The Dual Impact of Chaebols in South Korea : Economic Growth Versus Social Inequality

Abstract

Chaebols have played a pivotal role in South Korea’s economic development since the Park Chung-Hee regime. Through preferential state policies and close government-business cooperation, these family-owned conglomerates have become the driving force of national growth and remain vital to the economy today. Chaebols played a crucial role in lifting South Korea out of post-war poverty. While their contribution to economic growth is widely praised, their methods have also attracted criticism. Their developmental structure has provoked deep socio-economic inequalities. Wealth and power have become highly concentrated within chaebol networks, while small and medium-sized enterprises (SMEs) – the most notable employers – continue to fall behind in wages and influence. Furthermore, South Korea faces a demographic crisis indicated by an aging population and persistently low birth rates, while state intervention remains limited in addressing the long-term consequences. This study examines the dual impact of chaebols by analyzing their contribution to economic growth alongside their role in instigating inequality. It examines the importance of redefining the state-chaebol relationship, enhancing corporate transparency, and implementing inclusive policy reforms to promote continuous economic growth in South Korea.