How Korea’s Social Economy Grew with Government Support

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Korea Social Enterprise Promotion Agency logo (Source: Korea Social Enterprise Promotion Agency website)


What Is the Social Economy in Korea?


In Korea, businesses engaged in social innovation activities are referred to as social economy enterprises. These are not simply non-profit organizations; they are enterprises that aim to solve social problems and create social value through business models.


The key difference between social economy enterprises and conventional businesses lies in their core purpose. While conventional companies prioritize profit maximization, social economy enterprises pursue both profit and social value simultaneously.

South Korea’s social economy grew rapidly with government support. This is a runway event in Gyeonggi Province introducing local enterprises.(Photo by Milly) 


Types of Social Economy Enterprises in Korea


Korea’s social economy enterprises are officially recognized and supported by the government. Major types include:


Social Enterprises

Hybrid entities that pursue social missions while also engaging in profit-generating activities.


Cooperatives

Voluntary associations formed to meet the shared economic, social, and cultural needs of their members.


Village Enterprises

Community-based businesses that utilize local resources and are led by residents.


Self-Sufficiency Enterprises

Businesses created to promote economic independence among low-income or marginalized groups.


Social Ventures

Enterprises that use innovative technologies or business models to create both economic and social value.


These organizations typically receive certification or recognition from the government, which qualifies them for various forms of institutional support.


Legal and Institutional Foundations


The growth of Korea’s social economy has been shaped by key legislation and policy frameworks:


Social Enterprise Promotion Act (2007)

Framework Act on Cooperatives (2012)


These laws laid the groundwork for social economy enterprises to operate within a formal system. Since then, Korea has seen rapid growth in this sector.


Efforts to pass a more comprehensive Basic Law on the Social Economy have been ongoing for over a decade, but as of May 2025, it has yet to be enacted.


A Government-Driven Growth Model


One of the most defining characteristics of Korea’s social economy is that it has developed largely under government leadership. These enterprises operate between the public and private sectors, addressing public challenges through market-based approaches.


In other words, social economy enterprises often take on roles traditionally handled by the public sector—solving social problems using private sector tools. This has led the Korean government to actively support them through a wide range of initiatives.


Major Forms of Government Support


1. Social Enterprise Certification


Organizations that meet specific criteria—such as having a clear social mission and a sustainable business model—can receive official certification from the government.


2. Financial and Managerial Assistance


Support includes wage subsidies, consulting services, startup assistance, and capacity-building programs.


3. Public Procurement Preference


Government institutions are encouraged (and in some cases required) to prioritize purchasing goods and services from certified social economy enterprises.


Why Government Support Matters


Because these enterprises aim to balance “values” and “profit,” they often operate on a smaller scale and face sustainability challenges. Government support plays a crucial role in helping them build momentum and grow sustainably.


This government-led model has been instrumental in enabling Korea’s social economy to expand rapidly and gain mainstream recognition within a relatively short period.


The Role of Social Economy Today


Today, Korea’s social economy is increasingly seen as a practical solution to major societal challenges, including:


-Low birthrates and population aging

-Regional decline and rural depopulation

-Job creation

-Climate crisis response


Thanks to strong policy support and a clear public mission, Korea’s social economy is evolving into a vital part of the country’s long-term social and economic resilience.


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