SME Finance and the Creative Economy in Korea

The Park Geun-hye administration put forward the “creative economy” as a new growth strategy for the sustainable growth of Korea. To achieve this goal, SMEs and start-ups are regarded as key players in fostering the creative economy ecosystem, and new policy directions and alternative policy measures need to be addressed.The creative economy agenda is aimed at switching the ‘catch-up type’ strategy to a new growth strategy founded on innovation, technology and creative ideas. A more concrete concept of the creative economy is required and essential for policy implementation as well as coordination with the Korean economic environment and policy demand.President Park’s creative economy agenda reflects the current economic environment of Korea. Indeed, the potential growth of the economy is challenged by a number of factors such as a high dependency of SMEs on chaebols, widening economic and social imbalances between chaebols and SMEs, slowing down of the growth engine industries and so on. This calls for the new concept, the “Korean creative economy”, which includes creating new industries and markets, accelerating firms’ innovative activities, stimulating creative ideas, and creating quality jobs.In order to foster a creative economic ecosystem, the active role of SMEs is critical; this will be achieved by SMEs’ business ‘growth strategy’ and ‘tools’. Their growth strategy should aim to boost exports and trades in both global and domestic markets, and the tools would be backed up by their specialization and knowledge management in businesses.The on-going SME policies and direction in Korea need to be carefully addressed in order to encourage SMEs to play a key role in the creative eco-system. In coordinating SME policies, structural conformity with the elements of the creative economy and that of SME policies needs to be stressed. In addition, more creativity is required in the new SME policy making process.From the perspective of the creative economy, this article reviews the current financial environment faced by SMEs and related on-going policy measures and programs in Korea. It also discusses policy directions to support the ‘creative economy action plan’