The Korean Economic Review
On the Convergence of Productivity Between Large Enterprises and SMEs
Yeonseung ChungYear 2008Vol. 24No. 2
The Schumpeterian growth model by Aghion and Howitt is used to test convergence in productivity between small and large firms for Korea and EU countries. For Korea, convergence in productivity between Small and Medium - sized Enterprises (SMEs) and Large Enterprises (LEs) exists inthe sense that the productivity gap in the previous year between SMEs and LEs causes an increase in the productivity of SMEs this year. But there is no convergence in case of EU countries. Despite of convergence, the productivity gap between SMEs and LEs gets larger because the productivityimprovement of LEs in the current period is bigger than that of SMEs. To make SMEs more productive, the Korean government needs to focus on the transfer of technology from LEs to SMEs.