How Chaebols of South Korea influence the public policy

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INTRODUCTION

Public policy is a process about selecting strategies and making choices. Public policy making
include some steps –getting of agenda, policy formulation, policy adoptions, policy
implementation. It must be also evaluated to see the intended results, to revise existing and future
public programs and projects. Public policy can be studied as producing three types of policies
(distributive, regulatory and re-distributive) related with decision making process. Public
administration is the set of processes, structures, functions, methods and procedures. Public
administration is the formulation and particularly implementation of public policy and the
examination of the strategies and choices associated with that process. Public administration also
can be defined as public programs and projects, profession and as academic field of study. There is
no clear separation between administration and politics in the development of government policy
and public administration. Administrators engage in political acts by recommending legislation as
much as by making policy decisions in carrying out the laws.

Korea is well known for its rapid growth, often described by the symbolic phrase "Miracle of the
Han River." Rising from the ashes and devastation of the Korean War, Korea has become one of
the world's leading economies. While this rapid growth brought wealth and pride to many
Koreans, it also created a series of socio-economic problems such as dominance of Chaebol,
bipolarization, inefficiency of government-driven market economy, etc. In addition, the IMF
Bailout in 1997 totally restructured the whole Korean society, putting Korea under the order of
global neo-liberalism. The middle class and small businesses collapsed, worsening the polarization
of the Korean society and making the life of many ordinary families miserable. The Korean
government, however, decided to go on a path that focused on surviving amongst global
competition rather than sharing and solidarity in its macroeconomic policy: the government
concentrated more resources to the selected few, namely Chaebol and large corporate groups, with
unemployment worsened and many small businesses suffered.
 How Chaebols of South Korea influence the public policy

Chaebols, Korean big business conglomerates, have had a huge influence in the global economy
and in Korean society and politics. Literally it means group or party of wealth. Some stress the
significant contribution chaebols have made to the unprecedented rapid development of the
Korean economy, while others highlight their concomitant problems such as cronyism, corrupt
relations with government, and economic concentration. Although such problems seem to have
been reduced in recent years thanks to institutional pressures enacted by the Korean government
after the financial crisis of 1997, the pending reforms of the chaebol system are still important
issues that permeate political and economic debate in Korea.
 How Chaebols of South Korea influence the public policy

Chapter 2. History of Chaebol

South Korea's economy was small and predominantly agricultural well into the mid-20th century.
However, the policies of President Park Chung Hee spurred rapid industrialization by promoting
large businesses, following his seizure of power in 1961. The First Five Year Economic Plan by
the government set industrial policy toward new investment, and the chaebol were to be
guaranteed loans from the banking sector. The chaebol played a key role in developing new
industries, markets, and export production, helping make South Korea one of the Four Asian
Tigers.
Although South Korea's major industrial programs did not begin until the early 1960s, the origins
of the country's entrepreneurial elite were found in the political economy of the 1950s. Very few
Koreans had owned or managed larger corporations during the Japanese colonial period. After the
departure of the Japanese in 1945, some Korean businessmen obtained the assets of some of the
Japanese firms, a number of which grew into the chaebol of the 1990s.
The companies, as well as certain other firms that were formed in the late 1940s and early 1950s,
had close links with Syngman Rhee's First Republic, which lasted from 1948 to 1960. It is
confirmed that many of these companies received special treatment from the government in return
for kickbacks and other payments.

When the military took over the government in 1961, its leaders announced that they would
eradicate the corruption that had plagued the Rhee administration and eliminate "injustice" from
society. Some leading industrialists were arrested and charged with corruption, but the new
government realized that it would need the help of entrepreneurs if the government's ambitious
plans to modernize the economy were to be fulfilled. A compromise was reached, under which
many of the accused corporate leaders paid fines to the government. Subsequently, there was
increased cooperation between corporate and government leaders in modernizing the economy.

Government-chaebol cooperation was essential to the subsequent economic growth and

astounding successes that began in the early 1960s. Driven by the urgent need to turn the economy
away from consumer goods and light industries toward heavy, chemical, and import-substitution
industries, political leaders and government planners relied on the ideas and cooperation of the
chaebol leaders. The government provided the blueprints for industrial expansion; the chaebol
realized the plans. However, the chaebol-led industrialization accelerated the monopolistic and
oligopolistic concentration of capital and economically profitable activities in the hands of a
 How Chaebols of South Korea influence the public policy

limited number of conglomerates.

Park used the chaebol as a means towards economic growth. Exports were encouraged, reversing
Rhee's policy of reliance on imports. Performance quotas were established.
The chaebol were able to grow because of two factors: foreign loans and special favors. Access to
foreign technology also was critical to the growth of the chaebol through the 1980s. Under the
guise of "guided capitalism," the government selected companies to undertake projects and
channeled funds from foreign loans. The government guaranteed repayment should a company be
unable to repay its foreign creditors. Additional loans were made available from domestic banks.
In the late 1980s, the chaebol dominated the industrial sector and were especially prevalent in
manufacturing, trading, and heavy industries.

The tremendous growth that the chaebol experienced, beginning in the early 1960s, was closely
tied to the expansion of South Korean exports. Growth resulted from the production of a diversity
of goods rather than just one or two products. Innovation and the willingness to develop new
product lines were critical. In the 1950s and early 1960s, chaebol concentrated on wigs and
textiles; by the mid-1970s and 1980s, heavy, defense, and chemical industries had become
predominant. While these activities were important in the early 1990s, real growth was occurring
in the electronics and high-technology industries. The chaebol also were responsible for turning
the trade deficit in 1985 to a trade surplus in 1986. The current account balance, however, fell
from more than US$14 billion in 1988 to US$5 billion in 1989.

The chaebol continued their explosive growth in export markets in the 1980s. By the late 1980s,
the chaebol had become financially independent and secure, thereby eliminating the need for
further government-sponsored credit and assistance.

CHAPTER 3: SYSTEMATIC ARRANGEMENT

 How Chaebols of South Korea influence the public policy

Some chaebol are one large corporation while others have broken up into loosely connected
groups of separate companies sharing a common name. Even in the latter case, each is almost
always owned, controlled, or managed by the same family group.
South Korea's chaebol are often compared with Japan's keiretsu business groupings, the successors
to the pre-war zaibatsu. While the "chaebol" are similar to the "zaibatsu" (the words are cognates,
from the same hanja or kanji), some major differences have evolved between chaebol and keiretsu:
 Chaebol are still largely controlled by their founding families while keiretsu are
controlled by groups of professional managers. Chaebol, furthermore, are more family
based and family oriented than their Japanese counterparts.
 Chaebol are centralized in ownership while keiretsu are more decentralized.
 Chaebol have more often formed subsidiaries to produce components for exports
while large Japanese corporations have mostly switched to employing outside contractors.
 The major structural difference between Korean chaebol and the Japanese keiretsu
is that chaebol do not all have their own financial institutions. Most were heavily
dependent on government loans and loan guarantees in their early years, and they still have
a closer relationship with government than their Japanese counterparts. Chaebol are largely
prohibited from owning private banks, partly to spread risk and partly to increase the
government's leverage over the banks in areas such as credit allocation. In 1990,
government regulations made it difficult for a chaebol to develop an exclusive banking
relationship, but following the cascading collapses of the late 1990s, it was somewhat
relaxed. Keiretsu have historically worked with an affiliated bank, giving the affiliated
companies almost unlimited access to credit, so the economic problems for which the
Japanese have been known is zombie banks rather than a systemic banking crises.
However, many of the largest keiretsu have diversified their debt practices, and public
bond sales have become somewhat common.
The chaebol model is heavily reliant on a complex system of interlocking ownership. The owner
of the chaebol, with the help of family members, family-owned charity and senior managers from
subsidiaries, has to control only three of four public companies, who themselves control other
companies that control subsidiaries. A good example of this practice would be the owner
of Doosan, who controlled more than 20 subsidiaries with only a minor participation in about 5
companies
CHAPTER 4: INTO THE POLITICAL REALM

The speed and scope of South Korea’s political development in recent years have been as
 How Chaebols of South Korea influence the public policy

impressive as its economic development in previous decades. Since the transition to democracy
occurred, with the belated arrival of political liberalization and a return to direct presidential
elections in 1987, virtually all realms of Korean society have democratized.
o In the political realm, under the Kim Dae-jung government, power shifted from the
Kyongsang area in the southeast to Cholla in the southwest. This horizontal power shift is
important for ending the political dominance of the Kyongsang area. Regional competition
in the public policy-making process has become more democratic.

o Both the Roh government and National Assembly have become more accountable
for the public’s welfare and are better monitored by the Korean people. The power of
public authority was often unchecked and misused in the past. Now Korean voters and
civic representatives monitor whether public officials and assemblymen represent the
public’s interest and observe their due responsibilities.

o In terms of civilian-military relations, the government has become fully civilian, as

the Korean military was completely depoliticized in the early 1990s. The history of former
generals seizing the presidency was denounced and two former presidents, Chun Doo-
hwan and Roh Tae-woo, were convicted of crimes and sent to prison. As its image has
become more progressive, the Korean military is regaining the public trust.

o Economic liberalization has been no less impressive. With the 1998 Asian financial
crisis, Korea’s big businesses (chaebols) and financial companies underwent substantial
reforms that have led to enhanced transparency in corporate governance and financial
accountability, among other areas.

o The most impressive gains, however, were made in the area of democratization,
with the rise of a civil society. Although still not to the degree seen in advanced nations,
Korean society has become increasingly conscious and supportive of the rights of women
and minorities, including the handicapped and homosexuals. Traditional Korean values
such as respect for authority and hierarchy are rapidly giving way as increased value is
placed on individual freedoms and equality. These social democratic changes were driven
in part by reform-minded governments and the efforts of domestic NGOs.

Paradoxically, all this progress appears to have created a society more fragmented than ever
before, with increased social conflict and instability. In the last few years, the debate over major
policy issues has reflected the increasing polarization of Korean social values and attitudes. At the
same time, the ideological pendulum has been swinging in the liberal, or leftist, direction. For the
 How Chaebols of South Korea influence the public policy

last several decades, Korean society has been relatively conservative, valuing stability and order.
Naturally, democratization, which has been more vibrant in Korea than in any other part of Asia,
has generated a range of competing ideas that promise a departure from the past, and opportunities
for more new ideas. Korea’s democratization has had an especially liberating effect on leftist
ideals and values, which were severely repressed in the past. Since “leftist” remains a negative
label to many Koreans, new contesting ideas and ideological dispositions have been termed
“progressive.” Thus, the political divide between “conservatives” and “progressives” would be
analogous to the divide between “conservatives” and “liberals” in U.S. politics.

Influencing Agendas

There was a joke in South Korea back in the 1990s. It went like this:
What would employees of the mighty Korean conglomerates -- the so-called chaebols -- do if they
were accidentally confronted by a fearsome bear while strolling through the forest?
Hyundai employees would club the bear to death without hesitation. Daewoo would call its
Chairman Kim Woo-jung and await his command. Samsung would hold a meeting -- with the bear
still in front of them -- to discuss how to proceed. LG would wait for Samsung's response, and
then do the same.
Many spin-offs of the joke still exist today, and it shows how deeply the chaebols are embedded in
the South Korean consciousness. Though Daewoo Group -- most famous for its line of cars -- is
now defunct, the other conglomerates are still very much living, breathing parts of the
world's 13th-largest national GDP. Chaebols are quite numerous, but the largest -- dubbed the
"Big Four" by the South Korean press -- are Hyundai Motor Company, SK Group and perennial
rivals, Samsung and LG.

At its peak in 1999 and prior to increased government regulation, the cross-ownership of
subsidiaries within chaebols was at 43 percent, according to the Fair Trade Commission [Korean].
Loans between unrelated companies within a chaebol were also guaranteed -- done to protect
ownership and maintain control by the ruling family.
"It is very difficult to find similar counterparts abroad to South Korea's chaebols today," said Park
Sang-in, professor at Seoul University's Graduate School of Public Administration. "In English-
speaking countries, there really are no business groups, but singular companies that own its
subsidiaries 100 percent. In Europe, conglomerates are never as big as the chaebols and ownership
and management is usually strictly divided.
"On the other hand, the chaebol is compromised of multiple companies with robust internal
 How Chaebols of South Korea influence the public policy

transactions, all controlled by a single, near all-powerful chairman that act as both manager and
the de facto owner of the entire enterprise."
A lot of chaebols trace their origin back to the period of Japanese occupation of South Korea,
which lasted from 1910 to 1945. Others, like the heavy-industries-focused Doosan Group, trace it
back further, to the country's last dynasty. But these narratives conveniently surfaced after the
chaebols became true titans of industry.
The word chaebols, as well as their formation, is widely believed to have been influenced by
Japan's zaibatsu -- the two words are even spelled the same in Chinese. Like the chaebols, zaibatsu
were family-owned conglomerates, however, "family" to them meant those who you form close
bonds with, rather than strictly referring to blood relations. The zaibatsu disbanded after World
War II, and their successors today are loose federations of companies, rather than centralized
conglomerates like the chaebols.

Like the corporate trusts of the US in the late 19th and early 20th centuries, a relationship between
the government and the private sector was formed that still defines South Korean politics and
economy today. Park coaxed, wheedled, intimidated, manipulated and outright threatened the
companies for cooperation. But the president also offered incentives -- government and foreign
loans, relaxed regulations and tax cuts.
"South Korea can be defined as a 'developmental-state,' where the government actively intervened
and worked closely with companies," said Cho Dong-keun, a professor at the department of
economics of Myongji Unversity. "In some ways, it was necessary, because the market was
imperfect. And the chaebols were born."
The Federation of Korean Industries was formed by the chaebols in 1963 to promote their interest
and support Park's drive. It acted as the voice of the chaebols, and its mission was to foster
coordination among them. Though influence has somewhat declined, the chairman of the
Federation was at one point referred to as the "Prime Minister of Economy" by the press and
wielded considerable political power.
Samsung and LG were already flourishing, both among the top ten companies in South Korea
even before Park's regime took charge, and the pair didn't always welcome the government's
initiatives. For example, Samsung founder Lee Byung-chull and Park disliked each other: Lee,
who was older than Park (seniority being very important in Korean culture), thought of the
president as an upstart, uneducated thug. President Park, on the other hand, thought of Lee as a
man born with a silver spoon in his mouth.
During Park's five-year plans -- rolling periods of government-outlined economic development --
the government sometimes took successful subsidiaries away from the chaebols: On Park's orders,
 How Chaebols of South Korea influence the public policy

Samsung would cede a bank, a fertilizer manufacturer and a broadcaster, much to its dismay.
The government policy would also bring in new blood -- most famously Hyundai, which began as
an unimpressive, middling construction firm, but become a powerful chaebol during Park's
presidency. Hyundai's famed founder Chung Ju-yung, a peasant's son and an elementary school
dropout, had a do-or-die spirit that Park felt was needed in South Korea. The charismatic Chung
clinched projects and showed feats that were considered impossible. With Park's support, Hyundai
built the 400km-long Gyeongbu Expressway that connected the capital city Seoul to South Korea's
southern city in less than two and a half years. When the chaebols began to look overseas in the '70s,
Hyundai built a shipyard without ever having made a ship before. Daewoo, a relatively small trading
company in the '60s, came into power in the '70s thanks its founder Kim Woo-jung's father being a mentor
to President Park. Given first rights to purchase debt-ridden public companies -- another benefit offered to
the chaebols by Park -- Daewoo transformed itself into a mega-conglomerate.
Lacking a traditional entertainment industry, the chairmen and founders of the chaebols became
celebrities and heroes for a still-developing country. Gossip ran amok on what the chairmen did or
didn't do. Self-aggrandizement and publicity were mixed with real achievements, and the diverse
personalities and business philosophies of the chairmen trickled down to their employees. Hyundai
employees became known for their "shoot first, think later" approach to business; their motto was
if it doesn't work, make it work. Samsung developed a reputation for reviewing every possible
option before making a choice. The two chaebols are considered polar opposites, even today.
Park's strategy won wide support from the people. Many looked at South Korea's increasing
wealth with pride, and working for the chaebols meant contributing to the national cause. This was
the grand narrative of the chaebols. Their success was South Korea's success. The sentiment has
since waned, but the story still has a strong thread nonetheless.

CHAPTER 5: EFFECTS AND FUTURE STAND

Pressure to take the chaebol to task has come from two directions. As the corporate monoliths
have expanded beyond South Korea's shores there is growing concern at home that the industrial
champions do not conform to the highest standards of probity. More importantly, Koreans are
questioning an industrial policy that mostly benefits a few vast conglomerates.
 How Chaebols of South Korea influence the public policy

South Korea has reason to be grateful to the chaebol, which helped the country industrialise in
return for cheap loans and the freedom to expand where the fancy took them. But they also created
a brand of export-dominated crony capitalism that an educated middle class increasingly opposed.
The system began to unravel with the Asian financial crisis of the 1990s. Mighty debts that had
built up because of the close relationship between chaebol, banks and the government led to the
break-up or demise of some conglomerates. Others, like Samsung and Hyundai, emerged tougher
and better placed for global expansion.

The chaebol may deserve much of the credit for South Korea's rapid economic development, but
many now fear the country's massive conglomerates have become far too powerful. Samsung
Group alone now accounts for roughly 20 per cent of South Korea's gross domestic product.
South Korea's economy has slowed sharply in recent quarters, and is pushing up against the limits
of its export-led growth. Economic observers say the chaebol's dominance is now suffocating the
country's attempt to shift gears and foster a more innovative services-oriented economy powered
by small businesses.
Powerful South Korean exporters are being hit at the low end by expanding Chinese
manufacturers and at the high end by Japanese players who have benefited from a deliberately-
weakened yen. Exporters are creating fewer jobs in South Korea as the chaebol move production
offshore.
That has left large firms profitable, but the domestic economy hurting: South Korea's household
debt is now rising fast, small and medium-sized businesses are still unproductive and failing to
grow larger, and the high-value services sector is lagging well behind other countries.

The chaebol may deserve much of the credit for South Korea's rapid economic development, but
many now fear the country's massive conglomerates have become far too powerful. Samsung
Group alone now accounts for roughly 20 per cent of South Korea's gross domestic product.
South Korea's economy has slowed sharply in recent quarters, and is pushing up against the limits
of its export-led growth. Economic observers say the chaebol's dominance is now suffocating the
country's attempt to shift gears and foster a more innovative services-oriented economy powered
by small businesses.
Powerful South Korean exporters are being hit at the low end by expanding Chinese
manufacturers and at the high end by Japanese players who have benefited from a deliberately-
weakened yen. Exporters are creating fewer jobs in South Korea as the chaebol move production
offshore.
That has left large firms profitable, but the domestic economy hurting: South Korea's household
 How Chaebols of South Korea influence the public policy

debt is now rising fast, small and medium-sized businesses are still unproductive and failing to
grow larger, and the high-value services sector is lagging well behind other countries.
The government proceeded to liquidate unprofitable companies. It initiated what is known as the
"Big Deal" in South Korea, and ordered chaebols to sell their non-core businesses to other
chaebols. The chaebols initially refused, but following continued pressure, finally agreed. LG had
to sell its semiconductor business and Samsung sold its automobile business. The crisis cooled
down when the disaster spread to other nations, and US lowered its interest rate.
Even before the crisis, the chaebols themselves were calling for change: despite their size,
profitability was extremely low compared with their counterparts in the US and Europe. The
chaebols proceeded to decrease their expenses, and sold off unrelated businesses. Both voluntarily
and forcibly, the chaebols began to focus on related core businesses -- which some had vocally
opposed in the '80s and '90s -- which would work to the advantage of Samsung and Hyundai. At
the same time, each company within a chaebol was given more autonomy.
"The Asian Financial Crisis was a sort of stress-test for the chaebols," said Myongji University's
Cho. "Out of the 30 top chaebols, 16 went bankrupt. Those who thoughtlessly diversified their
businesses collapsed."
The chaebols themselves felt confident in their own technology and know-how when it came to
manufacturing. What they needed now was great design, branding and marketing. Most of their
corporate identities were renovated. Samsung and LG made strategic investments into
manufacturing TVs, handsets and home appliances before their Japanese or US counterparts.
Hyundai branded its cars as luxury vehicles. Thanks to the government's continuing support, SK
began to develop the fastest broadband in the world.
The chaebols still enjoy the support of many people, who believe they led South Korea out of
another financial crisis.

In the spotlight as the country confronts regional and domestic unrest, South Korea faces an
uncertain economic future. South Koreans are simultaneously dealing with a recent impeachment
of their president, the election of a new president on a platform of aggressive reform, and a
nuclear-equipped adversary to the north that grows ever more belligerent. The new president’s
promised economic reforms are also raising questions about the potential impact on a key U.S.
ally and trading partner.

South Korean President Moon Jae-in won a special election May 9 following the impeachment of
 How Chaebols of South Korea influence the public policy

former President Park Geun-hye. Moon promised voters he would go after government and
corporate corruption, particularly the ties between government and large family-owned
conglomerates, known as chaebol, that have played a dominant role in South Korea’s economic
growth. Examples of these companies include Samsung and Hyundai.
The Emerging Markets Traders Association explored what the situation could mean for regional
security and the South Korean economy during an event Monday in New York City. Bill
Richardson, the former U.S. Ambassador to the United Nations, shared his thoughts on the region
during the event.

“[Moon’s] pledge for reforms has been well received by South Koreans,” Richardson said. “We
have a situation where the dynamics of the region are changing. What’s going to happen with this
commitment to open up dialogue with North Korea? What’s going to happen with the South
Korean economy? I think it’s too early to judge what’s happening.”

Richardson has served as a governor of New Mexico, U.S. congressman, and U.N. ambassador.
The Korean Peninsula has been an important aspect of his foreign-policy focused political career.
Richardson believes the new president should first try to stabilize the economy so that the country
can better handle foreign threats and other challenges.
Former President Park sits in jail after divulging state secrets and colluding to accept bribes. The
scandal has led to calls for significant reforms, and Moon won the presidency by a wide margin on
a promise to pursue reforms that root out economic corruption. Investors and experts on the
region, however, are urging caution against impulsive reforms that could drastically reshape the
South Korean economy.

“I’ve heard some very good things about this president,” Richardson said. “His thirst for reform,
young people supporting him. But as he sets out to make changes, I think the devil will be in the
details. No one is certain what his policies are going to be in the short run, and many years down
the road. And I think this has brought some concerns to investors.”

Moon has said he will target the chaebol in his reform efforts. This could substantially impact the
economy. Unlike in the U.S. where even the largest companies remain a small piece of the total
economy, the assets of the 100 largest chaebol are equal to those of the South Korean government.
Samsung alone is responsible for 20 percent of South Korea’s economy.

But Samsung, like other chaebol, is facing tremendous future uncertainty with its leader, Jay Y.
Lee, on trial and looming investor fears that President Moon may act rashly in his pursuit of
prosecuting business leaders and in implementing structural reforms to the chaebol that could
 How Chaebols of South Korea influence the public policy

harm South Korea’s most important economic engines.

The concern from skeptics of Moon’s possible reform of a large swath of the economy, as
explained by a writer in Investor’s Business Daily, is: “Liberal economic reforms and breaking up
successful businesses could weaken South Korean companies and make it harder for them to
compete globally.” South Korea’s economy is already facing increased pressure from China’s
growing economy, and President Donald Trump’s stance on trade may also impact the country.

The Organisation for Economic Co-operation and Development (OECD) found the recent political
unrest has taken a toll on the South Korean economy. The gross domestic product (GDP) declined
late last year in the face of domestic and international challenges. The economy, however, is
expected to start turning around once everything settles.

“GDP growth declined in the latter part of 2016 in the context of political uncertainty, corporate
restructuring and a drop in exports,” OECD detailed in a recent report. “Assuming that domestic
and international political uncertainty dissipates, growth is projected to edge up to 2.8% in 2018,
supported by a pick-up in exports and rising business and consumer confidence.”
The OECD is an intergovernmental organization founded to promote economic progress and
world trade. The report also notes that South Korea has helped to improve its own place in the
global economy by joining over a dozen free trade agreements since 2003.

“The South Korean economy has recently been growing faster than expected coming off a
laudable leadership transition in the wake of the scandal surrounding President Park Geun-hye,”
said Kyle Ferrier, director of research at the Korea Economic Institute of America, in an interview
with InsideSources. “South Korea’s key stock market index, the KOSPI, is at an all-time high.
Ferrier adds exports and investments related to increased demand for high quality semiconductors
have been the catalyst for this recent growth. He notes the pace at which interest rates increase and
the buildup of household debt remain the key economic risks to watch.
“At the same time, despite the scandal, the South Korean economy is doing pretty well,”
Richardson said Monday. “Not just among Asian countries, but among other major industrialized
countries. Moon must balance how to tackle reforms, how to take on reforms, without rattling the
unique structure of the South Korean economy.”
Moon has also pledged to open up a dialogue with North Korean dictator Kim Jong-un. Ferrier
says that pressure from the north is likely doing little to impact the South Korean economy, but
increased tensions in the region have raised concerns.
“North Korean provocations have had a minimal impact on the South Korean economy in the
recent past,” Ferrier said. “Increased tensions after U.S. President Donald Trump’s promise to
 How Chaebols of South Korea influence the public policy

more aggressively approach North Korea seemed to have raised market concerns about the long-
term geopolitical stability of the Korean Peninsula, though the impact of those concerns has
arguably been minimal and short-lived.”
President Donald Trump has been focusing on the region in recent months as North Korea has
become more provocative. The United States and South Korea are key allies. Richardson believes
the Korean Peninsula poses the first major foreign policy test for Trump.