Chaebol
The giant family-controlled conglomerates, Samsung, Hyundai, LG, and others, that were built by state credit and drove South Korea from poverty to riches.
In 1960 South Korea was poorer than Ghana, a war-ruined country with almost no industry. Within a single generation it was building supertankers, cars, and semiconductors, and the engine of that transformation was a handful of family firms called the chaebol. The word means roughly 'wealth clan,' and it fits: Samsung, Hyundai, LG, SK, and Lotte are less companies than dynasties.
A deal with the state
The chaebol were made by a bargain. After seizing power in 1961, the general Park Chung-hee decided South Korea would industrialize by picking winners. His government controlled the banks, so it controlled credit, and it funneled cheap loans, import protection, and licenses to a short list of trusted founders. In return those founders had to hit hard export targets. Meet them and the privileges flowed; miss them and the state could cut you off. It was capitalism run like a military campaign, and it worked at staggering speed. Chung Ju-yung's Hyundai built the 428-kilometer Seoul-Busan expressway in two and a half years and then went into shipbuilding; Lee Byung-chul's Samsung moved from sugar and textiles into electronics. The result, the so-called Miracle on the Han River, was one of the fastest industrializations in history.
Too big to reform
Success left South Korea dependent on its own creations. Samsung alone now accounts for around a fifth of the national economy and a comparable share of exports in a strong year, and the top five groups make up close to half the value of the stock market. That concentration is the chaebol's blessing and its curse. The founding families still steer these empires through tangled webs of cross-shareholdings that let an heir control dozens of firms while owning only a few percent of them. The same opacity breeds corruption that runs to the top: the 2017 impeachment of President Park Geun-hye turned partly on bribes from Samsung, and the group's heir, Lee Jae-yong, was convicted, jailed, and later pardoned. The model can also break: after the 1997 Asian financial crisis the debt-laden Daewoo group, then one of the largest chaebol, collapsed in one of the biggest corporate bankruptcies the world had seen. Critics add a quieter charge, that the giants crowd out the small firms and startups where new jobs and ideas should come from.
Every South Korean president for decades has promised to tame the chaebol, and every one has failed, because the country cannot easily punish the companies it relies on to grow. Reforming them means loosening the grip of a few families on an economy they helped build from rubble, and no one has found a way to do that without risking the growth. The bargain Park struck in the 1960s bought a rich, modern Korea; paying it off is the problem no government has solved.