Regulatory reforms 2

Park Chunghee Administration
 
1) Overview of Regulatory Reforms under the Park Chunghee Administration^[1]
“Until the 1960s, the term in vogue was ‘government control’ instead of ‘administrative regulation’ or ‘government regulation.’ Most of the literature written during this period was on how to ensure the control of bodies affiliated with economic and related ministries, and no studies were conducted with respect to government regulation proper.”^[2] As is suggested, it is difficult to include the period of the 1960s in the history of regulatory reforms proper in Korea. The Park years were overwhelmingly focused on achieving economic development and growth, while the issue of social regulation was relatively neglected. The decade, in other words, is marked by the Korean government’s active involvement in the economy involving state-led efforts to form and shape a proper economic system. In essence, the ethos of the era pointed in a direction directly opposite to today’s tendency toward regulatory reforms. The decade was, in fact, a dark age as far as regulatory reforms were concerned.

 Korea achieved an astonishing level of success with the thoroughgoing governmental plan for national economic development established under the Park administration in the 1960s. The mold of government-led development planning, however, paved the way for the custom of policymaking initiated by ministries in Korean politics, thus expanding and deepening the level of regulation in all areas of the Korean economy and society.^[3] The regulatory policy of the Park administration was centered on the following model. First, the government would provide policy funds with little to no interest for companies on the condition that they comply faithfully with government policies. These companies would also receive dollars at a fixed exchange rate that significantly differed from the market exchange rate. The rents created thus would then be distributed throughout society. The regulation rents created thus played a decisive role in helping exporting companies overcome their deficits. They also became the chief sources of the growing ties between politics and businesses, and of the mounting controversy of preferential treatment concentrated in a few conglomerates now known as chaebol. The drastic cut by Washington of the aid and grants it provided for Korea abruptly raised the need for the Korean government to gather itself the capital necessary for the nation’s growth. Accordingly, the basic strategy for development shifted from import-substitute industrialization to export-oriented industrialization.
 
2) System of Implementing Regulatory Reforms under the Park Administration: Investigation Committee for Administrative Reforms and the Administrative Reform Committee^[4]
In the immediate aftermath of the coup d’état of May 16, 1963, the Park administration organized the Investigation Committee for Administrative Reforms, ostensibly for erasing the traces of Japanese colonial rule and inefficiency. The committee was mainly concerned with consolidating statutory provisions and improving institutions. In the context of Korea, then, the state was compelled to play a leading role in improving the people’s livelihood, developing industries, and promoting exports by attracting foreign capital and technology. In addition to the need to achieve high economic growth in a relatively short period of time, the unique geostrategic situation of Korea—facing a hostile enemy to the North—also necessitated a move toward strengthening, not reducing, administrative regulation.
This growing emphasis on the role of the government and administration ultimately led to the birth of one of the most administrative states in the world, in which the government’s active interference in various areas of civil society—politics, society, education, and economy—is more a norm than an aberration. The dearth of effective and powerful political groups other than the central administration, the shortage of capital and technology in the private sector, and the role of members of the administration as an advance guard of Korean politics all prompted the birth of an administrative state in Korea. While this administrative omnipotence has certainly given rise to an excessive state of administrative regulation in Korean society today, it also played a key role in helping Korea achieve miraculous economic development by ensuring the consistency of Korea’s economic and export policies. The Investigation Committee for Administrative Reform was renamed as the Administrative Reform Committee (ARC) in 1973 before it was reorganized in 1988 as an organization of civilians (including one chair and 21 or fewer members) directly counseling the President. The ARC handled the reform of the administrative organization and other required improvements, mainly focusing on hearing public opinion and building public consensus through public hearings, open forums, regional roundtables, and opinion polls. As Table 2-1 shows, the ARC was responsible for 849 of the 3,616 administrative regulations displayed on the List of Civil Claims Processed.
 
<Table 2∙1> Proposals from the ARC
 

Source: ARC, Proposals for Administrative Reforms (July 1987). Quoted from a secondary source.
 
3) Assessment of Regulatory Reforms under the Park Administration
The enduring legacy of the Park administration can be summed up in the establishment of an economic development system, heavily led and shaped by the state. The broad scope of governmental interference established during this era gave birth to an economic system in which the state interferes with the market, as a matter of norm, through targeted industrial policy and various regulations with a view to achieving economic development over a short period of time. The basic institutions supporting the market economy all formed part of the state apparatus, with the decisions made by bureaucrats substituting for many market functions. Over time, these features have served to reduce the autonomous regulatory function of the market, thus rendering the economic structure of Korea fundamentally vulnerable. The targeted industrial policy also served to inhibit free competition and enabled the state to attempt industrial coordination rather arbitrarily. The protectionist policy for fostering the heavy and chemical industries has also increased the weight of policy funds in corporate management, thus expanding the influence of the state in civil society while also leading to a monopolistic or oligopolistic concentration of wealth and power in conglomerates working with the government in the heavy and chemical industries. All these developments fuelled growing worries over the concentration of economic power and its undemocratic implications for the Korean public.
 

Source: Korea Institute of Public Administration. 2008. Korean Public Administration, 1948-2008, Edited by Korea Institute of Public Administration. Pajubookcity: Bobmunsa.