GraduateSchool of International Studies

YonseiUniversity

Korean Economic Institutions, Entrepreneurs, and Business

Fall 2006 (ZA694-01) Instructor:Prof. Sang-Young Rhyu

Class Hour: TUE.09:00-12:00 Office: Millennium B/D #619

Room: Millennium B/D # 201 2123-3961 ()

Course Description:

This course is designed to be an introductory case seminar that surveys and explore a variety of issues and policies related to the development of Korean capitalism. Through several cases which are primarily focused on economic institutions, “Korean Economic Institutions, Entrepreneurs, and Business” identifies and examines the various institutional arrangements by which the political and economic exchanges are coordinated. It also develops the argument that institutions do matter and, at the same time, that the Korean economic institutions are embedded in the Korean political society. The seminar also emphasizes the roles and interactions of the four determining actors (the government, business, labor, and foreign investors).

The three pillars of the class are comprised of the following: economic institutions which form the “constraint,” the entrepreneur as the “human choice” who is driven by and pursues his political and economic interests, and the business as a dialectic outcome of the interactions of the institutions and entrepreneurs. There are seven economic institutions (such as property rights, the stock company, fair trade act, commercial code, welfare system, etc.) to be analyzed while the Korean entrepreneurs are classified into political and economic entrepreneurs. For example, the business organization and strategy of the Korean chaebols are viewed in the neo-institutional perspective.

Comprised of lectures, discussions and student presentations, this class expects the students to formulate conceptual frameworks through historical facts and theoretical explanations.

Requirements & Evaluation

Students are required to read all assignments before class and participate in class discussions. Grades will be based on class participation and presentation (20%), mid-term examination(30%) and research paper (50%).

Supplementary Readings:

Alfred D. Chandler, Jr. Scale and Scope: The Dynamics of Industrial Capitalism

(Cambridge: Harvard University Press, 1990).

Daron Acemoglu and James A. Robinson, Economic Origins of Dictatorship and

Democracy: Economic and Political Origins (Cambridge, New York:

CambridgeUniversity Press, 2005).

Ministry of Legislation, Economic Laws on Foreign Investment in Korea. 3rd ed. (Seoul:

Ministry of Legislation, 2003) (Economic Laws).

Ministry of Legislation Homepage at

Mo, Jongryn, et al, Case Studies of Korea’s Economic Reform(Seoul: Oreum, 2002)

(in Korean).

North, Douglass C., Institutions, Institutional Change and Economic Performance

(Cambridge: Cambridge University Press, 1990).

Terry L. Anderson & Fred S. McChesney, eds., Property Rights: Cooperation, Conflict,

and Law (Princeton and Oxford: PrincetonUniversity Press, 2003).

Williamson, Oliver E. The Economic Institutions of Capitalism(New York: Free Press,

1985).

Course Outline

Week 1: Introduction and overview

Week 2: How economic institutions work?

Yoram Barzel, A Theory of The State: Economic Rights, Legal Rights, and the Scope of

the State(Cambridge: CambridgeUniversity Press, 2000), pp. 198-213.

Eirik G. Furubotn and Rudolf Richter. “Introductory Observations,”Institutions and

Economic Theory: The Contribution of the New Institutional Economics(Ann

Arbor: The University of Michigan Press, 2003), 1-38.

Robert Boyer and J. Rogers Hollingsworth. “From National Embeddedness to Spatial

and Institutional Nestedness,”Contemporary Capitalism: The Embeddedness of

Institutions(Cambridge: Cambridge University Press, 1997), 433-484.

Week 3: Institutional evolution in the Korean economic development

Krause, Lawrence B., “The Political Economy of South Korea: Fifty Years of

Macroeconomic Management, 1945-1995,”The Korean Economy 1945-1995:

Performance and Vision for the 21st Century(Seoul, Korea: Korea

Development Institute, 1997), pp.101-142.

Jong-sup Chong, “Political Power and Constitutionalism,” Dae-Kyu Yoon (ed.), Recent

Transformations in Korean Law and Society (Seoul: SNU Press, 2000), 11-32.

* Constitution of the Republic of Korea(in Economic Laws).

Week 4: Public and private governance in Korea

Stephen Goldsmith & William D. Eggers, Governing by Network: The New Shape of the

Public Sector(Washington, D.C.; Brookimgs Institutions Press, 2004).

Oh, John Kie-chiang. “Institutionalizing Political and Economic Reforms, 1993-

1995,”Korean Politics: The Quest for Democratization and Economic

Development(Ithaca: Cornell University Press, 1999), 138-163.

Soohyun Chon, “The Election Process and Informal Politics in South Korea,”Lowell

Dittmer (eds.), Informal Politics in East Asia (Cambridge: Cambridge

University Press, 2000), 66-81.

* The Political Fund Law. (MOLEG homepage) .

* The Public Official’s Ethics Law (MOLEG homepage).

Week 5: Property right and Korean capitalism

Whang, In-Joung. “Administration of Land Reform in Korea, 1949-1952,”The

Korean Economy: Reflections at the New Millennium(Seoul: Hollym

Corporation, 2001), 3-28.

Sung-Hee Jwa, “The evolution of the Chaebols: The Property Rights System and

Economic Organization in Korea,”A New Paradigm For Korea’s Economic

Development(New York: Palgrave, 2001), 83-113.

Week 6: Fair Trade Act and competition policy

Kwangshik Shin, “Competition Law and Policy,” Stephan Haggard (eds.), Economic

Crisis and Corporate Restructuring in Korea (Cambridge: Cambridge

University Press, 2003), 265-285.

Rhee, Zusun. “Were Regulations on Economic Concentration in the Korean Fair Trade

Act Effective?”Korean Business and Management: The Reality and the Vision

(Elizabeth, NJ: Hollym International Corp., 2002), 51-78.

* Monopoly Regulation and Fair Trade Act(in Economic Laws).

Week 7: Labor-related acts and business-labor relations

Mo, Jongryn. “Democratization, Labor Policy, and Economic Performance,”

Democracy and the Korean Economy(Stanford: Hoover Institution Press,

1999),97-134.

Seon-soo Kim, “Korean labor Law: Emerging Issues and Developments”Dae-Kyu

Yoon (ed.), Recent Transformations in Korean Law and Society (Seoul: SNU

Press, 2000), 339-362.

* Labor Standards Act (in Economic Laws).

* Trade Union and Labor Relation Adjustment Act (in Economic Laws).

Week 8: Mid-Term Exam

Week 9: Financial reform-related laws and Korean financial system

Kim, Pyung-Joo. “Financial Policies and Institutional Innovation,”The Korean

Economy 1945-1995: Performance and Vision for the 21st Century (Seoul,

Korea: Korea Development Institute, 1997), 186-237.

Jonathan Kirshner, “The Inescapable Politics of Money,” Jonathan Kirshner ed.

Monetary Orders: Ambiguous Economics, Ubiquitious Politics (Ithaca and

London: CornellUniversity Press, 2003), 3-24.

* Bank Act (in Economic Laws).

* Securities and Exchange Act (in Economic Laws).

Week 10: Korea’sCommercial Code and corporate restructuring

Il Chong Nam and Soogeun Oh. “Formal Bankruptcy Proceedings,” Bankruptcy of

Large Firms and Exit Mechanisms in Korea(Seoul: Korea Development

Institute, 2000), 22-34.

Lim Youngjae, “Bankruptcy Policy Reforms and Corporate Restructuring in Postcrisis

Korea”, Korea’s Economy 2006 (Korea Economic Institute of America, 2006),

pp.37-41.

Henry Hansmann and Reinier Kraakman, “Towards a Single Model of Corporate Law?”

Joseph A. McCahery (eds.), Corporate Governance Regimes: Convergence and

Diversity (Oxford: OxfordUniversity Press, 2002), 56-82.

* Commercial Act (in Economic Laws).

* Act on External Audit of Stock Companies (in Economic Laws).

Week 11: Welfare reform–related acts and Korea’s national strategy

Chung-in Moon and Jae-jin Yang. “The Kim Dae-jung Government and the

Productive Welfare Initiative: Ideals and Reality,”Korea in Transition: Three

Years under the Kim Dae-jung Government(Seoul: Yonsei University Press,

2002), 181-205.

Martin Rein and Winfried Schmahl, Introduction, Rethinking the Welfare State: The

Political Economy of Pension Reform (Cheltenham and Northampton: Edward

Elgar, 2004), 1-13.

* National Pension Act (MOLEG homepage)

Week 12: Political entrepreneurs: Kim Sung Soo, Park Tae Joon

Won-Shul Shim and Richard M. Steers. “The Entrepreneurial Basis of Korean

Enterprise: Past Accomplishments and Future Challenges,”Managing Korean

Business: Organization, Culture, Human Resources and Change(London:

Frank Cass Publishers, 2002), 22-43.

Cha, Dong-Se and Phillip Wonhyuk Lim. “In Search of a New Capitalist Spirit for the

Korean Economy,”An Agenda for Economic Reform in Korea: International

Perspectives(Stanford: Hoover Institution Press, 2000), 449-489.

Week 13: Economic entrepreneurs: Lee Byung Chul, Chung Ju Young

Patterson, Dennis P., “Asian Management Styles? The Evidence from Korea,”

Korean Business and Management: The Reality and the Vision(Elizabeth, NJ:

Hollym International Corp., 2002), 227-247.

Richard M.Steers, Made in Korea: Chung Ju Yung and the Rise of Hyundai(New York:

Routledge, 2000).

Week 14: Business organization structured by economic institutions

Chang, Sea-Jin. “Chaebols’ Ownership and Governance Structure,”Financial Crisis

and Transformation of Korean Business Groups: The Rise and Fall of Chaebols

(Cambridge: University Press, 2003), 161-185.

Woonhyuk Lim, The Emergence of the Chaebols and the Origins of the Chaebol

problem, Stephan Haggard (eds.), Economic Crisis and Corporate

Restructuring in Korea (Cambridge: CambridgeUniversity Press, 2003), 35-52.

Week 15: Business strategy for redesigning economic institutions

Jwa, Sung-Hee. “Economic institutions, diversification and performance: empirical

evidence and implications for Chaebol behavior,”The Evolution of Large

Corporations in Korea: A New Institutional Economics Perspective of the

Chaebol(Northampton, MA: Edward Elgar Publishing, Inc., 2002), 118-153.

Hicheon Kim, “The Evolution and Restructuring of Diversified Business Groups in

Emerging Markets: The Lessons from Chaebols in Korea”Asia pacific Journal

of Management, 21 (2004), 25-48.

Rebecca M.Blank and William McGurn, Is The market Moral?: A Dialogue on Religion,

Economics & Justice(Washington, D.C.; Brookings Institution, 2004).

Week 16: Final Exam

#Some additional articlescould be provided throughout the semester.

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