South Korea THE GOVERNMENT AND PUBLIC AND PRIVATE CORPORATIONS
Fresh produce at the market, Seoul
Courtesy Oren Hadar
It'aewon shopping district and entertainment center, Seoul
Courtesy Oren Hadar
Following the Korean War, foreign aid became the most
important source of funds for the reconstruction and
rehabilitation of the economy. What was left of the Japanesebuilt industrial plant, most of which by the 1950s either was
obsolete or had been destroyed by warfare), generally was turned
over to private owners, who were chosen more often for their
political loyalty than for their economic acumen. Moreover, Rhee
favored certain businessmen and companies with government
contracts in exchange for financial support of his political
endeavors. It was during this period that a group of
entrepreneurs began companies that later became the
chaebol, or business conglomerates. The chaebol
were groups of specialized companies with interrelated
management. These groupings of affiliated companies dominated
South Korea's economy in the late 1980s and often included
businesses involved in heavy and consumer industries and electric
and electronic goods, as well as trading companies and real
estate and insurance concerns.
The chaebol were responsible for the successful
expansion of South Korea's export capacity. According to
Steinberg, in 1987 the revenues of the four largest
chaebol were US$80.7 billion, a figure equivalent to twothirds of Seoul's total GNP. In that year, the Samsung Group had
revenues of US$24 billion; Hyundai, US$22.7 billion; Daewoo,
US$16 billion; and Lucky-Goldstar, US$18 billion. The revenues of
the next largest chaebol, Sunkyong, totaled US$7.3 billion
in 1987. The top ten chaebol represented 40 percent of all
bank credit in South Korea, 30 percent of value added in
manufacturing, and approximately 66 percent of the value of all
South Korean exports in 1987. The five largest chaebol
employed 8.5 percent of the manufacturing work force and produced
22.3 percent of all manufacturing shipments. Despite a rash of
strikes against the chaebol beginning in 1987, the
chaebol generally had higher compensation and better
working conditions than their lesser South Korean competitors.
Data as of June 1990
|