This study seeks political measures towards efficiently managing economic power concentration by objectively analyzing and assessing the economic power concentration in Korea.
The economic power concentration in Korea is the result of many large-sized monopolistic and oligopolistic conglomerates, diversified in a wide range of markets and industries, being owned by a very small number of individuals. This collection of corporate entities is wholly superior in market power compared to other independent corporations. Considering that these monopolistic problems consistently appeared across different economies and time periods in the process of economic development, the prevailing issue specific to Korea is the corporate ownership in an unprecedented minority of individuals, and the negative perceptions of the public on the process of this concentration.
The economic concentration in Korea is characterized by ownership concentrated in corporate groups. The measures these corporate groups have taken for ownership concentration is a procedure termed “mutual stock possession between corporations”. Mutual investment means that affiliated corporations own stocks in each other’s companies, but the corporate groups could compound concentration through one-sided capital investments. Through this method, the entirety of affiliated corporations is owned by only a certain few major shareholders. Therefore, the top corporate groups in Korea have low public corporate affiliation.
These Korean corporate groups, called chaebol, are mostly manufacturing-based. However, they have expanded into the insurance, stock exchange, and banking industries. As commercial banks are privatized, the chaebol become oligopolistic stock holders. In many cases, the expansion of chaebol is realized through expanding their affiliated corporations. However, due to the limitations caused by internal growth, chaebol have conducted wide-range corporate integration, including integration of recently-established corporations.
The causes of economic concentration in Korea can be primarily found in the relationship between economic development and the capabilities of businesspersons. The capabilities of businesspersons are particularly limited in a developing economy, where the market economy system is immature. To some extent, economic power is naturally concentrated to businesspersons with superior commercial capabilities. Other causes of economic concentration can be found in the diversification of corporate groups, which is promoted through the economic growth policies of the Korean government. Additionally, concentration of asset possession is largely due to the financial systems and capital market conditions unique to Korea.
In order to maintain capitalist fundamentals and to eliminate the harmful consequences of economic concentration, appropriate systemic measures should be pursued. The harmful effects of chaebol cannot be eliminated by the market, and there are many non-market factors involved in economic concentration. Therefore, government intervention is required. However, the government intervention may lead to failure due to non-optimal political directions and measures, which could worsen the situation.
In setting the basic direction for the measures against economic concentration, efficiency and fairness should be balanced. Corporate concentration could be produced in any form. Short-term impact is not sufficient.
Other measures for the improvement of national income and income distribution include: restructuring corporate traits, promoting the responsibilities of professional business managers, reducing investment speculation opportunities, and improvement in stock market conditions should be pursued as supplementary implementations.
기업집단과 경제력집중(Corporate groups and economic power concentration)
[서울] : 한국개발연구원
|Series Title; No||연구보고서 / 90-04|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Industry and Technology < Entrepreneurship|
|Holding||KDI; KDI School|