadvantaged than men in many fronts and this confines them to informal sector livelihood activities. Any attempt to improve women's economic status will require information on the organization, cost and returns to investment in the livelihood activities in which they predominate. This is the issue for this study which compared yield performance in artisanal fishing and fresh fish marketing. Primary data collected through multi-stage sampling method were analyzed using inferential statistics, budgeting and regression models. Empirical findings revealed that about 75.0% of fisher folks either had no formal education or acquired only primary school education while 50.0% of marketers had secondary school education. The budgeting model revealed fisher-folks' and marketers' annual net profit to be N2,882,626.00 and N640,227.00, respectively. Profit from fishing was significantly higher than that of fish marketing. At 53.2% for fishing and 40.3% for marketing, returns to investment was better in fishing. Regression model results showed the significant factors influencing returns to each livelihood strategy to include fishing ground, distance covered and years of experience. The major constraint faced by operators of both livelihoods groups was insufficient credit. Despite this, the livelihood strategies were shown to be profitable ventures which contributed to households' consumption expenditure. Organizing women informal sector operators into groups to enhance access to government support and formal credit are recommended for improving livelihood strategy performance.

• KDI Journal of Economic Policy
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• v.14 no.1
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• pp.191-212
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• 1992

This paper discusses the role of money in the process of capital accumulation where financial markets are impeded by contract enforcement problems in the context of overlapping generations framework. In particular, in less developed countries (LDCs) creditors may know little about the repayment capability of potential debtors due to incomplete information so that financial instruments other than money may not acceptable to them. In this paper the impediments to the operation of the private finanical markets are explicitly modelled. We argue that creditors cannot observe actual investment decisions made by the potential borrowers, and as a result, loan contracts may not be fully enforceable. Therefore, a laissez-faire regime may fail to provide the economy with the appropriate financial instruments. Under these circumstances, we introduce a government operated discount window (DW) that acts as an open market buyer of private debt. This theoretical structure represents the practice of governments of many LDCs to provide loans (typically at subsidized interest rates) to preferred borrowers either directly or indirectly through the commercial banking system. It is shown that the DW can substantially overcome impediments to trade which are caused by the credit market failure. An appropriate supply of the DW loan enables producers to purchase the resources they cannot obtain through direct transactions in the credit market. This result obtains even if the DW is subject to the same enforcement constraint that is responsible for the market failure. Thus, the DW intervention implies higher investment and output. However, the operation of the DW may cause inflation. Furthermore, the provision of cheap loans through the DW results in a worse income distribution. Therefore, there is room for welfare enhancing schemes that utilize the higher output to develop. We demonstrate that adequate lump sum taxes-cum-transfers along with the operation of the DW can support an allocation that is Pareto superior to the laissez-faire equilibrium allocation.

• KDI Journal of Economic Policy
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• v.30 no.1
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• pp.131-170
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• 2008

Korea's public assistance system, represented by NBLS(National Basic livelihood Security), has disclosed critical problems despite the rapid increase in its budget, such as decreasing work incentive and deepening welfare trap. These typical problems of classical welfare system have been commonly witnessed in many other advanced countries. Therefore a number of efforts have been exerted to correct these problems by transferring the existing welfare system into a welfare-to-work(or workfare) system, and the most common one of such efforts is introducing the EITC(Earned Income Tax Credit)-type programs. They have already been implemented in many countries such as the USA, the UK and France, also Korean government decided to launch EITC program in 2009. This paper aims to propose some measures to improve Korean EITC program. For this, an optimization problem is constructed from the government's viewpoint. Optimal EITC program is defined to be a solution to the problem - a combination of phase-in rate, phase-out rate, and maximum credit that maximizes labor supply increase under a exogenously given budget constraint. Using a mechanism design analysis, we derive and characterize the optimal EITC program. Analysis results implies that Korean EITC structure needs to be modified so that phase-in rate is larger than phase-out rate and the upper limit of phase-out range becomes larger. Comparative static analysis results show that the feature of the optimal EITC program is sensitive to the change of income distribution, suggesting that if beneficiaries are categorized into different income groups, then it is desirable to apply distinctive EITC programs to each group.