Are business dynasties hindering economic progress?
South Korea has rocketed from poverty to global economic leadership in the last half-century on the strength of massive conglomerates that specialize in electronics, telecommunications, autos and steel. These family-owned firms, called chaebols, include international brands such as Samsung, Hyundai and LG. While chaebols helped lift the country out of privation and continue to provide a massive global platform, many South Koreans now question their outsized influence and close ties to government. The economy has stagnated since the early 2010s, and political and business leaders have been jailed this year over corruption allegations. Some experts say chaebols must be reformed by curbing nepotism and insider dealing if South Korea is to restart its economy and cure many societal ills, including government corruption, income inequality and a lack of startups. Yet unraveling such complex government and business entanglements could be a decades-long process.
Among the key takeaways:
South Korea ranks fifth globally as an exporter and 11th in gross domestic product.
The country has the world’s fourth-largest trade surplus; trade accounts for more than three-fourths of GDP.
Economists say South Korea’s dependence on exports, and on the chaebols that dominate its export trade, hold back the economy.
Resources for Further Study
Chibber, Vivek, “Locked in Place: State-Building and Late Industrialization in India,” Princeton University Press, 2006. A historian from New York University contrasts South Korea’s economic and industrial rise in the late 20th century with that of India’s. His conclusion: South Korea’s success could not be easily replicated.
Tudor, Daniel, “Korea: The Impossible Country,” Tuttle Publishing, 2012. A Seoul-based journalist outlines South Korea’s rise from a Third World country to a global economic and cultural power. He questions if the country will continue on a path of dynamic change, or fade into “a rich yet aging society, devoid of energy and momentum.”
Cho, Mu-hyun, “The chaebols: The rise of South Korea’s mighty conglomerates,” CNET, April 6, 2015, http://tinyurl.com/
Jung, Soo Kyung, “As their job search drags on, South Korea’s young unemployed are more likely to skip meals,” Quartz, June 9, 2017, http://tinyurl.com/
Kim, Jae-kyoung, “Korean economy entering long tunnel of low growth,” The Korea Times, Feb. 28, 2016, http://tinyurl.com/
Kong, Kanga, “Korea Inc. Ready to Kill Major Reforms No Matter Who Wins the Election,” Bloomberg, April 28, 2017, http://tinyurl.com/
Kwak, Jung-soo, “Next chaebol generation gets failing grades for ability and legitimacy,” The Hankyoreh, March 31, 2015, http://tinyurl.com/
Reports and Studies
“OECD Economic Surveys: Korea,” Organisation for Economic Co-operation and Development, May 2016, http://tinyurl.com/
“Population with tertiary education,” Organisation for Economic Co-operation and Development, 2016, http://tinyurl.com/
“South Korea,” The Observatory of Economic Complexity, Massachusetts Institute of Technology, 2015, http://tinyurl.com/
Chiang, Min-Hua, “Chaebol’s Role in South Korea’s Economic Development,” East Asia Institute Background Brief, July 14, 2016, http://tinyurl.com/
Choo, Hakchung, Soon-il Bark and Suk Bum Yoon, “Korea: Poverty in a Tiger Country,” Handbook on International Poverty Research, p. 89, 1996, http://tinyurl.com/
The Next Step
Kim, Hooyeon, “Generation Gap Aggravates Divisions in South Korea as Election Looms,” Bloomberg, April 26, 2017, https://tinyurl.com/
Leavenworth, Stuart, “South Korea’s millennials could determine fate of U.S. alliance,” Miami Herald, Aug. 7, 2017, https://tinyurl.com/
Ramirez, Elaine, “Meet The Entrepreneurs Helping South Korean Millennials Tackle Elderly Poverty,” Forbes, June 19, 2017, https://tinyurl.com/
Jung-a, Song, “Rules and conformity frustrate South Korean tech start-ups,” Financial Times, Feb. 16, 2017, https://tinyurl.com/
Russell, Jon, “Korea’s top financial services startup lands $48m from PayPal and others,” TechCrunch, March 9, 2017, https://tinyurl.com/
Young-tae, Jin, “Korea drone startup Drogen expects sales to hit $8.9 million in 2018,” Pulse, July 31, 2017, https://tinyurl.com/
Korea Development Institute
263 (Bangok-dong, Korea Development Institute), Namsejong-ro, Sejong-si 30149, Korea
South Korean economic think tank with numerous areas of expertise, including macroeconomic policy, public finance, the industry and service economy and North Korea’s economy.
Korea Fair Trade Commission
95 Dasom-3ro, Sejong 30108, Korea
South Korean government commission formed in 1980 that independently “formulates and administers competition policies, and deliberates, decides, and handles antitrust cases.”
Mirae Asset Center 1 Building West Tower, 67 Suha-dong, Jung-gu, Seoul, Korea
Cultural organization founded in 1991 to promote goodwill between South Korea and the overseas community through exchange programs, fellowships and cultural activities.
Organisation for Economic Co-operation and Development
1776 I St., N.W., Suite 450, Washington, DC 20006
Intergovernmental economic organization with 35 member countries that was founded in 1960 to promote world trade and the market economy.
Government Complex - Daejeon, 189 Cheongsa-ro, Seo-gu, Daejeon 35208, Korea
National statistics agency with comprehensive website detailing population, housing, business trends, agriculture, national wealth, time use and other pertinent data.
1818 H St., N.W., Washington, DC 20433
An international financial institution with 189 member countries dedicated to ending poverty and promoting prosperity.