The South Korean Chaebol System Essay Example | Topics and Well Written Essays - 2000 words

The South Korean Chaebol System - Essay ExampleThe chaebol is the leading type of business group in South Korea. It can be outlined as a business group which is owned and controlled by a person and that persons family a definition that coincides for the most part with Morikawas definition of zaibatsu, which is that the business group exclusively owned and controlled by the family, and probably also fits the rest of the definition, diversified industrial firms, since it is a business group. (Shiba and Shimotani, p. 31) The chaebol concept boost the formation of conglomerates under a single holding company, usually controlled by a family. It was fashioned after the Japanese keiretsu. However, unlike the latter, chaebols do not have their own financial institutions and that they require the governments approval of financial backing since South Koreas banks are nationalized. (Dubois, p. 42)From the late 1950s, it has emerged due to fond import license concessions, access to scarce for eign exchange and governmental properties seized from the Japanese formed part of the Korean state policy. Samsung, Koreas oldest chaebol, and the four former(a) biggest conglomerates were established during this period. It was in the 1960s when the chaebols forged its strong partnership with the government. The Korean government identified talented entrepreneurs and systematically sponsored them by credit, trading licenses, tax advantages, and new(prenominal) measures. (Richter, p. 73) The nature of this alliance between the state and the chaebols is fundamental in the Korean impressive sparing performance seen from thereon. The government support, encouragement, and intervention resulted to what was called as the guided economic development wherein the government involvement enabled chaebols to monopolize spheres of activity and accumulate capital in order to finance diversification of production. According to Kong, democratization and economic relaxation method policies did no t break the interdependence of state and chaebols and that it even had the effect of strengthening the chaebols and generating new forms of collusion.