The government, financial system, and large private enterprises in the economic development of South Korea

• Published in: World development Vol. 20; no. 2; pp. 187 - 197
• Main Author: Lee, Chung H.
• Format: Journal Article
• Language: English
• Published: Oxford, Eng Elsevier Ltd 01.02.1992; Elsevier; Pergamon Press; Pergamon Press Inc
• Series: World Development
• Subjects: Economic Development; ECONOMIC SYSTEM IN DEVELOPED COUNTRIES; Economics; Finance; Government; INTERVENTIONISM (MILITARY, POLITICAL, AND/OR ECONOMIC INTERFERENCE BY A SOVEREIGN STATE OR AN INTERNATIONAL AGENCY IN THE AFFAIRS OF ANOTHER SOVEREIGN STATE); Korea, South; Private Enterprise; Private sector; Public Sector Private Sector Relations; SOUTH KOREA; South Korea
• ISSN: 0305-750X; 1873-5991
• DOI: 10.1016/0305-750X(92)90098-G

The paper investigates the main characteristics of the government-business relationship in South Korea in the past three decades to find out how it may have contributed to South Korea's economic development. It proposes that the government and large private enterprises in South Korea should be viewed as constituting an internal organization, namely a quasi-internal organization. As such, extensive intervention by the government with South Korea's financial system can be viewed as an internal capital market and, consequently, it could have led to a more efficient allocation of credit than possible in a free-market financial system. It also argues that the quasi-internal organization has made it possible for the government to efficiently implement its developmental policies. It is, however, pointed out that for the quasi-internal organization to be successful in accelerating the pace of economic development the country must have a political leadership committed to the goal of economic development and must adopt an outward-oriented development policy.