The most significant point of difference between the Zaibatsu and the Chaebol is that unlike their Japanese analogue, the Chaebol were not permitted to own banks (Lee, 1997 P. 19). During the regime of Park, South Korean banks were nationalised. This was done in order to supply scarce capital to corporates which the government identified to be vital for the manifestation of national objectives. Thus, the chaebol which enjoyed more favour of the government could procure more funds and could grow huge. This fact helps in inferring that the economic strength and success of the chaebol was not necessarily valid but in most cases a proportional outcome of the government-chaebol interrelationship (Watkins, n.d.).
The industrialisation of South Korea materialised during the regime of Park Chung Hee. Prior to this, it was largely an agrarian economy. This shift was initiated by penalising the corrupt business leaders followed by reformation of the state bureaucracy and the establishment of an economic planning ministry (based on the Japanese Zaibatsu System). During the initial phase of liberalisation South Korean industrialists were chiefly export-oriented owing to the fact that they were used by Japan as an offshore platform for the purpose of re-exporting its partially manufactured products to USA. Joint Ventures (JVs) between the Koreans and the Japanese flourished and they helped the Koreans in gaining technology and knowledge of foreign markets. The Korean government patronised this export – oriented strategy through promoting the formation of chaebol through merger of Korean industries. These highly integrated, family-controlled businesses enjoyed profuse government support in all operational activities, ranging from tax advantages to making foray into overseas markets.
The Korean focus on the development of the heavy industries and