6/15/2014 Land Reform - BadlyNeed
4. Income Equality
5. Cost of 1 Acre paddy field in Myanmar to reference
2012 Sample cost to produce rice by University of California
Myanmar Land Reform (Page 1)
1. Philippine and Myanmar (Burmese) Page.9
2. Land Reform Paper by (Page14)
Dr. You, Jong-Sung Ph.D Harvard University
3. Cost of one Acre paddy field (Page 59)
Myanmar to reference
2012 Sample cost to produce rice
by University of California
4. ေျမလြတ္ေျမရိုင္းဥပေဒ ၂၀၁၂ (Page 79)
5. ေျမယာဥပေဒ ၂၀၁၂ (Page 91)
Embedded Autonomy or Crony Capitalism?
Explaining Corruption in South Korea, Relative to Taiwan and the Philippines,
Focusing on the Role of Land Reform and Industrial Policy
Ph. D. candidate in Public Policy
Doctoral Fellow, Inequality and Social Policy Program
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,
this paper provides a test of 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 You and Khagram (2005). Although
developmental state and crony capitalism literature 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.
However, wealth concentration due to chaebol industrialization increased corruption over
time in Korea, in comparison with Taiwan.
Key words: corruption, crony capitalism, developmental state, income inequality, land
reform, chaebol, South Korea
Paper prepared for delivery at the Annual Meeting of the American Political Science
Association, Washington, DC, September 1-4, 2005.
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 a lot of
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. Then, where is Korea’s relative level of corruption
located, and why is that so?
The second sets of questions are about the trend. Many scholars 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 (Amsden 1989; Evans 1995). However,
others argued that both regimes were similarly corrupt (Wedeman 1997; Kang 2002). Thus,
the controversy about the transition from a predatory state to a developmental state is another
interesting question. Understudied, yet no less important, questions are 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 the point in which the state has lost autonomy and
serves for the special interests of the privileged.
This comparative historical case study has two purposes. First, I intend to contribute to a
better understanding of corruption and development in Korea with a comparative perspective
through an extensive and systematic examination of both quantitative and qualitative
evidence. Second, I aim to provide a test of existing theories on causes of corruption. It’s
impossible to conduct a perfect test through this small-N study. However, this study will
make a meaningful contribution by not only looking at correlations among the three countries
but examining causal mechanisms through process tracing. In particular, I will test and
examine whether You and Khagram’s (2005) argument and finding about the causal effect of
income inequality on corruption has explanatory power in this comparative historical analysis
and, if so, what are the causal mechanisms.
Most empirical studies on the causes of corruption, including You and Khagram (2005),
were cross-national statistical analyses. Although large-N quantitative studies have an
advantage in identifying correlations between an explanatory variable(s) and the dependent
variable controlling for plausible covariates, and thus may be less vulnerable to omitted
variables bias than small-N case studies, they are often vulnerable to endogeneity bias and
weak at identifying causal mechanisms. Comparative historical case studies can be useful for
establishing causal direction and illuminating causal mechanisms by examining the historical
sequence and intervening causal process between an independent variable(s) and the outcome
of the dependent variable (Rueschemeyer and Stephens 1997).
This study makes use of all the available quantitative and qualitative data from the
relevant literature. Although most data are secondary, careful examination of extensive data
from secondary sources may be better than the use of limited, and perhaps biased, primary
I find that Korea has been more corrupt than Taiwan but much less corrupt than the
Philippines. I also find that income and wealth inequality is closely correlated with the
See Table 1 and the discussion on pages 10-11 for the evidence.
relative levels of corruption among the three countries. In order to establish causal direction
and identify causal mechanisms, I conduct careful process tracing focusing on the role of land
reform and industrial policy.
The organization of this paper is as follows. I first briefly review developmental state
literature and crony capitalism literature on Korea’s corruption and development. In the next
sections, I assess various pieces of available evidence on Korea’s level of corruption relative
to Taiwan and the Philippines and its trend since the 1950s. Then, I examine several
potential explanations for Korea’s relative level of corruption. In the following sections, I
look at how land reform and chaebol industrialization were carried out in Korea and how they
affected inequality and corruption, in comparison with Taiwan and the Philippines. I also
examine what role democratization has played in Korea. The final section summarizes my
findings and concludes with research and policy implications.
Embedded autonomy or crony capitalism?
Korea’s economy was regarded as a spectacular success story among developing countries,
together with Taiwan, Hong Kong, and Singapore (World Bank 1993). Although Korea
was severely hit by the Asian financial crisis of 1997-98 and recorded negative growth in
1998, it recovered rapidly and is growing again. Many scholars tried to explain Korea’s and
these four tigers’ success, and the most influential explanation was centered on the role of the
state (Amsden 1989: Evans 1995; Wade 1990). They argued that Korea’s “developmental
state” distinguished it from many other developing countries that were characterized as
“predatory states”. The developmental states of these four East Asian countries were
coherent and autonomous so that they were able to effectively carry out their economic
policies without degenerating into capture and corruption. The core of the developmental
state was “Weberian bureaucracy” with meritocratic recruitment and promotion, career
service, and reasonable pay and prestige. Later some South Asian countries such as
Thailand, Malaysia, and Indonesia came to be included in the list of developmental states,
although their growth records were not as fantastic as those of the four East Asian tigers.
However, the Asian financial crisis radically changed the perceptions of these countries,
and in particular, of Korea. Many, including the IMF, blamed the crony capitalism of Korea
and other affected countries as primarily responsible for the crisis. Thus, overnight, Korea’s
image was radically changed from a model developmental state with good governance to a
country with rampant corruption and cronyism. Then, what is the truth? Did the
proponents of the developmental state theory fail to see the cronyism and corruption in Korea?
Or did the crony capitalism argument exaggerate corruption and cronyism in Korea?
Whereas proponents of the developmental state theory had to explain why state intervention
did not produce much corruption in Korea, those who argued for crony capitalism had to
explain how Korea was able to achieve rapid economic development in spite of corruption
The government intervention in the economy meant extensive interaction between public
officials and businessmen. The interaction could be collaboration, or collusion and
corruption, or both. The developmental state argument saw the close relationship between
government and business as benign collaboration, but the crony capitalism argument
interpreted it as collusion and corruption. Evans (1995) argued that collaboration between
the government and business was critically important for development, because information
exchange was necessary for effective policy formation and implementation and building up
trust helped reduce transaction costs. He further argued that an insulated, meritocratic
bureaucracy kept collaboration from degenerating into collusion and corruption. For him,
the autonomy of the state requires insulation of the bureaucracy from powerful societal
interests, but insulation does not mean isolation. Bureaucrats need to have close ties to
business yet still have to formulate and implement policies autonomously. Thus, “embedded
autonomy” was the key to the effectiveness of the developmental state of Korea.
Most scholars who studied the developmental state of Korea regarded Park Chung-Hee’s
regime (1961-1979) as a prototype of the developmental state. However, Syngman Rhee’s
regime (1948-1960) was generally regarded as predatory. Amsden (1989: 42) characterized
the 1950s with corruption, paralysis, underachievement, and bitter disappointment. Evans
(1995:51-52) pointed that, under Syngman Rhee, the civil service exam was largely bypassed
and that his dependence on private-sector donations to finance his political dominance made
him dependent on clientelistic ties and caused rampant rent-seeking activities. Some
scholars also noted that Korea’s developmental state has been challenged and has been
weakening since the 1980s (Moon 1994; Evans 1995).
Other scholars saw rampant corruption in Korea throughout its history after independence,
including the period of Park Chung-Hee’s presidency, and attempted to reconcile the high
growth and high corruption. Wedeman (1997) argued that Korea has had widespread,
high-level corruption ever since 1945 but that the type of corruption in Korea was functional
for economic development. He distinguished three different types of corruption such as
looting, rent-scraping, and dividend- collecting. Korea’s corruption represented an ideal
type of dividend-collection, while the Philippines and Zaire are examples of rent-scraping and
looting, respectively. Looting means uninhibited plundering or systematic theft of public
funds and property and extraction of bribes by public officials. Rent-scraping means
conscious manipulation of macroeconomic parameters to produce rents and the scraping off
of these rents by public officials. Dividend-collecting means transfers of a percentage of the
profits earned by privately owned enterprises to government officials. Among the three
types of corruption, looting is the most harmful to the economy but dividend-collecting may
be functional for economic development. The Korean governments, he argued, sold
economic opportunities and collected some portion of the profits, and their corrupt income
stayed in Korea, not going to Swiss bank accounts.
Kang (2002) also saw cronyism and corruption throughout the history of South Korea.
He compared crony capitalism in Korea and the Philippines, and argued that Korea neither
had a more autonomous or coherent state nor was subject to any less corruption than the
Philippines but that corruption had different effects on development in the two countries. He
developed a matrix of four types of corruption (Figure 1). The state could be coherent or
fractured, and the business sector could be concentrated or dispersed. According to him,
Korea moved from being characterized as a “predatory state” under Syngman Rhee to
“mutual hostages” under Park Chung-Hee and Chun Doo-Whan to “rent seeking” after the
1987 democratization, whereas the Philippines moved from “rent seeking” (pre-Marcos) to
“predatory” (Marcos) to “laissez faire” (post-Marcos).
Figure 1. Kang’s (2002) Four Types of Corruption
I. Mutual hostages
type: PD collusion
II. Rent seeking
III. Predatory state
Mutual hostages, Kang (2002) argues, explains why money politics did not hinder
economic growth in Korea. He asserts that if there is a situation of mutual hostages among a
small and stable number of government and business actors, cronyism can reduce transaction
costs and minimize deadweight losses. He further argues that the Philippines was less
affected by the crisis of 1997 because some of the collusive government-business ties had
been broken by the downfall of Marcos, while democratization in Korea increased
rent-seeking activities and hence made it more vulnerable to the crisis.
Korea’s level of corruption, relative to Taiwan and the Philippines
In this paper, I focus on identifying and explaining the relative level of corruption in
Korea rather than regime types of corruption. Although different regime types of corruption
and their impact on development is an important area of study, it is beyond the scope of this
It is very hard to compare the levels of corruption across countries. Corruption, by its
nature, is conducted secretly, and the probability of exposure will be different in different
countries. Hence, most empirical studies of corruption relied on measures of the
“perceived” level of corruption such as Transparency International’s (TI) Corruption
Perceptions Index (CPI) and Kaufmann et al.’s (2003) Control of Corruption Indicator (CCI).
TI has been publishing the CPI annually since 1995, and the CCI has been biannually released
Both the CPI and the CCI are aggregate indices based on a variety of surveys of mostly
international business people and ratings of country experts, although there are some
methodological differences in aggregating various underlying survey data as well as some
differences in the selection of sources. Because perceptions are subjective and inaccurate,
these indices must have substantial measurement error. However, they are highly correlated
with each other and also are highly correlated with domestic public perceptions of
Figure 2 shows the point estimates and 95 percent confidence intervals of the CCI 2002
for several Asian countries. A higher CCI value represents a higher level of control of
corruption, or a lower level of corruption. Because the CCI is a standardized score with a
mean of 0 and a standard deviation of 1, it is easy to interpret the CCI value in comparison to
the world average.
In 2002, Korea’s CCI value was 0.33, so its level of corruption was about a third standard
deviation below the world mean among the 195 countries that were covered in the CCI 2002.
Korea’s CCI 2002 value was much lower than that of Singapore or Hong Kong, but much
higher than that of Indonesia. The Philippines’s CCI 2002 value was -0.52, so its level of
corruption was about a half standard deviation above the world average. Taiwan’s CCI 2002
The perceptions of the domestic public concerning the extent of corruption (World Values Survey, 1995–97)
have a correlation coefficient of 0.85 with the CCI and 0.86 with the CPI (You and Khagram 2005).
value was 0.81, so corruption in Taiwan was about four fifths of a standard deviation below
the world mean. When we compare CCI 2002 values of Korea, Taiwan, and the Philippines,
Korea’s level of corruption was much lower than that of the Philippines, but higher than that
of Taiwan, and both differences were statistically significant.
Table 1 presents the available measures of corruption for Korea, Taiwan, and the
Philippines for the early 1980s to the present. CPI 80-85 and CPI 88-92 are TI’s historical
data, and CPI 95-04 and CCI 96-02 are averaged values for the period. BI 80-83 denotes
Business International’s data, which range from 1 to 10, and a higher value represents a lower
level of corruption. While all these data are measures of the perceived level of freedom from
corruption, Bribery 04 from TI’s Global Corruption Barometer Survey (2004) is a measure of
the experience of corruption. The Barometer survey was conducted in 64 countries in 2004.
The survey asked the respondents, “In the past 12 months, have you or anyone living in your
household paid a bribe in any form?” The respondents answered either “Yes” or “No”. Six
percent of Korean respondents said “Yes”3
, whereas 1 percent of Taiwanese and 21 percent
of Filipinos gave the same answer. The world average was 10 percent.
Table 1. Indicators of (Freedom from) Corruption for the Three Countries
BI 80-83 CPI 80-85 CPI 88-92 CPI 95-04 CCI 96-02 Bribery 04
Korea 5.75 3.9 3.5 4.3 0.37 6
Taiwan 6.75 6.0 5.1 5.4 0.78 1
Philippines 4.50 1.0 2.0 2.9 -0.43 21
Sources: BI’s ratings from Mauro (1995); CPI and Bribery from Transparency International; CCI
from D. Kaufmann, A. Kraay, and M. Mastruzzi (2003).
Note: Bribery 04 denotes the percentage of respondents who bribed during the last year.
The experience of bribery (Bribery 04) from the Barometer survey is a good objective
measure of corruption comparable across countries. One caveat is that this measure is likely
to capture petty corruption very well but may be a poor measure of grand corruption.
However, there are reasons to believe that the levels of petty corruption and the levels of
grand corruption are closely correlated, because corrupt practices are likely to spread both
top-down and bottom-up. Moreover, the public experience of bribery (Bribery 04) is highly
According to a different social survey conducted in Korea in 2003, 5.4 percent (sometimes 5.0 percent, and
frequently 0.4 percent) of Koreans had some experience of bribing (Park 2003). It is strikingly close to the 6
percent response from the Global Barometer Survey.
correlated with the CPI and the CCI.4
Because the CPI and the CCI are more likely to reflect
corruption at the upper level of bureaucracy and political corruption rather than petty
corruption, the assumption of a close correlation between petty corruption and high-level
corruption seems to hold in reality.
All the data presented above consistently show that Korea has been more corrupt than
Taiwan but less corrupt than the Philippines at least since the early 1980s.5
there are no available quantitative measures of corruption across these countries for an earlier
period. However, Table 1 suggests that the same relative rankings are very likely to apply
for the 1970s and probably for even earlier periods as well, unless there are important reasons
for radical changes in the levels of corruption during the earlier period.
Anecdotal evidence also suggests that political corruption in Korea was higher than that in
Taiwan but lower than that in the Phlippines. In Korea, two former presidents, Chun
Doo-Whan and Roh Tae-Woo, were sentenced guilty of corruption. Chun and Roh were
accused of raising slush funds of $890 million and $654 million and of receiving $273 million
and $396 million in bribery, respectively. The Philippines’s Ferdinand Marcos was known
to have raised $3 billion, and was found to have used several million dollars to buy foreign
real estate, primarily in New York, and to have deposited around $550 million and $250
million in Swiss banks and Hong Kong banks, respectively (Wedeman 1997). Considering
that the Philippine GDP was much smaller than that of Korea in the 1980s, Marcos’
corruption was much more severe that that of the two Korean presidents. Although Taiwan
has had many scandals of political corruption, too, there was no such big corruption scandal
comparable to Marcos’s or Chun’s and Roh’s.
In summary, the evidence indicates that the developmental state literature generally
overlooks the problem of corruption in Korea, while the crony capitalism literature tends to
overestimate the degree of corruption in Korea.
Korea’s level of corruption, from the 1950s to the present
Bribery 04’s correlation with the CPI 02 and CCI 02 are -0.72 and -0.73, respectively.
The values of the historical data such as CPI 80-85 and CPI 88-92 are not strictly comparable to the values of
CPI for later years, because there are differences in the underlying survey data and their methods. So, looking at
the relative rankings of the three countries will be safer.
Now, what can we say about the trend of corruption in Korea across time? Was the level
of corruption higher in the 1950s, under Syngman Rhee, than in the 1960s and 1970s, under
Park Chung-Hee? Did corruption increase or decrease with the rapid industrialization and
economic growth in the 1970s and the 1980s? Has the level of corruption increased or
decreased since the democratization of 1987?
There are no quantitative data available for the period before 1980, to my knowledge.
Previous literature, especially developmental state literature, often assumed, without
presenting adequate evidence, that Rhee’s regime was highly corrupt but Park’s regime was
not. This judgment seems to be based on such reasoning as that Park’s regime must have
been less corrupt than Rhee’s because Korea’s economy developed very fast under Park
unlike under Rhee. However, several scholars including Lie (1998), Wedeman (1999), and
Kang (2002) judged that Park’s regime was not considerably less corrupt than Rhee’s based
on various pieces of anecdotal evidence. Some Korean scholars also argued that the Rhee
and Park regimes cannot be differentiated in terms of the degree of rent seeking and
corruption (Kim and Im 2001), and that Park’s centrally managed economy produced a large
scope for rent seeking and corruption (Lee 1995). In the mid-1970s, a Korean social
scientist noted, “The rapid expansion of the scope of governmental authority (under Park)
tended to induce corruption at a far greater scale and in an even more pervasive manner than
before (under Rhee)” (Hahn 1975, recited from Lie 1998:96). Many journalistic reports on
corruption during the Park administration argued, with some quantitative and qualitative
evidence, that the level of corruption then was no smaller, and possibly larger, than under
Rhee (Lee and Kim 1964; Park 1967).
It is true that one of Park’s rationales for the military coup in 1961 was to eliminate
corruption, as Chun Doo-Whan’s military coup of 1980 also used the same catch phrase.
Immediately after the coup of May 16, 1961, the military arrested chaebol owners on charges
of illicit wealth accumulation, but the investigation ended with a negotiation on the political
and economic terms between the military and business owners. The junta not only reduced
the fines, but also provided financial subsidies for those industrialists who pledged to
undertake specific industrial projects and to provide political funds (Kim and Im 2001).