The Relationship Between Government and Private Companies in the Industrial Development of South Korea: A Study of Korean Way of Development
Kuk, Min Ho
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https://hdl.handle.net/2142/71021
Description
Title
The Relationship Between Government and Private Companies in the Industrial Development of South Korea: A Study of Korean Way of Development
Author(s)
Kuk, Min Ho
Issue Date
1987
Department of Study
Sociology
Discipline
Sociology
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Sociology, Social Structure and Development
Abstract
The rapid industrial development of Korea during the last two decades has often been evaluated as one of the most outstanding economic success cases in the industrial development history. During this period, Korean society has been changed from being an agrarian society to a so-called semi-industrial society. This study examined that part of the Korean industrial development focused upon the interaction between government and the large government favored private companies, termed chaebol. The raid industrial development of Korea during the last two decades was made possible primarily by active government intervention in business activities through planning its economic direction, selecting strategic industries, and allocating and distributing capital. Thus in order to understand Korean industrial development, the dominant governmental role is very important.
We presume that the Korean industrial development has been oriented to increase rationality of production. But, the means to achieve this goal need not necessarily be the same as the experiences of other countries because of the different historical and situational Korean context. Here, we single out the governmental role in the Korean industrialization process as a possible indication of that differences.
The major arguments in our study are: (1) The centralized power of the government since the coup in 1961 supported large private enterprises to harness their entrepreneurial energies for the new political goal of national economic development; (2) But, the criteria for government's favor and loan were largely decided by the size of enterprises in creating jobs and the record of exports rather than the overall quality of enterprises; (3) In the process, the Korean government developed various control mechanisms characterized as financial monopolization and administrative control; (4) The implications are the underdevelopment of the independent capitalist class in Korea and the financial dependence of them on the government credit system. This government-led, export-oriented economic policy could have achieved a great economic success in the first few decades, but it created the weak industrial structure of large Korean companies which led to financial problems. Nowadays, unless the enterprises can somehow find that capital, this will further increase the dependency of loan the larger firms on government institution.
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