(Assignment 1) South Korea : A Tripartite Alliance - Jueeli More

The case of corruption in South Korea can be situated in a complex nexus which revolves the government(public sector), the Chaebols and the banks. Scholars who studied the case of corruption in South Korea often found themselves in an opposing position. Those who looked at it from a developmental state model overlooked corruption and those who viewed it as a case of crony capitalism overestimated the incident of corruption. From an historical point of view, the transition of South Korea from a predatory to a developmental state is quite fascinating as it rests upon the perception of corruption and the various ways in which it manifested itself in different forms in both the cases.

In recent times it has been noted that the number of officials found to have broken the public-service ethics code almost doubled between 2008 and 2010 (Economist, July 21, 2011). As of 2015, the anti corruption campaign led by former prime minister Lee Wan-Koo came to a standstill when a construction tycoon, Sun Wan Jong hung himself and left a suicide note naming all those who took huge sums of bribe from him. Lee Wan-Koo was one of the names on the list along with the names of other top bureaucrats and public officials. South Korea has often found itself in scandals involving government officials and business tycoons.

Wedeman (Wedeman, Andrew. 1997. “Looters, Rent-Scrapers, and Dividend Collectors: Corruption and Growth in Zaire, South Korea, and the Philippines.”)  argued that Korea has had widespread, high-level corruption ever since 1945 but that the type of corruption in Korea was functional for economic development. He distinguished three different types of corruption such as looting, rent-scraping, and dividend-collecting. Korea represents the third kind where dividend collecting meant trade of a percentage of the profits earned by privately owned enterprises to government officials. He argues that the Korean government sold economic opportunities and collected some amount of profit, which then stayed within the country and not in swiss bank accounts. (You Jong-sung 2005, “Embedded Autonomy or Crony Capitalism?: Explaining Corruption in South Korea, Relative to Taiwan and the Philippines, Focusing on the Role of Land Reform and Industrial Policy”)

The key ares of focus to locate corruption in South Korea would be the complexity of their tax laws, the high incidence of tax evasion by the Chaebols and a symbiotic relationship between the bureaucracy and the private industry. Park’s centrally managed economy produced a large scope for rent seeking and corruption (Lee 1995). During the mid-1970s, a Korean social scientist noted, “The rapid expansion of the scope of governmental authority (under Park) tended to induce corruption at a far greater scale and in an even more pervasive manner than before (under Rhee)” (Hahn 1975, “The Authority Structure of Korean Politics”).  

Scholars argue that income inequality increases the level of corruption. The wealthy have a greater ability to engage in corruption and in their incentives for beyond political influence increases as a redistributive pressures grow with inequality (You and Khagram, 2005). In the case of Korea, the correlation between the two happens to be very high. Therefore the Chaebol centred economy produced(and continues to produce) a higher inequality as well as more incentives and opportunities for corruption.

Therefore, from an economic standpoint, the argument whether the democratisation of South Korea has liberated it of its predatory nature, or continues to conceal itself under a developmental state apparatus remains a crucial problem and thus complicates one's understanding of corruption in such a complex economic-political setup.