Trend Financial, regulatory and public institutions are failing to support innovation

Summary

The government diagnoses that institutions in finance, regulation and the public sector have stagnated at past levels and no longer support innovation. Capital markets are undervalued in what is known as the Korea discount, and private funds flow excessively into real estate rather than productive business investment and research. Korea's economic regulation is described as stricter than the OECD average because of rigid entry and administrative rules, and excessive economic criminal penalties burden firms and citizens. Long preparatory procedures such as preliminary feasibility studies and a contracting system centred on competitive bidding slow responses to fast technological change. Public institutions, research institutes and regional universities are also said to be poorly aligned with national missions and labour market needs.