A New Institutional Economics Perspective of the Chaebol
Chapter 7: Lessons from Korea’s Economic Success and the Future Paradigm for Corporate Policy
1. INTRODUCTION Extensive government intervention has featured prominently in the Korean economy. This is true whether we are talking about the general role of the government in economic development, or whether we are addressing specific issues such as the government’s policy toward the corporate sector. As has been discussed in the preceding chapters, this strategy of government-led economic management contributed to Korea’s economic growth in the early phase of her economic development. Extensive government intervention has, however, often hindered the development of the market economy and the prospects of its continued success are becoming increasingly uncertain. It is paramount, therefore, that a new approach to policy formulation be put into effect to meet the challenges as Korea moves into the modern era that is characterized by the rapidly changing domestic and international economic environment. In this chapter, we look back and evaluate the general impact of Korea’s industrial policies, emphasizing issues that need to be considered when looking forward in search of an appropriate framework for sustainable economic development. The first part of this chapter discusses the various deficiencies of the government-led development strategy, and also puts into proper perspective the reasons for the 1997 financial crisis. In the second part of this chapter, we review existing literature on the debates about the roles of government and the private sector in economic management, and in doing so provide a new interpretation of Korea’s development process. The last part of this chapter introduces our own unique conceptual framework based on the...
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