Effect of Economic Concentration of Chaebols on South Korean Economic Growth

Chaebol refers to a family-run conglomerate that dominates most industries of the Korean economy. The chaebols emerged in the 1960s with abundant support from the Korean government; in attempts to initiate an economic spurt, Dictator Park Chung Hee exercised “guided capitalism”, in which the government selected a few companies to subsidize through extensive government loans and tax cuts. The Korean economy has risen and fallen with the performance of the chaebol corporations. After the Asian Financial Crisis of 1997, the concentration of economic power that the chaebols hold started to become a problem noticeable by the general public. The central question that the concentration of chaebols’ economic power raises is the following: how does the change in the chaebol’s share of the Korean economy influence the performance of the Korean economy? This paper examines the relationship between the economic concentration of chaebols and the growth of the Korean economy and concludes that the impact of the change in the chaebol\u27s concentration of power on the changes of the Korean economic growth is minimal and negative