Author: Li Qilin

Source: Lianxun Qilin Hall

South Korea's economy began to take off in the 1960s, and in just a few decades, from a poor and backward country with scarce resources and a small market, South Korea successfully crossed the wall of high income to become a developed economy. But behind the "Korean model" is the "iron triangle" relationship between the government, banks and chaebol, which has a high debt ratio, large but not strong and lacks core competitiveness.

South Korea's economy, which had sustained high growth, was hit hard by the outbreak of the Asian financial crisis in 1997. Foreign-funded institutions have evacuated one after another, foreign exchange reserves are in an emergency, many large companies have closed down, and the life of the whole country is on the line.South Korea was forced to turn to IMF and other international organizations and other countries for help. Under the pressure of foreign forces, South Korea passively began to reform and open its capital market. The entry of foreign capital also strengthens corporate governance and restricts domestic vested interests.Although the transformation process is painful and the after-effects of the chaebol model have not been completely eliminated, South Korea's economy has indeed transformed from quantity to quality.

1

Game between IMF, the United States and South Korea

During the Asian financial crisis, South Korea's foreign exchange reserves shrank sharply and the government faced bankruptcy and was forced to seek help from international institutions such as IMF and other countries.But the IMF and its dominant country, the United States, have proposed a series of draconian adjustment policies for South Korea behind the aid package. The huge adjustment pressure brings pain to South Korea, and every additional clause puts South Korea into a difficult choice.

For example, IMF requires the government to immediately shut down commercial banks that are inextricably linked to the chaebol.However, in the history of South Korea, the government has never taken the initiative to close down any financial institution. And closing these commercial banks, which are closely linked to the plutocrats, means cutting off the plutocrats' right to borrow recklessly from some banks.It is bound to have an impact on chaebol enterprises.

Or, for example, IMF asked South Korea to raise its interest rate to 30%.To attract foreign capital into South Korea, but enforcing high interest rates will send many plutocrats and companies into bankruptcy。

The plan put forward by IMF restricts many domestic vested interests, some groups of vested interests who have been affected, and tries to oppose the signing of the treaty between the government and IMF on the grounds of preserving economic sovereignty.But the fact that the economic situation is endangering has forced the South Korean government to consider accepting the IMF treaty. On November 28, 1997, the South Korean government expressed its willingness to reform and rectify the financial system and improve supervision, but resisted the closure of commercial banks closely linked to the chaebol and a substantial increase in interest rates. because this will cause many chaebol enterprises that control the lifeblood of South Korea's economy to go bankrupt, the cost is too high.

IMF is very unhappy with South Korea's insistence. The South Korean government turned to Japan for help, hoping to seize this last straw, because they believed that Japan would be implicated if South Korea's crisis worsened to an irreparable stage. However, under pressure from the United States and IMF, the Japanese government has also said that it is willing to support South Korea only after it accepts the reform framework of the IMF.

By December 1997, South Korea's foreign exchange reserves were only about 5 billion US dollars. Every second of hesitation could ruin the entire South Korean economy, and the government finally had to accept the plan put forward by IMF and received a $57 billion package of loans.

The agreement with IMF has also aroused different public opinion in South Korea.Some people hope that under the pressure of external forces, South Korea's economy can be baptized and shovel away its original stubborn diseases. However, there are also many highly self-respecting South Koreans who think that signing such an agreement is tantamount to losing their rights and humiliating the country, making South Korea lose its economic sovereignty.

But in the face of bankruptcy, South Koreans finally chose to compromise.In the whole process of reform, IMF and the United States behind it always controlled the direction, and the overwhelming external forces forced South Korea to complete a series of in-depth changes.

First, the reform of the financial system.Under the supervision of the IMF, the World Bank and the United States, the South Korean government has reformed the domestic financial system.

First, we revised and improved the Securities Exchange Law and the Enterprise bankruptcy Law, cleaned up financial institutions with heavy losses, and closed 11 banks with less than 8% of their own capital. By the end of 2001, South Korea had cleaned up and rectified more than 600 financial institutions.

The second is to establish a higher standard of financial supervision system.The Financial Supervisory Committee was established in South Korea in 1998 and the corresponding executive body was established in 1999 to supervise financial institutions.

Third, through the injection of a large amount of public funds (a total of 155 trillion won), quickly clear out the non-performing loans of financial institutions, in order to cut off the vicious circle of endogenous credit contraction.

Fourth, the South Korean government no longer has full control over financial institutions, including credit investment.

Secondly, improve corporate governance.South Korea has abolished some laws and regulations that hinder the development of small and medium-sized enterprises, and under the pressure of the government, it has also carried out changes in industrial institutions and business models. In the aspect of corporate governance, protect the rights and interests of minority shareholders and introduce an independent external review system, including the disclosure of key internal information, such as "financial statements", to make financial transparency.

At the same time, a series of market-oriented measures have been implemented: punishing unfair "internal" transactions within the chaebol, regulating the total investment of affiliated enterprises, banning debt guarantees between affiliated enterprises, and so on.

Finally, the financial market is fully open to foreign investors.After the crisis, the South Korean government opened up the financial market to foreign investors at the request of the IMF, lifted all caps on foreign equity, and allowed foreign equity participation and investment in the banking sector. We will further improve the openness of the foreign exchange market, bond market and insurance sector. In 1997, the South Korean government officially announced that it would liberalize foreign exchange transactions.

Under the supervision of IMF and others, South Korea has carried out a relatively thorough reform.The crisis forced some bad financial institutions to liquidate, and the remaining institutions also carried out timely disposal of non-performing assets and asset restructuring. In these ways, the health of South Korea's financial system has been significantly improved. The proportion of non-performing loans fell from 20% at the time of the crisis to about 3% at the end of 2001.After a great change in the financial system, profitability has been improved, laying the foundation for the sound development of the country's economy as a whole.

These reform measures have also helped South Korea break the deadlock in government credit guarantee.. During the economic take-off since the 1960s, the South Korean government has been playing an important role in it. Through the mode of government guarantee, it has cultivated a number of chaebol enterprises conducive to economic development, but at the same time, it has also nourished a lot of risks. resulting in a high debt ratio is one of the fuses of the financial crisis.

The outbreak of the Asian financial crisis forced the South Korean government to make changes and introduced a deposit insurance system to this end. The reform of financial institutions and corporate governance has also accelerated the withdrawal of government credit guarants. after mergers and restructuring, most enterprises have changed the situation of large shareholders, and the rights and interests of controlling shareholders have been checked and restricted in many ways. the phenomenon of wanton borrowing has declined.

After the crisis, in addition to the universal improvement of corporate governance, the South Korean government also issued a "new chaebol policy" for chaebol enterprises that have been supported by the government.These policies are aimed at reducing the debt ratio of the chaebol and the regulation of fair trade, and some of them have lost the unconditional support of the government, because the high debts that are difficult to repay face rectification and bankruptcy. According to statistics, half of the top 30 plutocrats were forced to go bankrupt, liquidated and merged because of the financial crisis.

The collapse of Daewoo Group, once the second largest company in South Korea, bears witness to the South Korean government's determination to break credit guarantees.Before the crisis, Daewoo Group's business scope included foreign trade, shipbuilding, heavy equipment, automobiles, electronics, communications, construction, chemical industry, finance, etc., with 29 series companies, more than 30 foreign branches and 260000 employees. After the outbreak of the financial crisis, the high debt ratio of Daewoo Group caused a huge debt burden, and the decline in profits caused the stock price to fall. Despite a series of reduction measures, Daewoo Group is still unable to recover, and the myth that "Malaysia is immortal" is finally shattered. The South Korean government, which has always given special treatment to chaebol, did not lend a helping hand. Letting Daewoo perish is actually a wake-up call for other plutocrats. The era when the government pays for chaebol enterprises is over.

This time, the South Korean government has been tougher than expected, many enterprises have closed down one after another, which has triggered a wave of unemployment, and many South Korean people are skeptical about the measures taken by the government. But the government of Kim Dae-jung, who is well aware of the root causes of South Korea's economy, has not been lenient. President Kim Dae-jung once said that "lose three and protect seven": lose 30% of the workers' jobs and keep 70% of the workers employed.

Dilapidated also ushered in the new.The fundamentals of South Korea's economy have improved after the release of risk, debt disposal and capacity deregulation. The distorted resources under the strong government intervention have been corrected to a certain extent, the means of the market have begun to play a role, and a new chapter in South Korea's economic development has begun. Since 1999, the economy began to rebound, coruscating new vitality.

2

Opening to the outside world, chaebol restraint and economic transformation

The drastic reforms of the South Korean government have broken down the obstacles to economic development. After the opening of the capital market and financial market, the inflow of FDI has added new impetus to South Korea.The large inflow of foreign capital and the sharp rise of foreign equity have changed the original family monopoly business structure of South Korean enterprises, and brought advanced management system and high and new technology into South Korea, which is an important part of the reform in the post-crisis era.

After the Asian financial crisis, a large number of enterprises in South Korea went bankrupt, including many banks. Apart from the government, the only ones in the country that have the ability to rescue banks are the top chaebol enterprises, but in order to avoid further expansion of chaebol enterprises and threaten the control of the government, the South Korean government strictly restricts the entry of chaebol capital into the domestic banking sector.

In the process of opening up to the outside world, the ceiling of foreign shareholding, including the banking industry, is also being liberalized at an accelerated pace. In December 1997 and May 1998, the upper limit was raised to 50% and 100%, respectively.

Foreign capital is accelerating into South Korea's banking sector.In 1999, Newbridge Capital acquired the first Bank of Korea, and in 2003, the Lone Star Investment Fund of the United States acquired Korea Foreign Exchange Bank. By the end of 2005, the foreign ownership of South Korea's SC first Bank had reached 100%, the foreign equity of foreign exchange banks was as high as 74%, and the foreign equity ratio of national banks averaged more than 50%.

As many foreign capital is sold again within a few years after the acquisition of South Korean banks and enterprises, making a profit of several times, some people are resistant to the issue of foreign ownership, and some even think that foreign investors have come to South Korea to cash in the short term. For example, the controversial "cashers", the American Lone Star Fund, bought Korea Foreign Exchange Bank for 2.2 trillion won in 2003, but sold it to South Korea's Asiana Financial Group eight years later for 6.9 trillion won.

However, it has to be said that the entry of foreign capital has indeed improved the corporate governance level of South Korean enterprises and provided a lot of help for the transformation of South Korea.

Most importantly, the traditional model of "official finance" under foreign control no longer works, and the power of chaebol is limited.The South Korean banking industry was nationalized in the 1960s and was the credit tool of the government. although it was privatized in the 1980s, it has been guided by the government to support the development of enterprises such as chaebol in the form of low-interest loans. resulting in a serious problem of non-performing debt. However, the Korean banking industry controlled by foreign capital has broken the relationship with the chaebol, and the commercial banks have become the independent main body in the market and are no longer used by the chaebol.

Foreign ownership has also improved the operating efficiency of the banking industry.. Through asset restructuring and non-performing assets digestion, the proportion of non-performing loans in South Korean banks has decreased significantly. After foreign investment, advanced management experience and innovative ideas from Europe and the United States and other developed countries have been introduced, which has put pressure on the original banks and forced domestic banks to carry out corresponding rectification and reform. Through such competition, the efficiency of domestic banks in South Korea has been improved. The data show that after the entry of foreign capital, the capital adequacy ratio of South Korean banks is rising, while the non-performing loan ratio is declining, banks pay more attention to the quality of loans, and the risk of the whole banking industry has been effectively controlled.

South Korea's first Bank, which was acquired by American private equity fund Newbridge Capital, made a profit of more than $100 million in the second year of the acquisition, despite losses in the banking sector as a whole. This is inseparable from the rising level of corporate governance brought by Xinqiao Capital as a major shareholder to the first Bank. After the Lone Star Fund bought shares, the Foreign Exchange Bank has achieved good results, and the profit of the Foreign Exchange Bank has reached 4.7 trillion won in a short period of 8 years.

In addition to the revamping of the banking industry, many South Korean companies in operational difficulties have also been acquired by foreign investors.For example, Samsung Motor was acquired by France's Renault Group in 2000, and Daewoo Motor was acquired by General Motors Co of the United States in 2001.

The foreign shareholding rate of South Korean enterprises has also increased significantly. 66% of Quanzhou newsprint mill and 33% of telecom companies are owned by foreign companies. In the South Korean stock market, the proportion of shares held by foreign investors has skyrocketed from 14.6% in 1997 to more than 30% in 2000.

The inflow of foreign capital has also accelerated the transformation of South Korean enterprises.Take the dispute over the control of SK, which caused an uproar in South Korea, for example. SK Group is one of the four big plutocrats in South Korea. Like other big plutocrats in South Korea, it is faced with such problems as the ownership is mainly in the hands of a family, the interests of minority shareholders are damaged, and some subsidiaries make a living by internal trading. Around 2003, SK Global's financial fraud caused SK's share price to plummet. At this time, Dubai's Sovereign Asset Management went after it, becoming the largest shareholder of the SK Group through the acquisition.

After Sovereign Asset Management became the major shareholder of SK, he put forward a series of plans which are beneficial to the operation of the company, such as opposing SK's support to SK Global, closing poorly managed subsidiaries in order to improve the performance of SK and so on. InSovereign Asset ManagementDuring the holding of the SK stake, it has been putting pressure on the original head and management of the SK Group, believing that the original management of the SK Group is suspected of financial fraud and improper intra-group transactions.

Although Choi Tae-won and others took advantage of the long-standing patriotism of South Koreans and incited the company's shareholders to position Sovereign Asset Management as "international speculative capital", they finally retained their controlling stake in SK. However, in this process, the challenge of foreign investors to the original structure of South Korean chaebol forced SK Group to adjust the company in 2004, including increasing shareholders' rights and interests, implementing independent director system, improving accounting information transparency and so on. After the equity dispute, SK Group has witnessed a rapid rise in its share price.

Although in the minds of many South Koreans, foreign investors still come to South Korea to speculate and cash out. However, it must be admitted that speculative capital is a normal phenomenon in the capital market, and the investment income of foreign investors in Korea mainly comes from their proper management and operation of the enterprises they invest in. The entry of foreign capital has also impacted the original chaebol model in South Korea and accelerated the adjustment of industrial structure and the construction of corporate governance.

At the same time, the outbreak of the crisis and the promotion of economic globalization have made South Korea clearly aware of the importance of scientific and technological innovation and technological development.The South Korean government hopes to develop a knowledge-intensive enterprise model to replace the capital-intensive enterprise model with the chaebol as the center, speeds up the adjustment of industrial strategy, devotes itself to the development of high-tech industries, and the strategy of "building the country through science and technology" has replaced the strategy of "heavy industrialization".

The government no longer directly invests funds to relevant enterprises, but instead encourages R & D expenditure and actively sets up national research projects.。After the Asian financial crisis, South Korea established a body, the National Council for Science and Technology (NSTC), to fully coordinate the state-funded Redd program. From 1999 to 2004, the government invested 200 billion won every year to set up computer, electronic communications and other related research institutes. In order to improve human capital, the South Korean government launched the "21st Century Elite Project".

South Korea's government spending on Redd continues to rise as a share of GDP and now ranks first among major countries.

From 1998 to 2003, South Korea spent as much as 140 trillion won on scientific and technological research and development, covering 28 fields, including information technology, semiconductors, new energy, fine chemistry, biotechnology, new materials, aerospace and other fields. In 2003, the South Korean government listed semiconductors, new generation mobile communications and new energy vehicles as key industries and strongly supported them. In 2008, in order to resist the global financial crisis, South Korea formulated a new development strategy, and the Korean Future Planning Commission announced the "IT Korea Future Strategy", which plans to infiltrate high-tech IT technology into various industries.

South Korea has made a lot of scientific and technological innovation from direct government intervention in enterprises to supporting R & D.For example, WiBro (Wireless Broadband Access Service), a mobile broadband wireless access technology independently developed by South Korea, is the most cutting-edge at present. At present, the wireless data technologies adopted in the world are mainly WLAN and cellular technology, but the coverage and mobility of WLAN are very limited, while the cellular system is mainly used for language service services. Although mobility and quality of service are guaranteed, data transmission is slow and access cost is high. WiBro can not only ensure the access rate of data services, but also take into account different service requirements such as quality and security.

The Korean government has invested a lot in the development of WiBro. The government promoted the establishment of the project and provided it with abundant funds. In addition, the government has also promoted cooperation between enterprises, and WiBro was developed jointly by Samsung Electronics, Korea Electronics Research Institute (ETRI) and SK Telecom. South Korea is also one of the first countries in the world to formally allocate 2.3GHz frequency resources to mobile WiMAX, which shows its importance.

High investment has also achieved results. At present, Korea Telecom has formed an association with the participation of more than 20 communication operators around the world, hoping that each company's WiBro can form a "transnational roaming zone".

After the basic implementation of "building the country through science and technology", South Korea put forward the strategy of "building the country by culture".The South Korean government has successively promulgated the "five-year Plan for the Development of Cultural Industry" and the "assumption of Cultural Industry in the 12th Century" and so on. Since then, South Korea's cultural industry, such as film and television, music, games and so on, has made considerable progress, and the income of culture-related industries has continued to grow, which, together with South Korea's advanced science and technology, has become the double foot of Korea's modern development.

In the era of globalization, Korean culture has been widely spread. As a close neighbor of South Korea, China is more obviously influenced by "Korean Wave". TV dramas such as "Winter Love Song" and "Da Jang Geum" are very popular with Chinese audiences. Korean variety has swept China, and in recent years, it has partnered with domestic TV stations, such as SBS's "Running Man" and Zhejiang Satellite TV, to launch a popular variety show-running men.

3

The sequelae of the chaebol model have not been eliminated.

After the Asian financial crisis, South Korea has taken a series of reform measures and made remarkable achievements. GDP grew rapidly in 1999, reaching 11.3%, and 8.9% in 2000. Although the economic growth rate has slowed down somewhat since 2001, South Korea's economic performance is outstanding compared with the major countries in the world. In the process of successfully shifting the growth rate, the quality of South Korea's economy has also been improved.

In spite of this, there are still many problems to be solved. The roots of the South Korean chaebol are so deep that the sequelae of the chaebol model still flow in the blood of the South Korean economy.

(1) the chaebol still kidnap the South Korean economy and influence the government

South Korean chaebol are still pervasive, and small and medium-sized enterprises have no opportunity to grow, either strangled in the cradle by big chaebol enterprises, or become subcontractors of chaebol enterprises for chaebol use. Many South Korean chaebol not only monopolize their own industries, but also extend their tentacles to various industries, which can be said to be everywhere. The top four chaebol (Samsung, LG, Hyundai, SK) have an average of 68 subsidiaries. South Korea's top 30 chaebol companies account for 40 per cent of national sales and assets of about 95 per cent of GDP, an astonishing increase from before the crisis.

Most of the chaebol enterprises are run by families, which leads to the excessive concentration of wealth, resources and economic power.The domestic income distribution is very extreme, and it is highly dependent on chaebol enterprises. On the other hand, excessive power and economic power have given rise to the illegal acts of the chaebol, and the heads of these illegal plutocrats are often pardoned for making significant contributions to economic growth after they are imprisoned, leading many South Koreans to think angrily that there is no law to speak of in front of wealth and power.

Under South Korea's existing industrial structure, it is extremely difficult for any start-up company to get a piece of the pie.If their business is shaken to the existing chaebol group, then the chaebol group is likely to force it to withdraw through its own huge power. When the emerging field has better profits and prospects, then the chaebol group, which is "not short of money", will extend its tentacles and set up subsidiaries to set up subsidiaries to get involved in this field.

What is even more frightening is that, in fact, many emerging South Korean enterprises rely too much on South Korean chaebol groups, and they need the cooperation or favor of chaebol groups, because chaebol is a piece of South Korea's economy. Most of the time, chaebol groups appear as Party An in the business field of small and medium-sized enterprises, once they break off cooperation, small and medium-sized enterprises basically have no room for market survival.

Collusion between politics and business is still a stubborn problem in South Korea's economy.Whenever there is a recession in South Korea, the president asks chaebol groups to increase investment and job opportunities, while chaebol companies take advantage of their close relationship with government officials to gain more self-interest. South Korea's chaebol are so powerful that they dare to shout directly to the government. Lee Kun-hee, the former chairman of Samsung Group, publicly insulted the South Korean government.

(2) the problem of high debt still exists, which in turn suppresses domestic productivity

Although South Korea's market environment and economic efficiency have improved after opening up and financial reform, the problem of high debt has not been completely solved.Under the control of the chaebol in South Korea, total factor productivity has not been completely released.

South Korean chaebol show a strong force of "too big to fail", constantly extending to different industries and expanding the business areas of the group. But are these chaebol really omnipotent? The answer is no.

Even Samsung, South Korea's proudest company, is mainly engaged in heavy industries such as electronics, semiconductors, construction, chemicals and shipbuilding, as well as games, advertising, clothing, hotels, amusement parks, investments and so on. But not all of these subsidiaries have achieved good results. For example, Samsung tried to open an automobile business, but was acquired by Renault Group in failure.

In fact, many chaebol subsidiaries survive by intra-group transactions, which has something to do with the interrelated ownership structure of chaebol companies.

As shown in the Samsung Group's shareholding structure chart, the subsidiaries of the chaebol group often contribute money to each other, forming a super-complex network structure. Under such an equity structure, the subsidiaries of the chaebol collude with each other and support each other through internal transactions, which greatly weakens the transparency of the chaebol enterprises. It also shrouds the South Korean economy like a cobweb, making it difficult for South Korea to burst out the new vitality of economic growth.

This puts the government and society in a dilemma. If we do not reform the chaebol, the whole society will be tied up by the chaebol; but if we do, it will be a complete collapse of South Korea's economic network. After all, the chaebol group controls the lifeline of the economy.

Without fair and reasonable competition, the market mechanism can not play its role.Many inefficient subsidiaries of the chaebol group have no ability to make money and have a very high debt ratio, but they continue to survive on the advantage of resources, while the emerging efficient industries and companies can not get a reasonable allocation of resources.

The lack of proper fair competition among South Korean enterprises has resulted in the stagnation of the original big plutocrats. In this way, the total factor productivity is affected, and the social productivity can not be released reasonably for a long time.

Many chaebol leaders deliberately confuse the efficiency of individual enterprises with the economic efficiency of the country as a whole. They believe that using the existing resources and power of existing enterprises to develop new industries is more efficient and more conducive to the country's economic development. But as we all know, this is the ambition of "patriotic" expansion under the surface, and this boundless ambition hinders the development of a fair competition market, resulting in a long-term imbalance in South Korea's economy.

South Korean chaebol is a tool created by the government for rapid development during the military and political period, and it is the product of the times. But they have gone out of control and become the main body of wanton expansion and kidnapping of the government, leaving the South Korean government and people in a dilemma.

(3) the welfare of the people is poor and the two levels of society are seriously divided.

After the Asian financial crisis, South Korea successfully extricated itself from the quagmire and paid off the huge loan of IMF two years ahead of schedule, and its economic growth rate has been in the forefront of OECD countries.However, behind the eye-catching economic growth data, there is no corresponding improvement in welfare for the South Korean people.

South Korea's economic growth has failed to create a large number of jobs, and the coefficient of elasticity of employment is very low, which is related to South Korea's tradition of attaching importance to manufacturing. At present, the structural problem of employment in South Korea has a great impact on society, and the employment problem of teenagers and women is serious.

In addition, South Korea's wage growth has not been able to catch up with its beautiful macroeconomic data.In the decade from 2002 to 2012, South Korea's overall economic GDP grew by 45.6%, but residents' real wages grew by only 23.2%, barely more than half. But the rapid rise in house prices is astonishing.

Taken together, these factors have led to a contraction in South Korean consumption.The decline in expected household income and rising prices have discouraged ordinary South Koreans from spending at will. As a result, the general public believes that they have never been the beneficiaries of South Korea's economic growth, no wonder Koreans shout, "Korea's democracy is not our democracy."

The increasingly serious problem of aging population in South Korea has also hindered the economic development of South Korea.In recent years, the overall fertility level in South Korea is low, while the number of elderly population is increasing, and the speed of aging is very fast. In 2000, the proportion of people aged 65 and above in South Korea reached 7.2% of the total population, and that number is expected to double around 2019. The resulting burden of providing for the aged continues to increase, putting pressure on young people.

South Korea directly crossed the stage of well-being society and entered neo-liberalism, which led to its relatively low level of welfare. The gap between the rich and the poor under the western liberal system has also become more serious in South Korea, where the Gini coefficient has been rising and the uneven distribution of wealth has worsened since the financial crisis.

According to a survey by OECD, 7.9% of South Koreans have fallen from the middle class to the lower class. According to the data released by the Korean Bureau of Statistics in 2005, the middle class, which maintains social stability, began to disintegrate, with very few of them becoming the upper class by virtue of their advanced knowledge and skills, while more of the middle class was reduced to the lower class.

The reform of neo-liberalism has disintegrated the original social contract and employment system in South Korea. although the original authoritarianism had many problems, it also controlled the plutocrats' excessive rent-seeking and other behaviors that led to extreme inequality in a certain period of time.

The reform of financial institutions and chaebol enterprises has led to astonishing unemployment figures. And the default lifetime employment system was replaced by short-term employment, informal employment accounted for a considerable proportion of the labor force, these workers can only get very low wages and benefits. The previous system of high investment and high growth was destroyed, the oath of development before distribution was forgotten, and it was ordinary workers and citizens who paid the most price.

Therefore, the lives of the people have not been improved after the reform and consolidation of the chaebol, and the fruits of economic development are still picked and enjoyed by a small number of people. However, the price paid for rectification and reform is borne by the whole society, which once made it difficult for the Korean people to breathe.

In short, South Korea's economic growth is unequal growth, and the fruits of economic development are enjoyed by a small number of people. However, due to the unreasonable distribution of the fruits of economic growth, it failed to release reasonable consumer demand, so it did not let consumer demand stimulate investment, making South Korea's economic development face a new dilemma.

4

Conclusion

South Korea's rebirth of Nirvana after the Asian financial crisis is also a miracle. It is also the first country to pay off its IMF debts ahead of schedule and embark on the road of sustainable economic development after the serious financial crisis. Reviewing the history of South Korea, it is not difficult to find that the sustained development and rapid exit of the crisis in South Korea is related to the dynamic adjustment of its policy in time according to the current situation. With the help of the financial crisis, South Korea successfully carried out the reform of the financial system, eliminated some enterprises that hindered the development of the market, and realized the transformation of the economy from quantity to quality.

But objectively speaking, South Korea's current economic model still has many drawbacks.In order to achieve long-term economic development, industrial structure adjustment should be carried out continuously, and the problem of plutocrats in South Korea is still serious. It is obviously not wise to allow behemoths to continue to grow and further shrink the living space of small and medium-sized enterprises. How to achieve a fair and efficient market and release internal productivity is an urgent task for South Korea.

In addition, in the case of further deterioration of international terms of trade, it is risky to continue to rely on exports. South Korea should also expand domestic demand, increase residents' income and improve people's welfare, so as to use consumption to drive growth.