There is some truth perhaps in considering that history’s core lesson is “Politics first”— that political foundations are decisive in shaping economic institutions and with them, the course of innovation and investment in the pursuit of it culminating into a developed society.
Good governance is a metric of gauging how public institutions handle public affairs and manage public resources in an ideal way. It serves as a quality check on public institutions and the government and whether they prove effective; in terms of fairness, trust, and integrity, amongst many other factors under consideration.
While the concept of good governance births the system that identifies inefficiencies and specs of ineffectiveness in political bodies, it hinges on inter-institutional comparisons in order to enable improvements and the addressing of inconsistencies. Despite this conventional foundation of the concept, intra-institutional comparison proves beneficial by bringing out certain lessons. After all, history has witnessed volumes of discussion about the key institutional changes needed to bring societies to the point where they should be capable of controlling corruption and achieving good governance. The question that arises is plain, can they? The events that took place in South Korea from 1999 to 2005 make contributions to answering this golden question. South Korea saw a transition from the overarching influence of the Chaebols in nearly every aspect of national decision making to a period of state-led governance. Prior to this transition, theSouth Korean fabric was gripped by the aftermath of the Korean War, spiced by a state of authoritarianism. Its transition was laced with an autonomous middle-class despite state capture, the achievement of universal literacy, and a shift from an agrarian economy to that of a highly industrialized one. This positive transition paved way for a culture of public responsibility with a tinge of E-Governance.
The Chaebols, in an undeniable statement, were responsible for building up the South Korean economy. The profound influence of these cartels of family businesses has proven instrumental in the progress of the country’s economy from that of an agrarian to one based on industries. Samsung, considered as the largest Chaebol, once accounted for more than 14% of South Korea's GDP owing to its rapid diversification in industries as far-ranging as electronics, insurance, ships, luxury hotels, hospitals, amusement parks, and even an affiliated university! Although the Chaebol presence proved propitious for the South Korean economy, the trade-off between economic development and equity had to be addressed. The country progressed economically at the costs of a flawed system of privatization, the formation of monopolies, and rampant corruption. Highly corrupt, the Chaebols had involvement in literally everything-scandals of political finance, policymaking, and even public opinion; almost as bribes to feed them with monopoly power in order to gain fruits from the economic development factored in by their operations. In response, a strong need for policies that curtailed this power was felt; instigating South Korea to tread along the path of improved governance.
South Korea’s transition was spearheaded by the outcome of its 1998 presidential election. For the first time, a Presidential candidate was elected sans the big Chaebol support. Kim Dae-Jung, an opposition candidate from the Democratic Party since 1954, fortunately, won in 1998. After winning the elections in 1998, President Kim was under immense pressure from the IMF. This was due to the fact that South Korea had accepted a $58 Billion Loan from the IMF. In response, President Kim and his government, along with the IMF, instrumented five principles to weaken the Chaebols and thus partially do away with corruption in South Korea, aiming at good governance.
Together with the IMF, he instilled the principles to form a democratic government that rested on stilts encompassing the reduction of cross-shareholdings, the introduction of external managers beyond the owner family, the abolishment of nearly 50% of the prevailing business regulations, and liberalizing interest rate policies along with improved access to foreign banks which ultimately strengthened the Korean Free Trade Commission (KFTC). These principles drove a domino effect of positive economic implications. The total market share in the hands of the top three biggest companies (Chaebols) in the South Korean Market decreased from 68% to approximately 60% during the Kim-IMF joint policy, the top three in 1997 being Hyundai, Samsung, and LG. The effectiveness of the policy was reflected in the steep rise in fines levied on unfair business practices.
Setting the above policy measures in motion generated externalities that gave rise to supplementary benefits along the South Korean paradigm. These included the institution of the Infomation Disclosure law which gave citizens the right to access government records and documents; high-level public officials were mandated to disclose assets. Banking transactions were made more transparent to eradicate corruption and cronyism, accompanied by amendments made to the Office of Ombudsman which was pre-established with the objective of addressing citizen complaints against government agencies. The National Human Rights Commission was established to ensure the accessibility of human rights and civil liberties to each individual.
The success of these transitory policies, however, do not remain unmarred by inconsistencies and irregularities. The South Korean government can certainly be proclaimed as an electoral democracy, however, it remains far from accommodating certain elements of liberal democracy. The Central Election Commission looked into ensuring free and fair elections. Since Kim’s policy, the competitiveness of public power has improved, and all elections have been easily and fairly conducted along with two alternations of political parties in power. This attests to the effectiveness of institutions of vertical accountability which proves that outcomes of South Korean elections reflect in the formation of its government.
Amendments were made which made business contributions to parties and campaigns illegal, allowed public funding for significant parties, and imposed tight accounting obligations. This hints at improved electoral fairness and competitiveness. Electoral broadcasts came under the broadcasting Debate Commission and free access to media was granted to all stakeholders of society, making it fair and transparent alongside bringing in an element of inclusiveness. With this, the limits of political and civil rights greatly expanded and basic social rights began to be protected.
In 2006, South Korea received a positive rating in six dimensions of governance– Voice and accountability, Political stability, Government efficiency, Regulatory Quality, Rule of law, and control of corruption, in celebration of the foundations laid down by the democrats Kim Dae-Jung, followed by Roh.