The demise of “Korea, Inc.”: Paradigm shift in Korea's developmental state

Abstract

Abstract This article provides a partial analysis of the socio-political impact of the so-called IMF reforms that were implemented by the South Korean government in response to the financial crisis of 1997–98. We find that at least in one key area — namely policies related to foreign investment — the IMF reforms fundamentally altered and reshaped Korea's development path. In fact, the policy changes affecting foreign investment produced what amounts to a paradigm shift in Korea's well-known model of developmental state. Alternatively put, these reforms led to the demise of the "Korea, Inc.," the symbiotic relationship between government and businesses that was at the core of Korea's developmental state. As such, our analysis suggesting a paradigm shift in Korea's developmental state stands in contrast with previous (pre-crisis) arguments that proclaimed the demise of the developmental state.