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South Korea The Role of Public Enterprise
A government-led economic development policy during the 1960s
was necessary because the less experienced and capital-poor
private entrepreneurs lacked the wherewithal to develop several
critical industries that were necessary to the nation's economic
growth. The government determined that establishing public
corporations to develop and manage these highly strategic
industries was the fastest and most efficient way to foster
growth in a variety of key areas.
During the 1960s, public enterprises were concentrated in
such areas as electrification, banking, communications, and
manufacturing. In 1990 these enterprises were, in many cases,
efficient revenue-producing concerns that produced essential
goods and services at low costs, but which also produced profits
that were used for new capital investments or to produce funds
for public use elsewhere. In the 1980s, Seoul was slowly
privatizing a number of these firms by selling stocks, but the
government remained the principal stockholder in each company. In
the 1980s, an important function of public enterprises was the
introduction of new and expensive technology ventures.
In 1985 the public enterprise sector consisted of about 90
enterprises employing 305,000 workers, or 2.7 percent of total
employment in the nonagricultural sector. There were four
categories of public enterprises: government enterprises (staffed
and run by government officials), government-invested enterprises
(with at least 50 percent government ownership), subsidiaries of
government-invested enterprises (usually having indirect
government funding), and other government-backed enterprises.
Government-invested public enterprises, such as the Korea
Electric Power Corporation (KEPCO) and the Pohang Iron and Steel
Company (POSCO), represented the core of the new enterprises
established during Park's regime. In the late 1980s, roughly 30
percent of the revenues produced by public enterprises came from
the manufacturing sector and the other 70 percent from such
service sectors as the electrical, communications, and financial
industries.
Data as of June 1990
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