Industrial policy is an indispensable ingredient in Korea’s economic success story. At the center of that strategy stood the relationship between government and large business groups.
Yet Korean conglomerates, or chaebols, played additional roles that are often overlooked. First, by providing stable employment, they partially substituted for government welfare programs. Second, by accumulating rents through rapid industrial expansion, they helped generate a substantial tax base and became an important source of corporate tax revenue. In this sense, chaebols contributed not only to economic growth but also to the sustainability of the fiscal system.
Industrial policy is an indispensable ingredient in Korea’s economic success story. At the center of that strategy stood the relationship between government and large business groups.
Yet Korean conglomerates, or chaebols, played additional roles that are often overlooked. First, by providing stable employment, they partially substituted for government welfare programs. Second, by accumulating rents through rapid industrial expansion, they helped generate a substantial tax base and became an important source of corporate tax revenue. In this sense, chaebols contributed not only to economic growth but also to the sustainability of the fiscal system.