In order to foster future growth engines, major countries around the globe are formulating strategies to integrate cutting-edge technology with the manufacturing industry. And, at the center of the strategies are creative and innovative young firms. Young plants have played a key role in production and job creation in Korea’s manufacturing. However, the industry is now aging with the share of young plants dropping by almost 50% in the last 20 years. So, is this to blame for the industry’s shrinking competitiveness? KDI conducted an analysis to examine the impact of young plants on the productivity growth of manufacturing. After dividing manufacturing plants into young plants under 5 years old and old plants over 6, it was found that although young plants created less value-added than their older counterparts, their contribution to aggregate productivity growth was the same. Unfortunately, the growth in Korea’s manufacturing productivity is on a downward spiral, and the diminishing productivity growth of young plants, in particular, is a major factor. To identify the sectors that are facing lower productivity growth, plants were classified according to their technology intensity. It was found that, in the past 3 years, young plants in the high-tech group had the fastest decline in productivity growth. Then, why is the productivity growth of young plants continuing to decline? When the average productivity of old plants over 11 years was set at 100, the analysis revealed that the average productivity of young plants had, in fact, increased, but, their share of value-added declined. The sluggish entry and growth of young plants has reduced their share of the value-added, particularly those that have been in operation for 3 to 5 years. The decline in the share of value added of highly productive young plants implies that resources are being inefficiently allocated to plants with low productivity. And, it has become difficult to establish and grow in manufacturing in Korea’s economic environment. Then, what is needed to promote the growth of young plants? (Interview with the author) Because the entry and growth of young firms affect future growth, we need to examine whether the current government entrepreneurship programs are providing practical support. When we consider that innovative and high-growth firms lead economic growth, programs must focus on promoting growth and driving innovation of young firms. The selection process of innovative firms should shift away from being government-certified. Instead, the criteria for young innovative firms should involve private sector investment. Young innovative firms can refer to firms under a certain age who received investments from venture capital or those whose R&D investment ratio exceeds a certain level. However, this does not mean that it is effective for the government to select and support. Rather, it should focus its capabilities on reforming regulations that hinder the establishment and growth of innovative firms.