Crony Capitalism: Corruption and Development in South Korea and the Philippines (Cambridge Studies in Comparative Politics)

Why has the literature on Asian development not addressed the issue of money politics in Korea? How can we reconcile the view of an efficient developmental state in Korea before 1997 with reports of massive corruption and inefficiency in that same country in 1998 and 1999? Politics is central to the answer. In this book the author makes two arguments. First, both Korea and the Philippines experienced significant corruption throughout the post-independence era. Second, political - not economic - considerations dominated policy making in both countries. Focusing on the exchange of favors for bribes between state and business, the author argues that politics drove policy choices, that bureaucrats were not autonomous from political interference in setting policy, and that business and political elites wrestled with each other over who would reap the rents to be had. Even in Korea, corruption was far greater than the conventional wisdom allows. Cover......Page 1 Half-title......Page 3 Series-title......Page 5 Title......Page 7 Copyright......Page 8 Contents......Page 9 Figures......Page 10 Acknowledgments......Page 15 1 The Puzzle and the Theory......Page 19 I. The Argument......Page 21 II. The Theory: Money Politics, Rent Seeking, and Corruption......Page 30 1. The Politics of Corruption......Page 31 2. Types of Corruption: Bottom-Up or Top-Down......Page 33 3. Measurement......Page 36 III. Conclusion......Page 38 2 Comparing Korea and the Philippines......Page 39 I. Contrasting Colonial Legacies......Page 41 II. The Role of External Threats......Page 47 1. No Threat to the Philippines......Page 48 2. Severe External Threat to South Korea......Page 52 III. Economic Performance......Page 58 1. Investment and U.S. Aid......Page 60 2. Agriculture and Exports......Page 64 3. Economic Policies......Page 66 IV. Politics and Society......Page 68 1. Oligarchs and Networks......Page 69 2. Education......Page 73 V. Conclusion......Page 78 3 Institutions: Bureaucrats and Rulers......Page 79 I. Personnel Policy and the Organization of the Civil Service in South Korea......Page 83 2. Examination Procedures......Page 85 3. Internal Promotion......Page 88 4. Monitoring and Enforcing Bureaucratic Compliance under Rhee and Park......Page 90 II. Clientelism and Reform in the Philippines......Page 92 1. The Democratic Era: Patronage Plus......Page 94 2. Education and Exams......Page 95 3. Marcos and Martial Law......Page 98 4. State Strength and the Marcos Regime......Page 101 III. What Was Different in Korea? Credible Commitments and the Bifurcation of the State under Park......Page 103 IV. Park’s Major Policy Shifts......Page 108 V. Conclusion......Page 112 4 Mutual Hostages in Korea......Page 114 I. Politicians: The Demand for Political Funds......Page 116 II. Businessmen: The Supply of Bribes in Exchange for Rents......Page 124 1. The Logic of the Exchange......Page 125 2. How the Process Worked in Practice......Page 127 III. Mutual Hostages......Page 134 IV. Conclusion......Page 139 5 Bandwagoning Politics in the Philippines......Page 140 I. The Democratic Era (1946–1972)......Page 141 1. Parties and Elections......Page 143 2. Policy......Page 148 II. Marcos and Martial Law (1972–1986)......Page 154 1. The Players......Page 156 2. The Competitors......Page 159 3. The Survivors......Page 161 4. The Endgame......Page 162 1. Similarities......Page 163 2. Differences......Page 165 IV. Conclusion......Page 168 6 Democracy in the 1980s and the Financial Crisis of 1997......Page 169 I. Democratic Transitions in the 1980s......Page 171 II. The Asian Financial Crisis of 1997......Page 174 1. Korea......Page 176 2. The Philippines......Page 189 III. Conclusion......Page 198 7 Conclusion: Corruption and Development......Page 199 I. Corruption and Development......Page 200 II. Conclusion......Page 205 Index......Page 213 Cover 1 Half-title 3 Series-title 5 Title 7 Copyright 8 Contents 9 Figures 10 Acknowledgments 15 1 The Puzzle and the Theory 19 I. The Argument 21 II. The Theory: Money Politics, Rent Seeking, and Corruption 30 1. The Politics of Corruption 31 2. Types of Corruption: Bottom-Up or Top-Down 33 3. Measurement 36 III. Conclusion 38 2 Comparing Korea and the Philippines 39 I. Contrasting Colonial Legacies 41 II. The Role of External Threats 47 1. No Threat to the Philippines 48 2. Severe External Threat to South Korea 52 III. Economic Performance 58 1. Investment and U.S. Aid 60 2. Agriculture and Exports 64 3. Economic Policies 66 IV. Politics and Society 68 1. Oligarchs and Networks 69 2. Education 73 V. Conclusion 78 3 Institutions: Bureaucrats and Rulers 79 I. Personnel Policy and the Organization of the Civil Service in South Korea 83 1. Cabinet Composition 85 2. Examination Procedures 85 3. Internal Promotion 88 4. Monitoring and Enforcing Bureaucratic Compliance under Rhee and Park 90 II. Clientelism and Reform in the Philippines 92 1. The Democratic Era: Patronage Plus 94 2. Education and Exams 95 3. Marcos and Martial Law 98 4. State Strength and the Marcos Regime 101 III. What Was Different in Korea? Credible Commitments and the Bifurcation of the State under Park 103 IV. Park’s Major Policy Shifts 108 V. Conclusion 112 4 Mutual Hostages in Korea 114 I. Politicians: The Demand for Political Funds 116 II. Businessmen: The Supply of Bribes in Exchange for Rents 124 1. The Logic of the Exchange 125 2. How the Process Worked in Practice 127 III. Mutual Hostages 134 IV. Conclusion 139 5 Bandwagoning Politics in the Philippines 140 I. The Democratic Era (1946–1972) 141 1. Parties and Elections 143 2. Policy 148 II. Marcos and Martial Law (1972–1986) 154 1. The Players 156 2. The Competitors 159 3. The Survivors 161 4. The Endgame 162 III. Philippine Bandwagoning and the Pendulum of Corruption 163 1. Similarities 163 2. Differences 165 IV. Conclusion 168 6 Democracy in the 1980s and the Financial Crisis of 1997 169 I. Democratic Transitions in the 1980s 171 II. The Asian Financial Crisis of 1997 174 1. Korea 176 2. The Philippines 189 III. Conclusion 198 7 Conclusion: Corruption and Development 199 I. Corruption and Development 200 II. Conclusion 205 Index 213 Why Has The Literature On Asian Development Not Addressed The Issue Of Money Politics In Korea? How Can We Reconcile The View Of An Efficient Developmental State In Korea Before 1997 With Reports Of Massive Corruption And Inefficiency In That Same Country In 1998 And 1999? Politics Is Central To The Answer. In This Book Kang Makes Two Arguments. First, Political - Not Economic - Considerations Dominated Policy Making In Both Korea And The Philippines. Second, If There Is A Balance Of Power Among A Small And Stable Set Of Government And Business Elites, Money Politics Can Actually Reduce Transaction Costs And Promote Growth. Focusing On The Exchange Of Favors For Bribes Between State And Business, Kang Argues That Politics Drove Policy Choices, That Bureaucrats Were Not Autonomous From Political Interference In Setting Policy, And That Business And Political Elites Wrestled With Each Other Over Who Would Reap The Rents To Be Had. Even In Korea, Corruption Was Far Greater Than The Conventional Wisdom Allows - So Rampant Was Corruption That We Cannot Dismiss It; Rather, We Need To Explain It.--jacket. The Puzzle And The Theory -- Comparing Korea And The Philippines -- Institutions: Bureaucrats And Rulers -- Mutual Hostages In Korea -- Bandwagoning Politics In The Philippines -- Democracy In The 1980s And The Financial Crisis Of 1997 -- Conclusion: Corruption And Development. David C. Kang. Includes Bibliographical References And Index. Why has the literature on Asian development not addressed the issue of money politics in Korea? How can we reconcile the view of an efficient developmental state in Korea before 1997 with reports of massive corruption and inefficiency in that same country in 1998 and 1999? Politics is central to the answer. This study argues that both Korea and the Philippines experienced significant corruption throughout the post-independence era, and that political--not economic--considerations dominated policy making in both countries. This book addresses the issue of money politics in Korea. It asks whether we can reconcile the view of an efficient developmental state in Korea before 1997 with reports of massive corruption and inefficiency in that same country in 1998 and 1999 "When the Hanbo Steel Company of South Korea went bankrupt in early 1997, an inquest discovered that at least two billion dollars had evaporated from its accounts, most likely ending up in the pockets of political or business elites."