Fresh produce at the market, Seoul
Courtesy Oren Hadar

It'aewon shopping district and entertainment center, Seoul
Courtesy Oren Hadar

Following the Korean War, foreign aid became the most important source of funds for the reconstruction and rehabilitation of the economy. What was left of the Japanesebuilt industrial plant, most of which by the 1950s either was obsolete or had been destroyed by warfare), generally was turned over to private owners, who were chosen more often for their political loyalty than for their economic acumen. Moreover, Rhee favored certain businessmen and companies with government contracts in exchange for financial support of his political endeavors. It was during this period that a group of entrepreneurs began companies that later became the chaebol, or business conglomerates. The chaebol were groups of specialized companies with interrelated management. These groupings of affiliated companies dominated South Korea's economy in the late 1980s and often included businesses involved in heavy and consumer industries and electric and electronic goods, as well as trading companies and real estate and insurance concerns.

The chaebol were responsible for the successful expansion of South Korea's export capacity. According to Steinberg, in 1987 the revenues of the four largest chaebol were US$80.7 billion, a figure equivalent to twothirds of Seoul's total GNP. In that year, the Samsung Group had revenues of US$24 billion Hyundai, US$22.7 billion Daewoo, US$16 billion and Lucky-Goldstar, US$18 billion. The revenues of the next largest chaebol, Sunkyong, totaled US$7.3 billion in 1987. The top ten chaebol represented 40 percent of all bank credit in South Korea, 30 percent of value added in manufacturing, and approximately 66 percent of the value of all South Korean exports in 1987. The five largest chaebol employed 8.5 percent of the manufacturing work force and produced 22.3 percent of all manufacturing shipments. Despite a rash of strikes against the chaebol beginning in 1987, the chaebol generally had higher compensation and better working conditions than their lesser South Korean competitors.

Data as of June 1990