ABSTRACT
This chapter analyses the government-business relationship by focusing on the two main institutions which have played a crucial role in the process of Korea's economic development: the state and the chaebol. In particular, during the 1960s and 1970s, as many developmental statists pointed out, the government played a central role in driving the economy towards the correct direction by enlisting the chaebol's support with various financial incentives. At the same time, the chaebol have been the leading actors in bringing about rapid and sustained economic development and the centrepiece of development strategies. They have gradually played a significant role through time as the implementers of the government's industrial policies and as entrepreneurs who maximised various market incentives. However, as the Korean economy progressed, the relationship between the government and the chaebol has reflected the changing economic environment. They have moved from a symbiotic to a competitive relationship based on complementarity.
