Public enterprises in Korea: With special reference to their roles in economic development.

Abstract

This study attempts to examine the role played by the public enterprise sector in Korea's economic development since the early 1960s, on which relatively little research has been directed. It is based on a belief that Korea's economic experience, particularly that of the 1960s and 1970s cannot be explained without acknowledging the government's strong initiative in the economy. The study discusses the rationale of public intervention in general, followed by a consideration of Korea's turbulent modern history, through which the dominant role of the public sector has emerged. It notes some strong socio-cultural aspects, such as racial homogeneity and the influence of neo-Confucianism as factors behind Korea's pattern of economic development. The study examines economic policy-making under the Park Government (1961-79) during which national planning and public enterprises were intensively utilized. A central part of the study consists of an examination of the role played by public enterprises during the country's rapid growth period of the 1960s and 1970s. The study found that public enterprises, as providers of infrastructure and pioneers in technology-intensive fields, provided the industrial base and inputs for the manufacturing sector. The study also found that the public financial sector gave the government a powerful means of control over the private sector. The study also examines the unprecedented reform in the direction of Government-Invested Enterprises, the core group of the public enterprise sector, introduced as part of the economic liberalization measures in 1984. The study concludes that although there are some undesirable side-effects such as excessive competition and technical loopholes in the evaluation system, the overall reform deserves a positive interim assessment