The study reviews issues concerning chaebol (a type of South Korean conglomerate controlled by a single chairman) structure and policies from the perspectives of the competition process, which is a major operational mechanism of the market economy, and aims to propose policy directions for regulating chaebol through market forces.
In Korea, chaebol policies, or measures to contain concentration of economic power in chaebol, started to be implemented in the mid-1980s, and the recent economic crisis shed has highlighted the chaebols’ economic interference, again emphasizing the need for chaebol reform in Korea.
Chaebol policies were designed to inhibit their business and mitigate economic power concentration by regulating business ownership system and diversification. No efforts were made to eliminate or reduce chaebol monopolies or their ability to monopolize, which resulted in encouraging the conglomerates to monopolize. Under the guise of strengthening corporate competitiveness, competition-related regulations have not been sufficient, and law enforcement has not been effective against the illegal activities of chaebol and their corporate executives. As such, chaebols’ market positions and management rights are overly protected, causing cost increases and management inefficiencies, as well as distortions in management incentives for the pursuit of high growth. The issues concerning chaebol structure and their business practices haven’t improved in a substantive manner.
Chaebol reform, as well as corporate restructuring as part of risk management, is accomplished through government involvement and pressure, not by market force, which risks hampering the advancement of the market economy. Hence, the issue of chaebol and their concentration of economic power can only be addressed by establishing rules and regulations that support smooth operation of market tools and the market economy. Any chaebol policy should target promoting competition and reducing or eliminating monopolies so that chaebol structure and their business practices can be rectified by market forces. Markets should be able to play a bigger role in resource distribution and entrance barriers installed by the government should be removed in order to boost competition and to enhance market contestability.
재벌개혁의 정책과제와 방향(Policy tasks and directions for Chaebol reform)
|Series Title; No||연구보고서 / 2000-03|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Industry and Technology < Entrepreneurship|
|Holding||KDI; KDI School|