Business studies - asian pacific studies - Essay Example

The chaebol were guaranteed loans to divert the investment form agricultural setups to industrialisation (Song, 1990). With the availability of resources and support of the government, the chaebol played a tactical role in exposing the export market for the Korean economy and placed the country among the East Asian Tigers. Most of the success of the chaebol has come from the realisation of the Korean government after in the 1960s and later that they needed the ideas and cooperation of the chaebol to implement much of the government’s plans to turn the economy away from consumer driven goods and small industries (Stiglitz, 2001).

Furthermore, in return to the chaebols’ cooperation, the government would extend special favours and allow monopolistic and oligopolistic presence of these business groups to grow. In addition, these business groups were also facilitated with foreign and domestic investments as loans as the Korean government guaranteeing their return if the business group failed to. In the shade of this government support, the chaebol not only helped themselves with huge foreign investments but also benefited from access to foreign technology.

Since the chaebol were the only leaders to develop the industrial sector their success came with the expansion of the South Korean exports. The chaebol were solely dominating all industrial sectors with the support of the government and in the 1980s the chaebol were financially independent and did not need any further government assistance. The chaebol were heavily invested in meeting the demand of the export market and had tailored their products in accordingly. They had completely overseen the local market and the opportunities available within the borders of Korea (Stiglitz, 2001).

Moreover, by the 1990s, the chaebol had developed oligopolistic competition among themselves and had reached overcapacity which the local market could not have supported in case of a decline in the