The business and economic strategy based on chaebols took an export and outward-oriented model to boost the country’s economy through business associations. Today, the chaebols have become global powerhouses that have made the economy of South Korea become one of the greatest in the world. Chaebols are multinational conglomerates that are controlled by certain families in South Korea. The chaebols have received immense government support in South Korea resulting in fast economic growth and an increase in the country’s GDP of about 10 percent between the years 1962-1994 (Powers, 2010).
The Korean chaebols have resulted in enormous economic growth of South Korea from early 1960s to early 2000. The economic growth in South Korea was due to the effects from industrial and other services sector. The industrial sector increased its contribution to the country’s economy from 20 to 37 percent while the services sector increased from 43 to 60 percent from 1965 to 2008.
To boost economic growth, the South Korean government fully supported the chaebols. The government nationalized all commercial banks so that the banks could channel all their finances to the chaebols. The chaebols had a great share of the total credit produced by financial institutions. As a result, the chaebols had to fulfill most of their export obligations thus, increasing economic growth in South Korea. The government also developed an export strategy to promote export of goods and at the same time substitute imports that favored the conglomerates. The government also restricted direct foreign investments and used this as a chance to get new technologies and business expertise. As a step to support fast economic growth, the government allowed the chaebols to access foreign loans. In contrast, the government curbed any outflows in domestic capital. Government support of the chaebols was of a great magnitude to the extent that the chaebols expanded unprecedentedly in size. The chaebols had

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