March 16, 2026, Filed Under: Working PaperSuperstars or Supervillains? Large Firms in the South Korean Growth Miracle EMPCT Working Paper Series No. 2026-02106 pages | PDF Download | PDF in Browser CitationChoi, Jaedo, Andrei A. Levchenko, Dimitrije Ruzic, and Younghun Shim, “Superstars or Supervillains? Large Firms in the South Korean Growth Miracle,” March 2026. Jaedo ChoiThe University of Texas at Austin Dimitrije RuzicINSEAD and CEPR Andrei A. LevchenkoUniversity of MichiganNBER and CEPR Younghun ShimInternational Monetary Fund AbstractWe quantify the contribution of the largest firms to South Korea’s economic performance over theperiod 1972-2011. Using firm-level historical data, we document a novel fact: firm concentrationrose substantially during the growth miracle period. To understand whether rising concentrationcontributed positively or negatively to South Korean real income, we build a quantitative dynamicheterogeneous firm small open economy model. Our framework accommodates a variety of potentialcauses and consequences of changing firm concentration: productivity, distortions, selectioninto exporting, scale economies, and oligopolistic and oligopsonistic market power in domesticgoods and labor markets. The model is implemented directly on the firm-level data and invertedto recover the drivers of concentration. We find that most of the differential performance of the topfirms is attributable to higher productivity growth rather than increasingly favorable distortions.Exceptional performance of the top 3 firms within each sector relative to the average firms contributed20.8% to the 2011 real GDP and 6.6% to the net present value of welfare over the period1972-2011. Thus, the largest Korean firms were superstars rather than supervillains.
