The Effect of Local Government Supports on Export of SMEs: Focused on 4th Industrial Revolution Firms

Abstract

Purpose - This research aims to analyze the impact of local government support on the exports of small and medium-sized enterprises (SMEs), with a particular focus on 4th industrial revolution firms. Design/Methodology/Approach - In this study, we use corporate information obtained from the Korea Enterprise Data (KED) database from 2015 to 2020 for firms located in Gyeongsangbuk-do. We conducted a fixed-effects panel regression analysis to diagnose the effect of local government support on the exports of firms. A total of 41,153 firm-year data from 10,840 firms were used in the analysis. Findings - The results show that local government support for SMEs have a statistically significant negative effect on the exports of 4th industrial revolution firms in the region. However, scientific and technological support by the local government have a positive effect on the exports of the 4th industrial revolution firms. Their yearly effects are usually reversed over time after budget support. Among local government budgets, only the science and technology support budget and the education support budget positively impact export performance, and small and medium-sized enterprises and social welfare support budgets negatively affect exports. In addition, the result of R&D investment in 4th industrial companies is not statistically significant. Research Implications - With different effects on firm exports, governments, either local or central, shouold consider the short-term and long-term effects in providing subsidies and support.