ABSTRACT
This chapter describes and uses the model of economic development as basis for the consideration of the formation and development of the Korean economy. In 1961, the Korean government's first five-year economic development plan identified two key objectives. First is to attain rapid and sustained economic growth and second is to develop a self-reliant economy. During the Meiji era in Japan, the Meiji government focused on developing specific key industries that were managed by family-owned conglomerates called zaibatsu. Industrial development was encouraged through government subsidies, tax incentives and government managed distribution of products. The strong commitment of the government to the planning and facilitation of zaibatsu enabled rapid industrial growth in Japan. The system established government-led economic strategies that not only mobilised resources, but also provided knowledge and leadership for business development. The key relationship in the development of the Korean economic system is that of government and chaebol.
