South Korea, Chaebols
The South Korean development pattern entailed a tremendous economic success story as its
expansion has been one of the fastest in the world between 1961 and 1990. The GNP grew of 7.1
percent every year1. Plus, in spite of the 1998 financial crisis and negative growth rates, the country
recovered quickly and is part of the four Asian tigers along with Taiwan, Singapor and Hong Kong.
This impressive economic take off occurred in the 1960s, right after the military coup of
Park Chung Hee, who overthrew Syngman Rhee's regime. After 1961, Park launched an array of
reforms that deeply modified the core structure of the Korean market organization, that went from
an agrarian- to an industrial-based economy. This one-of-a-kind model was based on the close
relationship between a strong State and the Chaebols, it is to say big family owned enterprises comparable to the Japanese zaibatsus. It promoted a developmental state, supposed to be totally
independant and committed to the elimination of cronyism.
Nevertheless, even though this pattern evolved and is still considered today as extremely
efficient, it failed to adress the corruption issue as the Asian financial crisis eventually revealed it.
Ramping corruption never ceased and became part of the society's mechanisms. It could be either
functional or irrevelent, but it was always there.
In this regard, we can argue that corruption might be compatible with development to some
extent. Yet, did corruption impede or fuel the South Korean rise? What influence did it have,
through the Chaebols, on democracy?
To figure out better the Korean situation, it seems necessary to hark back to its history after
the war that split the peninsula. Then, I will analyze the main pattern of developement implemented
in South Korea and try to explain how it shaped (or not) cronyism. Last, I will discuss the today's
situation, influenced by a strong will of the population to struggle against corruption.
[...] Indeed, the Kennedy administration wanted to urge the anticommunist countries to industrialize their economy and provided aids to South Korea. Yet, Park refused to jeopardize the partnership that existed between the state and the business groups and softened his tone. He stressed transparency by changing certain rules. The new nature of this relationship was formal and not personal and collusive as it was under Rhee. Plus, the state imposed its will over the Chaebols as it aimed to play a major guidance role in the nation's economic development. [...]
[...] Even though they were accused of bribery, the corporations remained out of troubles because they were indispensable for the South Korean economy. The state needed to cooperate with the Chaebols to implement its policies more than ever. The avent of the Chaebols Republic entailed a high level of corruption despite Chun's promises. Plus, the Chaebols had access to priviledged informations, concerning the purchasing of lands for instance. The issue of land speculation became a serious problem throughout the 1990s. The rapid growth of cities in the 1970s provoked a land shortage and the price of land and housing skyrocketed. [...]
[...] Corrupt politicians and heads of Chaebols had to pay for what they did. Nevertheless, the 1996 national elections revealed that Kim Young-Sam was not totally clean. Moreover, the Chaebol-centered economy started to face new problems and turned out to lack efficiency. Its legitimity was not recognized anymore and collusive practices were blamed. The Hanbo corruption scandal and its bankruptcy in 1997 revealed corrupt relations between the firm and Kim Young-Sam's son, which put an end to the President's career. Civic organisations reinforced their action for the 2000 legislative elections associations gathered to create the citizens alliance for general election (CAGE). [...]
[...] Explaining Corruption in South Korea, Relative to Taiwan and the Philippines, Focusing on the Role of Land Reform and Industrial Policy 1990s. Like Chun, the succeeding presidents tried to implement measures to reduce industrial concentration but failed in practice to attain this objective. In the early 1980s, the government decided to help sectors in need rather than those promised to a bright future. Moreover, the firms would benefit from loans for only three years in order to avoid rent-seeking activities and to preserve market competition. [...]
[...] Press point of view is also found in Peter Evans' work. Indeed, the sociologist argues that a mature Weberian bureaucracy constituted the main asset of the State in this process. This was due to the rapid expansion of education in South Korea who even began to export educated persons abroad through the 1960s. The country created a class of managers and engeeners dedicated to national industrialization. The developmental alliance was compounded of bureaucrats, capitalists, politicians and the military. Since labor was excluded, as well as the landlord class, the State became incredibly strong and willing to pursue industrialization. [...]
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