Two Chaebol-Related News This Week; What’s Lacking in Research on Chaebols?

The Korean media outlets have reported two chaebol-related news this week.

Korean chaebols have expanded its affiliates, increasing its debt levels under Lee administration partly due to its pro-business stance and accompanying policies.

Doesn’t this sound familiar when the 1997 financial crisis was playing out?

Another news is that Korea’s income gap is widening. This also stems in part from chaebols-centered export-dependent growth strategy, industrial structure and their expansionist drive and waning SMEs’ competitiveness,

Despite the shortcomings of chaebol-centered economic model, they continuously grow and reap high profits.

Much of the research on chaebols has been from the perspective of ownership and governance structure or its competitive strategy.

Aside from their own strategies and competence, there have been forces, international and domestic, which have helped chaebols to grow and prosper.

The political economy of Korea has favored the chaebol-centered economic system for various reasons I have discussed.

There are outside forces in conjunction with internal forces which have made Korea’s rapid economic growth possible and put Korea in austerity mode. They did that for their benefits.

As I have alluded on more than a few occasions, Korea’s exponential growth came with a cost: the 1997 financial crisis was a big symptom.

Of course, unless Korea’s policy instrument including mercantilist export-dependent economic drive, taxation and regulations favoring chaebols change to a significant degree, chaebols’ dominance in Korea’s economic landscape would be unlikely to wane. In other words, Korea’s overall economic stance and the dynamics and dubious collusion between the state and chaebols, let alone international politics and the U.S. political economy matter much.

Accordingly, more research on these forces is needed to address some of the underlying issues in an effort to revamp the skewed industrial structure, which in turn would generate more jobs, and nurture entrepreneurship and innovative discipline. Otherwise research on chaebols may miss the forest for the trees.