Changes in and Insights on Potential Industry and Enterprise Insolvency in the Manufacturing Sector

This paper takes the spectrum approach to identify possible industrial and enterprise insolvency and goes on to conduct a composite analysis of both the potential industry insolvency spectrum and enterprise insolvency spectrum. Recently, the proportion of industries and enterprises showing signs of insolvency in Korea’s manufacturing sector has been on the rise. From an industrial perspective, uncompetitive industries, such as those that show negative growth in both the domestic and export markets, are increasing, while the proportion of segments that are recording positive growth in production are decreasing. Moreover, segments with healthy competitiveness are concentrated in only a few segments, such as semiconductors. From an enterprise perspective, on the spectrum from insolvent to healthy, the degree of insolvency increased for all corporations, while the degree of healthiness decreased. By combining these analyses, it was found that, as of 2019, the pattern of enterprises being active in a “competitive segment” is very weak for both healthy and insolvent enterprises. Based on the findings of the spectrum analysis, this study identifies implications for preemptive restructuring policy.