Abstract
South Korea has been classified as a typical developmental state. Centralized policymaking, vertical government-business relations, bureaucratic intervention and various industrial policies were the core of the South Korean economic development model at least until the 1997 Asian financial crisis. After the crisis, South Korea carried out a broad-scale economic reform following pressure from both inside and outside. South Korea carried out full-scale institutional reform in major areas including chaebols, public sector, labor, and finance. Such a series of thorough institutional reform played a positive role in helping South Korea overcome an economic crisis in a short period. It has also brought about massive change in the South Korean-type developmental state model which continued on from the 1960s. The developmental state was brought to an end in South Korea. In addition, there are views that a new post-developmental state, which moves following market principles, international standards, and transparent economic institutions, is emerging.
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Notes
- 1.
- 2.
One interesting episode regarding Chairman Park’s intention to eliminate government interference as much as possible occurred when Park Tae-joon ordered his staff to come up with a proposal that would reduce the government share to 5% by selling off the shares to Pohang Institute of Technology (POSTECH) and ESOP in 1990. For the details of this episode, see the page 506 in Rhyu (1996).
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For example, Park Woon-Seo, then deputy minister of the MCI, said “privatization for efficiency gain does not apply to the case of POSCO, because POSCO as an SOE under government control has been supplying high quality steel products at lower prices.” (Requoted from Rhyu 1996, originally from Maeil Economic News, March 23, 1995).
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Foreign institutional investors welcomed the renewal of Yoo’s term as CEO and chairman because of his excellent performance despite the implications and indictment. They did not appreciate the Korean government’s interference requesting them to object to Yoo. The author’s confirmed the negative responses of foreign institutional investors against the government’s intervention through an anonymous interview with a CEO in charge of Investors Relations of a large Korean company who maintains a close relationship with foreign institutional investors.
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Lee, S., Rhyu, Sy. (2019). Privatization and a Lingering Developmental State: Case Studies of POSCO, KT, and Korea Development Bank. In: The Political Economy of Change and Continuity in Korea. The Political Economy of the Asia Pacific. Springer, Cham. https://doi.org/10.1007/978-3-319-71453-0_3
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