Globalization has progressed in the twenty-first century to the extent that no Korean chaebol is free from international pressures of institutional and legal reforms that can meet the global standards of business. This process entails that chaebol ownership and governance structures must also change to accommodate the demands of foreign shareholders. The core of the entire problem associated with globalization is protecting the chaebol within the purview of state control, an idea that is anathema to global players. Furthermore, the South Korean state must accommodate the demands of global investors who want to protect their property rights in South Korea after making substantial investment commitments. This chapter outlines the process of globalization of the Korean economy, focusing on how it has maintained international competitiveness, while struggling with reform priorities. In addition to the repertoires of reform and their outcomes, the future of the Korean economy will also be evaluated, based on the identified strength of competitiveness as well as the structural weakness of the economic system.

PURSUIT OF GLOBAL STANDARDS

The term globalization, in the name of segyehwa, began to haunt Korea in the early 1990s when the newly established Kim Young-sam administration, the so-called “civilian government” (munmin jeongbu), launched a series of political and economic reforms upon the rapid changes of the international economic system. Kim, who managed to win the presidential election with less than 40 per cent of the popular vote, attempted to pass through political opposition, both from the established authoritarian force and the challenges from the progressives he barely defeated in the election, by initiating a massive reform programme dubbed as “reform all the way down” (Kihl 2005: 103). For justification, he ordered the prosecution of the politicians of the previous ruling circle, including the military junta and the two former military general-turned-presidents, who were prosecuted with the charge of illegal wealth accumulation through collusion with chaebols. The ugly truth of state– business collusion was revealed and served as the grounds for a reform drive. Many business leaders were also prosecuted for bribery and illegal political funding.