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

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.

The historical origins of corruption in the developing world: a comparative analysis of East Asia

“…As briefly mentioned above, this quasi-monopoly on credit allowed the Park regime to institutionalize a system of bribery, whereby highranking government officials would provide the chaebol with access to loans in exchange for the payment of fixed kickback rates. The illicit payments extracted from private business were an important source of funding for the regime's Democratic Republic Party (DRP) [ [29,40]: 133-134] -and continue to characterize 'elite cartel' corruption in South Korea nowadays.…”

Racionalidad del modelo de desarrollo chino: una perspectiva institucionalista

“…como sostiene Kang (2002), el fenómeno de la corrupción ha estado tan acuciado desde los inicios del "milagro asiático" que debe considerársele como una variable explicativa constitutiva del desarrollo de la región y debe de manera más importante indagarse sobre las dinámicas culturales que le dan forma. Luego, como afirman Chang y Chu (2006), "la corrupción es de naturaleza desarrollista y lo que es visto como corrupción en una cultura puede ser visto como rutinario en otra [La traducción es nuestra]" (p. 262).…”

“…La intervención del Estado, cuyo sentido confucionista es salvaguardar el beneficio colectivo, lo convierte en responsable de crear las condiciones macroeconómicas, los sectores estratégicos, la creación de rentas por fuera de la lógica del mercado y el fomento a sectores clave de la economía exportadora; trae consigo también el establecimiento de alianzas entre élites estatales, empresarios por medio del favoritismo en la asignación de contratos, recursos y, en general, toda práctica conducente a mantener a los diferentes círculos propios como principales beneficiarios de la industrialización de la región (Kang, 2002;Cumings, 1984;Doner, Ritchie y Slater, 2005). Ateniéndose, entonces, a la naturaleza guanxi, pueden aparecer, en principio, relaciones económicamente disfuncionales y corruptas, en las que, desde la mirada clásica de la competencia pura, los agentes económicos no acceden a la misma información ni competirían en condiciones de igualdad.…”

Japan, Korea, the Philippines, China: four syndromes of corruption

“…Some funds went to projects such as the "New Village Movement", which ostensibly improved the quality of rural life but in reality was a slush fund. After Park's assassination in 1979 about $500,000 was discovered among his effects ( [38], p. 188), a trivial sum by comparison to the fortunes amassed by others.…”

“…But Chun practiced "money politics" with particular effectiveness: contributions ran as high as $1.2 billion, with Chun retaining $270 million and a share also helping buy off the opposition ([61], p. 220;[51], p. 171;[52], p. 575;[7], p. 4;[69], p. 207;[63], pp. 698-708;[37], p. 96;[38], pp. 187-188;[41], pp.…”