The Korean Economy in Transition

The Korean Economy in Transition

An Institutional Perspective

O. Yul Kwon

This informative book provides a comprehensive examination of the dynamics of institutional reform and the transition of the South Korean economy. The analysis, based on an institutional approach, stretches over three decades of remarkable economic success under a state-led system, through the 1997 financial crisis, to the current market-oriented system.

Chapter 10: Public Sector and Regulatory Reforms: A Critical Evaluation

O. Yul Kwon

Subjects: asian studies, asian economics, economics and finance, asian economics

Extract

10.1 INTRODUCTION Chapter 1 demonstrated that excessive government intervention was one of the principal causes of the 1997 financial crisis. Reform measures undertaken by the government in response to the crisis included structural reforms not only to the financial and corporate sectors but also to the public sector. In 1998, President Kim Dae-jung initiated a new focus on public sector reforms with the objective of 'a small and efficient but better serving government', based on market-oriented, performance-oriented and customer-oriented principles (K.H. Lee 2004; Y.S. Ha 2004). This aimed at creating a competitive, efficient and highly productive government by slimming down the public sector and applying principles of competition and performance in public sector administration. Nonetheless, the Korean public sector is still regarded as bloated, concentrated, inflexible and inefficient (Jwa 2001; P.S. Kim 2000; Yang 2004). This chapter examines and evaluates public sector reforms in Korea undertaken in the wake of the crisis. Two overarching issues of the public sector are whether public policies are consistent with citizen preferences, and whether public services are provided efficiently. The first question is concerned, in essence, with the political process of policy-making that was discussed in Chapter 3. The latter concerns the management of public administration for the efficient and effective performance of public functions. For its management efficacy and efficiency, the scope of the public sector is broad and includes its organizational structure, expenditure, revenue (taxation), regulation, quality of services and service delivery modes. This chapter chooses to narrow its scope to public...

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