New East Asia Foundation study analyzes South Korean Chaebols (재벌, 財閥) and economic concentration issues
New East Asia Foundation study analyzes South Korean Chaebols (재벌, 財閥) and economic concentration issues.
South Korea has peculiar perceptions and regulations regarding economic concentration. Economic concentration usually means market concentration. Economic theories emphasizing efficiency in resource allocation and the competition law of most advanced industrial countries consider market concentration to be evil. However, economic concentration in a South Korean context refers to general concentration. Since 1987, South Korea has imposed discriminatory regulations on corporate groups over a certain size based in the belief that Chaebols account for too much of the country’s economy.
Currently, 61 corporate groups with assets totaling over 5 trillion won (around $5 billion) are under regulations regarding investment, corporate governance, business structure, and trade with affiliates. Yet, these regulations on general concentration have a weak basis and have yielded meager results, while having considerable negative side effects. Moreover, efforts to rectify the issues related to market concentration, such as abuse of market power or unfair transactions, are insufficient because regulatory resources are focused on general concentration regulations. South Korea should refocus its policies to correct market concentration and promote fair competition.
Full text at the East Asia Foundation official web-site