EAI Fellows Program Working Paper Series No.15

Abstract
By comparing Korea’s relative level of corruption with that of Taiwan and the Philippines and examining how a political economy of corruption has developed over time within Korea, I test my “inequality hypothesis” and existing theories on causes of corruption. I find that inequality of income and wealth best explains the relative level of corruption among these countries and across time within Korea, consistent with my hypothesis. Although developmental state and crony capitalism literature paradoxically emphasize the “autonomous and uncorrupt bureaucracy” and “rampant cronyism and corruption” in Korea, respectively, I find that Korea has been neither as corrupt as the Philippines nor as clean as Taiwan. Successful land reform in Korea and Taiwan brought about low levels of inequality and corruption, while failure of land reform in the Philippines led to a high level of inequality and corruption. Wealth concentration due to chaebol industrialization, however, increased corruption over time in Korea, in comparison with Taiwan.

Author
Dr. You received his Ph.D. in public policy from Harvard University in June 2006. His research focuses on Korean politics, comparative politics, political sociology, and comparative public policy.

His doctoral thesis explored how income inequality affects corruption and how corruption and inequality erode social trust through a large cross-national study and comparative case study of South Korea, relative to Taiwan and the Philippines. His article with S. Khagram entitled "A Comparative Study of Inequality and Corruption" was published in the American Sociological Review (February 2005). At IR/PS he teaches graduate courses on Korean politics and justice, development, and public policy, and an undergraduate course on course on corruption, inequality, and democracy.

Before pursuing an academic career, he worked for democratization and social justice in South Korea. He was imprisoned for more than two years because of his active role in the anti-dictatorship student movement under the military regimes, but later was recognized as a person of merit for democratization by a democratic government. He worked for Citizens" Coalition for Economic Justice, an influential NGO in Korea, as Director of Policy Research and later as General Secretary.

 This paper was submitted to "EAI Fellows Program on Peace, Governance, and Development in East Asia" supported by the Henry Luce Foundation based in New York. All papers are available only through the online database.

South Korea (Korea hereafter, except occasionally), together with Taiwan, has been praised by many scholars as a model developmental state with a competent and uncorrupt bureaucracy (Johnson 1987; Amsden 1989; Evans 1995; Wade 1990). Since the financial crisis of 1997, however, Korea has often been labeled as an example of crony capitalism, together with other Asian countries like the Philippines (Kang 2002). Hence, an important question to be resolved is whether Korea has been as corrupt as the Philippines or relatively clean like Taiwan.

Indeed, Taiwan and the Philippines are ideal comparison cases. Korea shares many similarities with Taiwan and the Philippines. The initial economic conditions in the 1950s and 1960s were not much different among these countries. The three countries all experienced colonial rule before World War II, and were all heavily supported by the US during the Cold War era. They all have been experiencing democratization processes over the last two decades. Despite the similar initial conditions, however, the levels of corruption and economic development today are quite different. Taiwan has an obviously lower level of corruption than the Philippines. Not only do all the available quantitative measures of (perceived) corruption indicate that this is the case, but this has not been contradicted by any qualitative studies, to my knowledge. Where, then, does Korea fall relative to Taiwan and the Philippines, and why is that so?

The second set of questions is about Korea’s corruption trend. Many scholars, including Alice Amsden (1989) and Peter Evans (1995), regarded Park Chung-Hee’s regime (1961-79) as a prototype of a developmental state, while they judged Syngman Rhee’s regime (1948-60) as predatory. Others such as Andrew Wedeman (1997) and David Kang (2002), however, argued that both regimes were similarly corrupt. Thus, the controversy regarding the transition from a predatory state to a developmental state is another interesting question. Understudied, yet no less important, are the questions of how industrialization and economic development since the 1960s and political democratization since 1987 have affected the level of corruption in Korea.

By corruption, I mean “abuse of power for private gain.” There are many kinds of corruption, but this paper will focus on political corruption and high-level bureaucratic corruption. Although petty corruption may be more important for the everyday lives of most people, there is evidence that the degree of petty corruption is closely correlated with the degree of political and high-level bureaucratic corruption.1 Also, I use the term capture, which indicates that corruption has reached to the point in which the state has lost autonomy and serves for the special interests of the privileged...(Continued)