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helping the politicians who protected them to succeed
in the political arena.
Park’s adoption of export-oriented industrialization in
South Korea effectively changed the South Korean government
into the board of directors for “Korea Inc.” The
government gave wealthy businessmen, academics, and
government officials a voice in the biggest planning agencies
in South Korea. These interest groups coordinated
their efforts to build up the country’s industrial capabilities
and to catapult it into the ranks of the modern, developed
economies.
A 1973 shift to investment in heavy industry and chemicals
only cemented the economic might of family-owned
South Korean cartels, called chaebols, at the expense of
the working Koreans who paid higher prices for domestic
goods. Agencies such as the Economic Planning Board
and the Ministry of Trade and Industry used their arsenal
of targeted subsidies, import restrictions, loan guarantees,
and licensing requirements to strengthen the most
promising South Korean businesses and “infant industries.”
The exchange of favors flowed freely between
businesses and the politicians that helped them; corruption,
bribery, favoritism, and clientelism dominated
South Korean industrial policy. 10 There existed a dense
web of personal contacts that exchanged private money
for political favors: chaebols rewarded government
agents with handsome donations in exchange for public
loans and sweetheart deals. Government agents in South
Korea sometimes cut out the middleman and directed the
benefits straight to themselves: the Park administration
kept around 10 percent of all public loans for personal and
political uses. 11
98 LIBERALISM AND CRONYISM