Hostname: page-component-745bb68f8f-mzp66 Total loading time: 0 Render date: 2025-02-05T10:35:38.712Z Has data issue: false hasContentIssue false
  • English
  • Français

Bad Loans to Good Friends: Money Politics and the Developmental State in South Korea

Published online by Cambridge University Press:  09 July 2003

David C. Kang
Get access

Abstract

Why has the literature on Asian development not addressed the issue of money politics in South Korea? How can we reconcile the view of an efficient developmental state in South Korea before 1997 with reports of massive corruption and inefficiency in that same country in 1998 and 1999? Politics is central to the answer. In this study I make two arguments. First, money politics was extensive in South Korea both during and after the high-growth era. Second, political—not economic—considerations dominated policymaking. This study explains both past and present and compares the patterns of money politics in the early post-independence era with those that arose after the democratic transition in 1987. While during the Park era a balance of power between businessmen and politicians kept corruption from spinning out of control, the transition to democracy altered the basic business-state relationship, allowing business to exert greater influence over policy decisions. The political hypothesis advanced in this study suggests a new direction for our research about the developmental state.

Type
Articles
Information
International Organization , Volume 56 , Issue 1 , Winter 2002 , pp. 177 - 207
Copyright
Copyright © The IO Foundation 2002

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Ahn, Byoung-yong. 1995. Pichagŭm kwa taekwŏn yokŭi chuakhan janch'i (The Disgusting Feast of Illicit Funds and Presidential Hunger for Power). Shindonga (December):112–21.Google Scholar
Amsden, Alice H. 1989. Asia's Next Giant: South Korea and Late Industrializations. New York: Oxford University Press.Google Scholar
Axelrod, Robert. 1984. The Evolution of Cooperation. New York: Basic Books.Google Scholar
Bag, Parimal Kanti. 1997. Controlling Corruption in Hierarchies. Journal of Comparative Economics 25 (3):322–44.CrossRefGoogle Scholar
Bank of Korea, Statistics Division (Chosabu). 1998. Uri nara kiŏp ŭi puch'ae kujo punsok (An Analysis of the Structure of Korea's Indebted Companies). 21 October.Google Scholar
Bardhan, Pranab. 1997. Corruption and Development: A Review of Issues. Journal of Economic Literature 35 (3):1320–46.Google Scholar
Barzel, Yoram. 1982. Measurement Cost and the Organization of Markets. Journal of Law and Economics 25:27–48.CrossRefGoogle Scholar
Blair, Roger D., Kaserman, David L., and Romano, Richard. 1989. A Pedagogical Treatment of Bilateral Monopoly. Southern Economic Journal 55 (4):831–41.CrossRefGoogle Scholar
Bliss, Christopher, and Telia, Rafael Di. 1997. Does Competition Kill Corruption? Journal of Political Economy 105 (5):1001–23.CrossRefGoogle Scholar
Braguinsky, Serguey. 1996. Corruption and Schumpeterian Growth in Different Economic Environments. Contemporary Economic Policy 14 (3):14–25.CrossRefGoogle Scholar
Broz, J. Lawrence. 1997. The International Origins of the Federal Reserve System. Ithaca, N.Y.: Cornell University Press.Google Scholar
Buchanan, James. 1980. Rent Seeking and Profit Seeking. In Toward a Theory of the Rent-Seeking Society, edited by Buchanan, James M.\, Tollison, Robert D., and Tullock, Gordon, 3–15. College Station: Texas A and M University Press.Google Scholar
Chang, Ha-Joon. 1994. The Political Economy of Industrial Policy. New York: St. Martin's Press.Google Scholar
Chang, Ha-Joon, and Kozul-Wright, Richard. 1994. Organising Development: Comparing the National Systems of Entrepreneurship in Sweden and South Korea. Journal of Development Studies 30 (4):859–91.CrossRefGoogle Scholar
Cho, Dong-song. 1987. The General Trading Company: Concept and Strategy. Lexington, Mass.: Lexington Books.Google Scholar
Choi, Byung-sun. 1987. Institutionalizing a Liberal Economic Order in Korea. Ph.D. diss., Harvard University.Google Scholar
Choi, Dong-gyu. 1986. Kiŏpŭi chun jose pudame kwanhan silchŏngchŏk yŏnku (Concerning the Burden of Quasi-taxes on Companies). Seoul: Korea Economic Research Institute.Google Scholar
Choi, Sung-no. 1997. 1996 nyŏn 30 dae kiŏpchipdan (An Analysis of the 30 Korean Conglomerates in 1996). Seoul: Korea Economic Research Institute.Google Scholar
Clifford, Mark L. 1994. Troubled Tiger: Businessmen, Bureaucrats, and Generals in South Korea. Armonk, N.Y.: M.E. Sharpe.Google Scholar
Coalition for Social Justice/Citizen's Coalition for Economic Justice. 1993. Uridŭlŭi pukkŭrŏn chahwasang (Our Shameful Self-Portrait). Seoul: Umjiginun Chaek.Google Scholar
Doner, Richard, and Ramsey, Ansil. 1997. Competitive Clientelism and Economic Governance: The Case of Thailand. In Business and the State in Developing Countries, edited by Maxfield, Sylvia and Schneider, Ben Ross, 237–76. Ithaca, N.Y.: Cornell University Press.Google Scholar
Economic Planning Board. 1983. Kyonje kihoekwŏn isipnyŏnsa (Twenty-Year History of the EPB). Seoul: EPB.Google Scholar
Evans, Peter. 1995. Embedded Autonomy: States and Industrial Transformation. Princeton, N.J.: Princeton University Press.CrossRefGoogle Scholar
Fields, Karl. 1997. Strong States and Business Organization in Korea and Taiwan. In Business and the State in Developing Countries, edited by Maxfield, Sylvia and Schneider, Ben Ross, 122–51. Ithaca, N.Y.: Cornell University Press.Google Scholar
Greenspan, Alan. 1998. Remarks before the 34th Annual Conference on Bank Structure and Competition. 7 May. Federal Reserve of Chicago.Google Scholar
Ha, Jong-dae. 1998. No-ssi pichagŭm 8 ch'on ŏk nŏmnŭnda (Roh's Secret Funds Exceeded $800 Million). Shindonga (March):230–51.Google Scholar
Haggard, Stephan, and Kaufman, Robert R.. 1995. The Political Economy of Democratic Transitions. Princeton, N.J.: Princeton University Press.Google Scholar
Han, Heung Soo, and Ahn, Byung Hoon. 1994. Hankuk ŭi pihap pŏpchŏk chŭngch'i chagŭm ŭi yuhyŏng kwa siltae (Patterns and Realities of Illegal Political Funds in Korea). Tong Suh Yonku (East and West Studies) 7:198–215.Google Scholar
Hutchcroft, Paul. 2000. Obstructive Corruption: The Politics of Privilege in the Philippines. In Rents, Rent-Seeking, and Economic Development: Theory and Evidence in Asia, edited by Khan, Mushtaq H. and Jomo, K. S., 207–47. New York: Cambridge University Press.CrossRefGoogle Scholar
Johnson, Chalmers. 1986. Tanaka Kakuei, Structural Corruption, and the Advent of Machine Politics in Japan. Journal of Japanese Studies 12 (1):1–28.CrossRefGoogle Scholar
Johnson, Chalmers. 1987. Political Institutions and Economic Performance: The Government–Business Relationship in Japan, South Korea, and Taiwan. In The Political Economy of the New Asian Industrialism, edited by Deyo, Frederic, 136–64. Ithaca, N.Y.: Cornell University Press.Google Scholar
Jomo, K. S., and Gomez, Edmund Terence. 1998. Rent Generation and Distribution, and their Consequences in Malaysia. Unpublished manuscript, University of Malaya.Google Scholar
Jones, Leroy P., and Il Sakong, . 1980. Government, Business, and Entrepreneurship in Economic Development: The Korean Case. Cambridge, Mass.: Harvard University Press.Google Scholar
Kang, David C. 1995. South Korean and Taiwanese Development and the New Institutional Economics. International Organization 49 (3):555–87.CrossRefGoogle Scholar
Kang, David C. 2002. Crony Capitalism: Corruption and Development in South Korea and the Philippines. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Katzenstein, Peter J., ed. 1978. Between Power and Plenty: Foreign Economic Policies of Advanced Industrial States. Madison: University of Wisconsin Press.Google Scholar
Khan, Mushtaq. 1996a. A Typology of Corrupt Transactions in Developing Countries. IDS Bulletin 27 (2):12–21.CrossRefGoogle Scholar
Khan, Mushtaq. 1996b. The Efficiency Implications of Corruption. Journal of International Development 8 (5):683–96.3.0.CO;2-4>CrossRefGoogle Scholar
Khan, Mushtaq. 1997. The Input-Output Function for Rent-seeking: A Comparative Analysis of Differential Effects. Unpublished manuscript, University of London.Google Scholar
Kim, Chun-gun. 1988. Hankuk kiŏp ŭi chunjose ŭi kwanhan yŏnku (Research on Quasi-taxes on Korean Companies). Seoul: Korea Economic Research Institute.Google Scholar
Kim, Jin-bae, and Park, Chang-rae. 1968. Ch'agwan (Foreign Loans). Sindonga (December):80–102.Google Scholar
Kim, Jong-Seok. 1996. Korea's Regulatory Reform: A Critical Review. In Korea's Economy 1996, edited by Rich, Robert, 10–14. Washington, D.C.: Korea Economic Institute of America.Google Scholar
Kim, Joungwon Alexander. 1975. Divided Korea: The Politics of Development. 1945–1972. Cambridge, Mass.: Harvard University Press.Google Scholar
Kim, Kwan Bong. 1971. The Korea-Japan Treaty Crisis and the Instability of the Korean Political System. New York: Praeger.Google Scholar
Kim, Yong-suh. 1995. No Tae-u kusokgwa YS ŭi sŏntaek (The Detention of Roh Tae-woo and Kim Young-sam's Choices). Sisa Wolgan (December):56–65.Google Scholar
Kiser, Edgar, and Tong, Xiaoxi. 1992. Determinants of the Amount and Type of Corruption in State Fiscal Bureaucracies: An Analysis of Late Imperial China. Comparative Political Studies 25 (3):300–31.CrossRefGoogle Scholar
Klitgaard, Robert. 1988. Controlling Corruption. Berkeley: University of California Press.CrossRefGoogle Scholar
Krasner, Stephen D. 1978. Defending the National Interest: Raw Materials Investments and U.S. Foreign Policy. Princeton, N.J.: Princeton University Press.Google Scholar
Kreps, David M. 1990. A Course in Microeconomic Theory. Princeton, N.J.: Princeton University Press.CrossRefGoogle Scholar
Ku, Bon-hong. 1999. Hanguk sahoe esŏ pup'ae wa chagŭme kwanhan yŏnku: 6 kong hwakuk ŭl chungshimŭro (Research on the Sociology of Korean Corruption and Funds with a Focus on the 6th Republic). Ph.D. diss., Yonsei University.Google Scholar
Kuk, Minho. 1995. The Governmental Role in the Making of Chaebol in the Industrial Development of South Korea. Asian Perspective 19 (1):108–31.Google Scholar
Lee, Jong-won. 1997. 97 Taesŏn: DJ pichagŭm (The 1997 Election: DJ's Secret Funds). Jugan Chosun (23 October):26–34.Google Scholar
Lee, Young-suk. 1987. Sŏngŏ chagŭm kwa chaebŏl (Election Funds and Chaebols). Wolgan Chosun (November):222–39.Google Scholar
Levi, Margaret. 1988. Of Rule and Revenue. Berkeley: University of California Press.Google Scholar
Levy, Richard. 1995. Corruption, Economic Crime, and Social Transformation Since the Reforms: The Debate in China. Australian Journal of Chinese Affairs 95 (33):1–25.CrossRefGoogle Scholar
Lew, Seok-jin. 1992. Bringing Capital Back In: A Case Study of South Korean Automobile Industrialization. Ph.D. diss., Yale University.Google Scholar
Martial Law Enforcement Headquarters. 1980. Kwŏllyŏkhyŏng ch'ukchaesa kyŏlgwa (The Investigation and Disposition of Corrupt Officials). Government press release.Google Scholar
McCubbins, Matthew D., and Schwartz, Thomas. 1984. Congressional Oversight Overlooked: Police Patrols Versus Fire Alarms. American Journal of Political Science 28 (1):165–79.CrossRefGoogle Scholar
Migdal, Joel S. 1988. Strong Societies and Weak States: State-Society Relations and State Capabilities in the Third World. Princeton, N.J.: Princeton University Press.Google Scholar
Milgrom, Paul, and Roberts, John. 1990. Bargaining Costs, Influence Costs, and the Organization of Economic Activity. In Perspectives on Positive Political Economy, edited by Alt, James E. and Shepsle, Kenneth A., 57–89. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Miller, Gary. 1992. Managerial Dilemmas: The Political Economy of Hierarchy. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Morris, Stephen D. 1991. Corruption and Politics in Contemporary Mexico. Tuscaloosa: University of Alabama Press.Google Scholar
North, Douglass C. 1986. The New Institutional Economics. Journal of Theoretical and Institutional Economics 142 (1):230–37.Google Scholar
Nti, Kofi O. 1997. Comparative Statics of Contests and Rent-Seeking Games. International Economic Review 38 (1):43–59.CrossRefGoogle Scholar
Oh, Hyo-jin. 1986. JP, Taumŭn imcha ch'aryeya: Chonghwadae mildam (JP, Your Turn Is Next: Behind the Scenes at the Blue House). Wolgan Chosun (December):38–49.Google Scholar
Olson, Mancur. 1982. The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities. New Haven, Conn.: Yale University Press.Google Scholar
Önis, Ziya. 1991. The Logic of the Developmental State. Comparative Politics 24 (1):109–26.CrossRefGoogle Scholar
Park, Byung-yoon. 1982. Chaebŏl kwa chŏngch'i (Chaebol and Politics). Seoul: Hankuk Yongoso.Google Scholar
Park, Byung-yoon. 1979. Chadongcha Sanob naemak (The Inside Story of the Automobile Industry). Shindonga (November):152–66.Google Scholar
Park, In-Hwan. 1992. 1 chowŏn kongsa: Kim Young-sam, Kim Dae-Jung, Chung Juyoung sŏngo chakŭm (The Billion Dollar Deal: Campaign Funds and Kim Young-sam, Kim Dae-jung, and Chung Ju-young). Shingonda (December):268–77.Google Scholar
Park, Jong-yol. 1989. 5 kong hwakuk chŏngch'i chagŭm (Political Funds in the 5th Republic). Shindonga (January):280–300.Google Scholar
Park, Kyung-suk. 1967. Taet'ongnyŏng kukhoe wiwŏn sŏngo chagŭm (Campaign Funds for Presidential and Assembly Elections). Sindonga (May):204–17.Google Scholar
Ramseyer, Mark, and Rosenbluth, Frances McCall. 1993. Japan's Political Marketplace. Cambridge, Mass.: Harvard University Press.Google Scholar
Root, Hilton. 1994. The Fountain of Privilege: Political Foundations of Markets in Old Regime France and England. Berkeley: University of California Press.Google Scholar
Rose-Ackerman, Susan. 1978. Corruption: A Study in Political Economy. New York: Academic Press.Google Scholar
Rose-Ackerman, Susan. 1988. Bribery. In The New Palgrave Dictionary of Economic Thought, edited by Eatwell, John\, Milgate, Murray, and Newman, Peter, 277–78. London: Macmillan.Google Scholar
Sandholtz, Wayne, and Koetzle, William. 1998. Accounting for Corruption: Economic Structure, Democratic Norms, and Trade. Unpublished manuscript, University of California, Irvine.Google Scholar
Schneider, Ben Ross. 1998. Elusive Synergy: Business-Government Relations and Development. Comparative Politics 31 (1):101–22.CrossRefGoogle Scholar
Shafer, D. Michael. 1994. Winners and Losers: How Sectors Shape the Developmental Prospects of States. Ithaca, N.Y.: Cornell University Press.Google Scholar
Shleifer, Andrei, and Vishny, Robert W.. 1993. Corruption. Quarterly Journal of Economics 108 (3):599–617.CrossRefGoogle Scholar
Spiller, Pablo J. 1990. Politicians, Interest Groups, and Regulators: A Multiple-Principals Agency Theory of Regulation, or ‘Let Them Be Bribed.’ The Journal of Law and Economics 33 (1):65–101.CrossRefGoogle Scholar
Theobald, Robin. 1990. Corruption, Development, and Underdevelopment. Durham, N.C.: Duke University Press.CrossRefGoogle Scholar
Tilly, Charles. 1985. War Making and State Making as Organized Crime. In Bringing the State Back In, edited by Evans, Peter B.\, Rueschemeyer, Dietrich, and Skocpol, Theda, 169–91. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Treisman, Daniel. 1997. The Causes of Corruption: a Cross-national Study. Unpublished manuscript, University of California, Los Angeles.Google Scholar
Tullock, Gordon. 1988. Rents and Rent-seeking. In The Political Economy of Rent-Seeking, edited by Rowley, Charles K.\, Tollison, Robert D., and Tullock, Gordon, 51–62. Boston: Kluwer.CrossRefGoogle Scholar
U.S. House of Representatives. 1978. Investigation of Korean-American Relations (Hearing Before the Subcommittee on International Organizations of the Committee on International Relations. House of Representatives. Ninety-Fifth Congress). Part II.Google Scholar
Wade, Robert. 1985. The Market for Public Office: Why the Indian State Is Not Better at Development. World Development 13 (4):467–97.CrossRefGoogle Scholar
Wedeman, Andrew. 1999. Systemic Change and Corruption in China. Paper presented at the 95th Annual Meeting of the American Political Science Association, Atlanta, Georgia.Google Scholar
Weingast, Barry R. 1993. Constitutions as Governance Structures: The Political Foundations of Secure Markets. Journal of Institutional and Theoretical Economics 149 (1):286–311.Google Scholar
Weyland, Kurt. 1997. ‘Growth with Equity’ in Chile's New Democracy? Latin American Research Review 32:37–67.CrossRefGoogle Scholar
Williamson, Oliver E. 1985. The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting. New York: Free Press.Google Scholar
Williamson, Oliver E. 1991. Comparative Economic Organization: The Analysis of Discrete Structural Alternatives. Administrative Science Quarterly 36:269–96.CrossRefGoogle Scholar
Woo, Jung-en. 1991. Race to the Swift: State and Finance in Korean Industrialization. New York: Columbia University Press.Google Scholar
Yang, Gi-Dae. 1997. Toduk konghwaguk (Republic of Thieves). Seoul: Donga Ilbo.Google Scholar
Yoon, Sung-yong. 1995. Pichagŭm (Secret Funds). Seoul: Jiyangsa.Google Scholar
Yoon, Young-ho. 1997. Chŏng Tae-su wa kŏmŭn ton (Chung Tae-soo and Black Money). Shindonga (March):188–204.Google Scholar