Modernization theory and corruption in South Korea's development

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.

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 kept borrowing from lenders and banks in their own country and all throughout the world, and they failed to pay close attention to how they were actually performing financially (Wong, 2000). Naturally, no business can continue to do that and remain successful. They were able to pay their bills, but they were not doing anything of value beyond that.

The Downfall of the Economic Market

The uncertainty of production was another issue contributing to the downfall of the economic market in Korea. There was so much product being created that no one knew what was going to happen to all that was left over (Wong, 2000). After a while there were so many leftovers that it was impossible for companies to sell them at a profit. The companies started struggling to pay their bills, and that was true of larger corporations, too, not just the small businesses. The larger companies tried to cover up their problems and make it appear that everything was fine, financially (Wong, 2000). These companies started working to convince banks that they were still good risks when it came to credit, and they borrowed even more money. Then they used that money to pay some of the other debts they had to other banks and lenders. Because of the amounts owed and the lack of profits, though, they were not really getting ahead by using this strategy.

They started struggling more obviously, and the banks eventually stopped lending them any more money (Wong, 2000). At that same time, the government began to promote particular industries and not promote others. That made competition problematic, because there were so many companies and simply not enough buyers for the products they were selling (Wong, 2000). By the time the government saw what a mistake that has been, it was too late and the financial crisis had become a social crisis, as well (Jones, 1998). There were many people unhappy with their government and how it did so little to help them with the problems they were facing. That unrest spread, and turned the financial problems of the country into so much more than they were in the beginning. Eventually the crisis lessened, but a great deal of damage to the South Korean economy was already done.

The State of South Korea After 2000

In 2000, there was a turning point in South Korea (Wong, 2000). The country moved from a developmental state to a more predatory one over the course of a few short years. Corruption began anew, even though it originally appeared as though corruption was the very thing that the country was working hard to avoid. The Sunshine Policy was enacted, and a strong effort was made to reconcile with North Korea. Summit talks led to the South Korean leader being awarded the 2000 Nobel Peace Prize (Wong, 2000). The desire to reconcile was not reciprocated by North Korea, however, and the goal of bringing the two nations back together as one was eventually abandoned (Friedman & Wong, 2008). Presidents came and went and the country moved on, but more corruption charged began appearing in government and in big business. Some of those who were in power were removed, and other removed themselves - some by suicide, as opposed to simply resigning their posts (Friedman & Wong, 2008). It was clear that problems were building.

The predatory state in which South Korea found itself was a disappointment to many of its people, but they were was little they could do. Whether or not the government was corrupt, it still held all the power and ensured that the common people were kept down. Many countries handle their politics that way, and even though some presidents had promised something different for South Korea, the differences never came to pass - at least not for any extended period of time (Friedman & Wong, 2008). The terrorist attacks on 9/11 played a role, even though Korea was not directly involved, because South Korea and North Korea were at odds as to what they thought about the attacks (Friedman & Wong, 2008). That started the real breakdown of talks that could have led to reconciliation at that time.

Conclusion

As can be seen from the many issues addressed in the preceding pages, South Korea did not suddenly develop into what it is today. It became what it is over time and with a lot of struggle. While there have been improvements in the country in recent years, there have also been problems that have caused it to flounder, struggle, and lose its way. South Korea is not as stable as would have been assumed in the past, and that indicates issues that are much deeper than what were expected by only looking at the surface. It is clear that the country has always been one where strife and dissent lurked just around the corner, but there are also times in history where these kinds of problems became much more obvious. One of those was in the 1960s and 1970s, where corruption became the norm and there was little that others could do about it even if they saw it happening.

The back-scratching of government and businesses in South Korea during the 1960s and 1970s set a precedent for what would take place in the future. By having that occur and allowing it to continue, South Korea sent the message that corruption was an acceptable way to operate a country and a business. There were times when the corruption slowed, because a particular president vowed that it would stop. He may have made a difference for a while, but he either eventually became corrupt himself, or he was forced out of power so that the corruption could continue. Whether South Korea "likes" to be corrupt is not the issue. It is impossible to generalize in that way about such a large group of people. However, it is clear that the government and businesses there have struggled with corruption since the back-scratching of the 1960s and 1970s, if not before that, and that efforts to change the status quo in that country on a permanent basis have been unsuccessful.