South Korea The Political, Social, and Economic Institutions in South Korea

South Korea was considered to be one of the "Asian Tigers," but that designation of strength did not stop the country from experiencing serious problems in the past. These were financial, but they were also social and political. The country went through rapid changes, including a financial crisis, but before that crisis occurred there were other issues with which the country had to deal. Most of these problems began in the 1960s and 1970s, when the Korean government and businesses within that country started "scratching each other's backs." That might sound as though the businesses and the government were simply attempting to help one another out, but that proved not to be the case. Modernization theory will be examined here in an effort to show the effects it had on Korea and what the country was attempting to do for its future, as well as how those attempts failed.

While it is often important to a country to become more modern, there are ways in which it can be done and there are other ways that appear to provide some stability but only do so on the surface. While Korea appeared to be doing things correctly in many cases, there were behind-the-scenes issues that were not being faced and dealt with as clearly and quickly as they should have been in order to ensure that Korea could actually operate as a world power and see success. With that in mind, there are still issues from Korea's past that have to be faced. Additionally, there are important questions to be answered, such as: how did the back-scratching of companies and businesses in Korea during the 1960s and 1970s lead to a corrupt society that paved the way for further problems as the country moved forward?

Modernization Theory and South Korea

Modernization theory states that countries that are more "traditional" in nature (i.e. less developed) can be given assistance and brought up to the same "standards" that are seen with more developed countries. This was something that appeared to be important to Korea. South Korea, especially, had been through a great deal of trials and tribulations. It was still largely subservient to and controlled by North Korea, and in order to get past that point it would need to be modernized and have the strength and ability to break free and operate more independently (Aroskar & Swanson, 2002). That would not be something that could occur overnight, and the country went about it in the wrong way by allowing corruption to flourish (Haggard, 2000; Wong, 2000). During the 1960s and 1970s, South Korea also experienced significant changes - and many of these were detrimental.

One of the ways in which South Korea used modernization theory was to rely heavily on United States assistance in order to learn what it could do to move forward. At the same time, however, the country was getting deeper and deeper into corruption and difficulties, so it was actually not becoming more modernized at all (Bello & Rosenfeld, 1990; Sachs & Woo, 1999). Instead of moving toward being a modern country that could take care of itself, metaphorically speaking, South Korea was struggling in the background with the corruption that had spread throughout its government and moved into its businesses. That was setting it up to take a significant financial fall, and the issues surrounding that corruption were not being appropriately faced by those who were in power and who had the opportunity to do something (Jones, 1998). Many of the most powerful business owners in South Korea, along with many of the government workers, were part of the problem.

Development During the Park Administration

In May of 1961, Park Chung-hee ended the Second Republic through a coup (Wong, 2000). By doing so, he effectively began the Third Republic of South Korea. Military officers were appointed to replace officials who had previous been civilians, and the National Assembly was completely dissolved. The goal was to remove all the corruption and misdeeds that had been taking place in the country, and to determine how to have better relationships with allies such as the United States. At that point, South Korea entered a developmental state whereby it focused on rebuilding its country under Park's ruling (Higgott & Robison, 1985; Jones, 1998). Ties with the United States were very close, and the U.S. gave a great deal of aid to South Korea during that time. This was provided willingly, because the country...

There were treaties with Japan, and South Korea also helped the United States fight in the Vietnam War (Sachs & Woo, 1999).
Technology improved, as did economics. Education was easier to come by, and more people were able to take advantage of that. In urban areas, the population growth was rapid as many people moved up to a new and better standard of living. Farmers and others who did not have much education or money, however, essentially remained where they were and did not see much improvement from the growth that was taking place in their country (Haggard, 2000; Wong, 2000). The government started controlling the prices, pushing many farmers further into poverty. The urban economy thrived, and the rural economy continued to lessen, creating a struggle for farmers and others who eventually decided they had had enough. In 1971 the government recognized the issue and decided to take steps that would improve the quality of life for farmers (Wong, 2000). Park continued to be re-elected, even though dissent against him was starting to grow.

A constitutional amendment that was forced through kept him running and being re-elected, even though he was originally limited to only two terms (Wong, 2000). Martial law was declared by Park in 1972, after dissent continued to grow and reunification talks with North Korea broke down. That suspended the constitution and dissolved the national assembly, throwing the country into chaos once again. A new constitution was created that essentially gave Park a dictatorship and complete authority over South Korea, but the economy continued to do well in spite of everything else that had taken place (McLeod & Garnaut, 1998; Sachs & Woo, 1999). Eventually, Park's ruling became too much and efforts were undertaken to remove him. These efforts failed, and Park was eventually assassinated as the only way to end his rule. Presidents came and went after that, and the country struggled to gain back some stability. It lost ground from where it was when Park has first begun to improve it, and had to start rebuilding once again.

Eventually, some order was restored to South Korea. While the country is not as openly democratic as many others, the strong authoritarian rule of a military regime has lessened. Presidents can now be elected by the people again, and the current republic is much different from what Park's republic had become. The current republic (the sixth) began in 1987. While it has improved life for the people, there are still serious problems and concerns that have taken place during it. One of the most significant was the Asian Financial Crisis that occurred in 1997, which also resulted in a change of presidency.

The Beginning of the Financial Crisis

Korea was one of the most heavily affected countries when it comes to the financial crisis that struck Asia. In order to be able to continue to pay debts to its foreign creditors, South Korea was forced to approach the International Monetary fund for help. That was a shocking development, because South Korea was believed to be strong financially. There was no reason to think that it would not be able to pay its debts, but it quickly showed that it did not have the reserves it was assumed to have, and that it could not meet its obligations without assistance (Wong, 2000). Many blamed the Korean government for the crisis - at least partially - because many of the economic policies that were held by the government at that time were actually detrimental to the country as a whole. They came into creation decades before the financial crisis, and they had never been updated (Wong, 2000). Because these policies had not changed with the times, the people of Korea were completely unprepared to face the financial crisis that plagued them.

Since the policies had not been changed when they should have been and had not been adjusted to the times, the times were what forced the Korean economic policies to finally undergo some changes. The other problem that contributed to the financial crisis was the business climate in South Korea. There were many firms there that were undergoing extremely rapid growth. That might sound as though it is a good thing, but these companies were expanding well past what they needed to in order to meet the demand for their goods or services. They overproduced their goods and then tried selling them at a deep discount when they realized they had too many (Wong, 2000). They…