Changing Business-Government Relations in Korea

Abstract

Business-government relations in Korea were transformed during the developmental period between 1960 and 1990 under an authoritarian government. The relationship could be characterised as a close and vertical one where the government took a firm control of the business sector through the allocation of financial resources and entry permits for new business. Cultural characteristics such as close family and school ties and the Confucian tradition of respecting civil servants helped to strengthen this relationship. However, there have been signs that the traditional ‘Korea, Inc.’ model has outlived its usefulness. As the economy matured and became more open t o the world economy, the tight control of the economy by bureaucrats has proved less effective and in many cases it has weakened the efficiency of the economy. The democratisation of the polity has also changed the traditional vertical relationship among the power elite, bureaucrats and business. Now the government has become just one of the many stakeholders that business has to interact with in a more pluralistic and decentralised society.