Professional Documents
Culture Documents
2008
IN THE REPUBLIC OF KOREA
CASE STUDIES ON REFORM
IMPLEMENTATION EXPERIENCE
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December 2008
1. Introduction .................................................................................... 6
Bibliography ...................................................................................... 35
iii
Figures
1 Structure of Regulatory Reform in the Korean Government, 2004 ........................... 15
2 Inflows of Foreign Direct Investment into Korea, 1970–2002 ................................. 21
Boxes
1 “Sacred” Regulations in Korea ............................................................................. 9
2 A Measure of Commitment to Regulatory Reform .................................................. 29
iv
The Republic of Korea’s first attempt at regula- the political economy of reform, giving new
tory reform began in the 1980s. The aim was to strength to reformers and weakening the sup-
dismantle the regulatory structure favoring porters of a regulatory state whose habits were
government intervention that had been built up two decades out of date. Having suffered one of
during the 1960s and 1970s. Korea therefore the worst economic crises ever experienced by a
designed its regulatory reforms not as ad hoc member country of the Organization for Eco-
programs of deregulation but as broad institu- nomic Co-operation and Development
tional and procedural reforms. These reforms, (OECD), Korea launched an ambitious regula-
extending over a decade, addressed entire fields of tory reform program in 1998 as part of its
regulation and tried to permanently change how recovery strategy.
regulators functioned by building sustainable
capacities for good regulatory governance into The 1998 regulatory reform program, the focus
the machinery of the public sector. of this case study, included two key initiatives.
The first was a massive deregulation initiative
Korean institutions are relatively developed. But in which the president ordered each govern-
the lessons from Korea’s reform experience can ment ministry to eliminate 50 percent of its
help developing countries that are encumbered by regulations. The second was an enduring
costly regulatory legacies and habits from earlier institutional reform that established institu-
development strategies and are now building new tions and mechanisms at the center of govern-
capacities to regulate open, dynamic markets. ment to promote reform and monitor and
guarantee the quality of regulations and the
The 1998 Reforms regulatory process.
While regulatory reform in Korea began in the The financial crisis had given regulatory reform in
late 1980s, initial efforts produced few results. Korea added urgency and forced the government
But the Asian financial crisis of 1997 changed to commit to stronger reform measures. After the
This lesson supports strategies that seek to Public agencies normally resist change, but their
embed regulatory reform in existing macroeco- conservatism and inertia can work in favor of
nomic and structural reforms. If the liberal reform if it can be normalized in their operations.
consensus is still in the early stages, institution- In Korea regulatory reform—in the form of
alizing reform is even more important for quality control of new and revised regulations—
creating active defenders of reform. In Korea has become a routine part of government opera-
strong institutional reforms were needed tions. Indeed, it has become a permanent
because this consensus was weak. The cultural function of government, protected by the public
shift toward greater self-reliance and consumer administration.
choice is still in the early stages.
Regulatory reform was internalized in the public
The regulatory reform experience in Korea also administration system through the reform of the
offers other lessons, through the factors favoring Basic Act on Administrative Regulations, which
success as well as through the shortcomings. mandated the regulatory reform and review
processes. This legal change created a government-
Success Factors wide system, backed by internal institutions, law,
rights, courts, and vigilant citizens, that ministries
Korea’s strategy for building sustainable capaci- could not evade.
ties for good regulatory governance featured
several elements that supported success. ■ Regulatory quality was controlled by an
independent agency at the center of govern-
■ Reform was opportunistic. Economic crisis ment that could counter the “pro-regulation”
galvanized an emerging liberal consensus that tendency of ministries.
In Korea regulations tend to become excessive ■ Focus on compliance costs. Since the ultimate
and restrictive in part because regulators, goal of regulatory reform is to reduce the
At the end of 1997, Korea suffered one of the its regulations. The second was an enduring
worst economic crises ever experienced by a institutional reform that established institutions
member country of the Organization for Eco- and mechanisms at the center of government to
nomic Co-operation and Development. To restore promote reform and monitor and guarantee the
stability and re-create the foundations for sustain- quality of regulations and the regulatory process.
able growth, the government embarked on a
far-reaching program of regulatory, financial, and The deregulation initiative was radical, aimed at
structural reforms. The regulatory reform program reinvigorating the economy in the wake of the
launched in 1998 as part of this recovery strategy economic crisis. By contrast, the institutional
affected thousands of regulations and administra- reforms can be considered evolutionary; they
tive formalities across the whole of government. were an outgrowth of past attempts at regulatory
This case study examines the strategies of Korea in reform and adopted many of the earlier forms
carrying out this ambitious program of regulatory and structures. Korea hoped for a synergy effect
reform. between the two prongs of reform.
The 1998 regulatory reform program included The reforms have led to many moderate suc-
two key initiatives. The first was a deregulation cesses. Whether they have effected a fundamen-
initiative in which the president ordered each tal shift in the relationship between the state and
government ministry to eliminate 50 percent of the market in Korea is not yet clear, however.
Korea’s first attempt at regulatory reform began functioning efficiently. As a result, a tradition of
in the 1980s with the aim of dismantling the government intervention in the economy
regulatory structure favoring government became established—a tradition that became
intervention that had been built up during the increasingly costly as Korea entered its mature
1960s and 1970s. Three presidential administra- market development phase in the 1980s.
tions made episodic efforts to reduce regulatory
burdens through institutional changes. These As the Korean economy grew and its structure
efforts were usually made at the beginning of an became increasingly complex, limits in the govern-
administration, to gather political support, or ment’s ability to control the economy began to
during recessions, to reinvigorate the economy. become obvious. The costs of government failures
began to outweigh the benefits of government
The timing of Korea’s 1998 regulatory reforms intervention (RRC 1999, 23–24). Korean busi-
was therefore not unusual. But the severity of the nesses had long complained of inefficiencies arising
Asian financial crisis, and the peer pressure from Korea’s complex and opaque regulatory
applied by other member countries of the OECD regime, and as noted, there had been episodic
to its newest member, gave the reforms an added attempts at regulatory reform since the early 1980s
sense of urgency and greater seriousness. (Choi 2002, 58–60). Thus even before the finan-
cial crisis, regulatory reform had been an official
government policy in Korea for almost 20 years.
Historical Context: 1960s–1997
In the early stages of its economic development, Early Regulatory Reform Efforts
Korea depended heavily on direct intervention
and allocation of national resources. This was In 1980, as Korea recorded its first negative
most true in the 1960s and 1970s, when there growth rate, widespread support for reform
were doubts that market institutions were began to emerge. In 1981 newly inaugurated
The “sacred” regulations in Korea include those designed to protect farmers, workers, and consumers; to protect
small and medium-size enterprises from competition; and to protect the environment. They include regulations to
stabilize prices and employment, to prevent real estate speculation, and to ensure that financial institutions follow
sound prudential standards. They also include regulations dealing with chaebol (conglomerates) and with
education and culture.
Why the Reforms Before 1998 As a result of these very different political econo-
Were Unsuccessful mies, soft reforms had business allies but bureau-
cratic enemies, while hard reforms were orphans.
Why were these previous reforms not successful?
Examining this question is useful because the
Another reason for the lack of success is that
factors working against the success of reforms
Korea used a bottom-up approach to regulatory
before 1998 are the same ones that affected the
reform that limited its effectiveness. Regulators
1998 reforms reviewed in more detail in this
were responsible for determining which regula-
case study.
tions to reform or abolish—tantamount to the
One major reason that the previous reforms had public asking the regulators to admit that their
a limited impact was a lack of demand for rules were mistaken or misguided. Although
comprehensive reform. Korean businesses have some efforts were made to collect suggestions
usually called for “soft” reforms—aimed at from the private sector, the regulating bureau-
reducing bureaucratic intervention and red crats always had the final authority, and pro-
tape—and it is on these reforms that the Korean posed changes that met with strong opposition
government has therefore focused. Soft reforms from a ministry would not take place. Even
have the effect of reducing regulatory controls when changes were forced on a ministry by
over business activities, and their costs fall political pressures, the ministry could dilute
mostly on the bureaucrats. Thus bureaucrats put their effect when implementing the reform.
up direct and indirect resistance to the reforms,
resulting in a cycle of deregulation and reregula- These problems were worsened by regulatory
tion corresponding with episodes of political capture. Many Korean ministries have long
interest in reform. maintained a “cooperative” relationship with
interest groups and organizations under their
Korea has engaged much less enthusiastically in jurisdiction. The regulators naturally tended to
“hard” reforms—those promoting competition sympathize with the regulated interest groups
and market principles. Because hard reforms that supported them. Voluntarily proposing
have a direct impact on the interests of compa- regulatory reforms that might adversely affect
nies, the business sector has tended to resist “their” interest groups has been particularly
them. Moreover, bureaucrats have been less than difficult for the ministries.
eager to introduce market principles that would
reduce their discretionary powers over the Another problem was that reforms focused on
economy. the stock of regulations, with no controls over
Yet another element undermining effectiveness ■ While the administration adopted tools that
is that public officials are generally passive or could have been used to improve regulatory
defensive about regulatory reforms. The reason quality, it failed to establish a systematic
is not only that they want to hold onto power process for doing so. As a result, it could
and territory but also that they are generally risk neither directly affect the regulatory process
averse. Government officials often give greater nor change the bureaucratic culture.
weight to the potential adverse side effects of
reform than to its potential benefits. For all these reasons, the many measures Korea
introduced for regulatory reform—with the aim
The Kim Young Sam administration made a of strengthening market competition and
more systematic attempt at regulatory reform liberalization—led to few results and little reduc-
than its predecessors, creating committees in tion of regulatory burdens. The measures were ad
charge of reform in different areas. But even this hoc, leaving major regulatory barriers untouched.
reform attempt is generally judged to have failed And even when some of the more formal mea-
because the committees were not very effective. sures were removed, informal measures such as
A crucial problem was lack of expertise and a administrative guidelines remained.
failure to allocate skilled and dedicated personnel
(Lee and Han 1999, 225–33). Other factors Context of the 1998 Reforms
were also at play:
Reformers recognized this failure. Toward the
■ While the administration established end of the Kim Young Sam administration that
advisory committees on scores of different recognition led to the drafting, after much
issues, overall regulatory reform did not debate, of the historic Basic Act on Administra-
receive focused attention. The roles of tive Regulations. The foundation for the 1998
different committees sometimes overlapped, institutional reforms, this law created a power-
so that it was unclear who was responsible ful, long-term regulatory reform body, the Regu-
for regulatory reform. latory Reform Committee, and mandated
regulatory quality controls such as regulatory
■ The Regulation Renovation Committee in impact analysis.
charge of regulatory reform was an advisory
body with little actual power over policy. Like previous attempts to reduce regulatory
The committee had neither legal powers nor burdens and reform the regulatory system, the
clear political support. 1998 reforms took place in the context of a new
presidential administration and a severe domes-
■ Some of the committees were temporary, tic recession. As a result of the 1997 Asian
reducing their credibility in persuading minis- financial crisis and the recession that followed,
tries and interest groups to accept change. 1998 was the first year since 1980 in which
10
11
12
The Basic Act on Administrative Regulations be reviewed by agencies in conjunction with the
forms the legislative core of today’s regulatory Regulatory Reform Committee and that all
reform policy in Korea and is still a key driver of regulations be registered in a central registry.
the reform process. According to explanatory
material published with the act: Design of the 1998 Institutional
The aim of the [Basic Act on Administrative
Reforms
Regulations] is to break away from the hitherto The Kim Dae Jung administration established the
fragmentary and dispersed attempts at regulatory Regulatory Reform Committee, as required by the
reform and to move toward building a founda- Basic Act on Administrative Regulations, in April
tion for a more fundamental, enduring and 1998. Work on the Basic Act had begun in late
systematic regulatory reform . . . The purpose of 1996, but not until after the financial crisis was
this Act is to promote private initiative and there enough political will and bureaucratic
creativity in the social and economic sphere in momentum to actually establish the committee.
order to improve the quality of life for the people This proved to be Korea’s most important institu-
and to enhance national competitiveness.1 tional reform: the committee reviews new and
existing regulations and bears the main responsi-
The Basic Act defines general principles for bility for maintaining regulatory quality.
regulation, including minimum necessary
regulation and greater transparency and effi- The Regulatory Reform Committee is meant to
ciency. It sets out rules for making new regula- have sufficient political and bureaucratic strength
tion, including the use of regulatory impact
analysis, sunsetting, and review by the Regulatory 1 Basic Act on Administrative Regulations, Act 5368, August
22, 1997. References to the act are to the English edition,
Reform Committee and the Office of Legislation. dated June 1999, which includes explanatory and
The act also requires that all existing regulations supplementary material.
13
■ Establish and implement a program for The Regulatory Reform Committee also maintains
comprehensive review and reform of existing a comprehensive registry of regulations, accessible
regulations. through the Internet (http://www.rrc.go.kr).
Technically, a regulation is valid and enforceable
■ Register and publish regulations. only if it has been entered into the registry.
14
Office of the
Vice Minister in charge
of regulatory reform
Secretary to RRC in
the Office of the
Prime Minister
Regulatory reform
groups in each
provincial and local
government agency
15
16
17
The volume of research assessing the impact of the number of regulatory proposals that it
regulatory reform in Korea is fairly small, as is recommended for revision or withdrawal. Taken
the case for most countries. Nevertheless, the together, the numbers also suggest that the
research results that are available suggest that the Regulatory Reform Committee did much to
1998 institutional reforms and deregulation pro- help reduce the growth in new regulations.
duced benefits for both businesses and the
economy as a whole.
Impact of the 1998 Deregulation
Impact of the 1998 Institutional For the deregulation initiative, direct measures
Reforms of the outputs are clear. By the end of 1998, as a
result of the presidential order calling for a 50
While little research has dealt directly with the percent reduction in regulations, the govern-
impact of the institutional reforms in Korea, the ment had eliminated 5,430 (48.8 percent) of the
Regulatory Reform Committee has published 11,125 regulations previously in place and had
data on the regulatory proposals that it has revised another 2,411 (21.7 percent). By 2002,
examined. These data show that between 1998 however, new regulations had begun to increase
and 2002 the committee examined 4,518 in number, bringing the reduction since 1998 to
regulations associated with 1,339 laws—and rec- only 33 percent (Table 2).
ommended that 1,544 of these regulations be
revised or withdrawn (Table 1). The deregulation touched virtually all areas of the
economy and of Korean life in general. It covered
According to official data, Korea had 7,435 such areas as paperwork, social regulations,
regulations at the end of 2002. That total corporate regulations, financial sector regulations,
suggests the significance of both the number of regulations on venture firms and on small and
regulations that the committee examined and medium-size enterprises, and regulations relating
18
T A BLE 2
19
2001
to foreign direct investment and to trade and around 45 percent to 36 percent (Table 3). Even
market openness. Among other things, deregula- more important, the share with strong barriers
tion made dismissals of workers easier, made dropped by almost half.
work and employment rules more flexible,
The easing of entry barriers, along with other
increased access to foreign exchange markets,
measures to promote foreign direct investment,
reduced regulations on foreign ownership of
probably contributed to an increase in such
land,2 and led to both privatization of and
investment. In 1997–2000 the inflows of
reduced privileges for state-owned enterprises.
foreign direct investment into Korea rose to
In foreign direct investment, deregulation was unprecedented levels (Figure 2). Inflows fell
generally deemed to have made inward invest- substantially in 2001, however, and sank to the
ment easier. Korea’s growth policies had resulted level of before the Asian crisis in 2002.
in numerous barriers to entry, such as govern-
ment monopoly and licensing, permit, and Another study projected that the 1998 deregula-
reporting requirements. Indeed, according to a tion would have positive macroeconomic effects.
1997 government study, 63 percent of all indus- The study, by Ha and others (1999), focused
tries (205 out of 325) had regulations controlling primarily on regulatory reforms in such areas as
market entry (KDI 1997). employment, entry barriers, price cap regulation,
A private sector study in 2002, using a more inward investment, the environment, and land
detailed categorization of industries, found a use. The study first estimated the direct effects
visible decline in the number affected by entry and the direct net benefits of the 1998 deregula-
barriers. Between 1992 and 2001 the share of tion (Table 4). Using input-output table analysis,
industries subject to entry barriers dropped from the study then projected the effects of
deregulation on major sectors of the Korean
economy. Finally, it used these results in a
2 Foreign investors had often cited restrictions on foreign
ownership of land as the most serious barrier to foreign
macroeconomic model to project the overall
direct investment. See, for example, Kiska (2003). economic effect of the deregulation (Table 5).
20
10000
8000
6000
4000
2000
0
70
72
74
76
78
80
82
84
86
88
90
92
94
96
98
00
02
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
Source: UNCTAD Web site.
TAB LE 4
Cost savings due to lower regulatory costs 18.69 trillion won (4.4 percent of GDP in 1997)
Foreign direct investment $36.5 billion increase expected over five years
TAB LE 5
Unemployment Rate
Real GDP Consumer Prices Employment Real Wages (Percentage Points)
21
22
In implementing the 1998 reforms, the Kim Dae The institutional changes were intended to allow
Jung administration went beyond the reform the reforms to continue even if the political
efforts of previous administrations in two crucial leaders and the public lose interest. But the
ways, taking significant first steps to reduce the support for regulatory reform weakened near the
regulatory burden on the Korean economy: end of the administration, when the need for
reform was less desperate and the political
■ Institutionalizing reforms. The Kim Dae Jung strength of the president waned. The new
administration established permanent institutions were not enough to overcome
institutions and mechanisms of regulatory implicit resistance to reform in the bureaucracy.
reform, such as the Regulatory Reform Moreover, because the deregulation measures
Committee, regulatory impact analysis, and reduced the regulatory burden less than had been
the sunset clause. Each ministry established hoped for, many observers lost interest in further
an internal regulatory review committee, regulatory reform.
and the activities of these committees are
monitored by the Office of the Prime
Minister and the Regulatory Reform Differences Between the 1998
Committee. Reforms and Previous Efforts
■ Improving accountability. President Kim set a The Korean government’s bold, sweeping reform
numerical target for deregulation that served measures in 1998 were in part a response to
as a concrete goal that ministries had to meet. criticism of previous reform methods. Indeed,
Setting a numerical target had mixed effects, one of the major goals was to avoid the short-
but it did signal that the government was comings of previous attempts at reform. The
serious about regulatory reform and estab- bold reform strategy was intended to signal the
lished unequivocal goals for monitoring. government’s seriousness about reforming
23
24
25
Political support proved to be too narrow as the Though powerful on paper, the Regulatory
crisis passed. The Basic Act on Administrative Reform Committee also lacked the legal force or
Regulations was passed by the National Assem- expertise to deal with intentional “sabotage” by
bly in 1997 thanks in large part to personal rule-making ministries:
efforts by President Kim Dae Jung and Prime
Minister Go Geon, and there was little attempt ■ The civilian members of the committee did
afterward to widen the political support for not represent a cross-section of stakeholders,
regulatory reform. As the urgency of the crisis nor did they have the expertise needed. There
declined, so did active support for regulatory may have been a tendency to choose mem-
reform and further deregulation (see Kim 2003). bers because they were widely known to the
public rather than on the basis of expertise.
Politicians also sensed that the continuing struggle
for good regulation might require more political ■ The committee’s bureaucratic support mecha-
capital than it produced. After the drastic purge of nism in the Office of the Prime Minister may
half the existing regulations, the political and not have had the support needed to overcome
socioeconomic context of the remaining agenda antireform sentiments in ministries, and the
became much more complicated, with less support agency itself lacked expertise, in part
political capital to be gained from dramatic because of the tendency for rapid managerial
measures. As the regulatory system began to deal turnover in Korea.
with longer-term and more institutional prob-
lems, the attention of the president waned. ■ Some of the committee’s first decisions as a
Without the president’s support, the government’s government institution were culturally
representatives on the Regulatory Reform Com- controversial and may have weakened public
mittee lost their enthusiasm for reform proposals. support for regulatory reform.
The committee continued to examine new
regulations, but gradually lost its aggressiveness. In addition, the range of regulatory reforms
envisioned in the Basic Act on Administrative
The mechanism for regulatory review also began Regulations proved to be too narrow. The law was
to show flaws. The Regulatory Reform Commit- designed to take into account the criticism by
tee regularly examined new regulations and businesses and experts that previous regulatory
released regulatory impact assessments to the reform efforts had been unfocused and needed to
public. But battles with the bureaucracy contin- be unified under a common framework. But there
ued because its traditional practice of controlling may have been some miscommunication between
rather than enabling private sector activity had the government and the National Assembly. The
changed little. That is, the regulatory quality National Assembly wanted to reduce the regula-
agenda remained top down rather than being built tory burden on businesses. The government, by
into the machinery of government at all levels. contrast, focused on more formal, legalistic
26
27
28
The OECD produces a synthetic indicator that measures the existence and content of explicit government
policies on regulatory reform and the organizational arrangements put into place to support them—the
indicator of policy and organizational commitment to regulatory reform. This indicator gives a high score to
policies on regulatory reform that are adopted or revised by the current government, those that include explicit
objectives and principles of good regulation, and those that are supported by the establishment of a specific
body with responsibility for promoting, supporting, and reporting on the progress of regulatory reform.
In 2001 Korea’s score on this indicator was one of the highest among OECD member countries. It was also
significantly higher than the average for the G7 countries and that for the other member countries of both
OECD and the Asia-Pacific Economic Cooperation (APEC). Because the indicator measures formal aspects and
not the intensity of implementation of reform policies, however, it may not be a good proxy for policy results.
Indicator of policy and organizational commitment to regulatory reform, 2001.
100
80
60
40
20
0
Korea, Rep. of APEC and OECD G7 OECD members
(excluding Korea, Rep. of)
Source: OECD 2000.
in the business environment. This suggests that foreign, still considers regulations to be among
the Korean government and the Regulatory the biggest problems in Korea, and businesses
Reform Committee have not been able to use the have asked the Roh Moo Hyun administration
formal tools and policies at their disposal to to focus on further reducing the regulatory
effectively reduce the regulatory burden and burden. According to the FKI Press, a poll of the
tackle problems in Korea’s regulatory structure. presidents of 13 Korean economic research
The system of regulatory impact analysis has been institutes ranked regulatory reform second
particularly misused and neglected. Though every among the 10 most urgent economic policy
ministry fulfills its legal obligation to submit reforms for Korea. A poll by the Korean Cham-
regulatory impact assessments to the Regulatory ber of Commerce showed that more than
Reform Committee, the quality of the assess- 60 percent of respondents were dissatisfied with
ments is too poor to show the true costs and current government efforts on regulatory
benefits of proposed regulations. reform, and the organization’s chairman cited
excessive regulation as a major reason for Korea’s
Even so, there may be cause for optimism about low domestic investment. True to historical
the future of regulatory reform because of patterns, the Roh government pledged to carry
continued pressure from the business commu- out regulatory reform in 2005 to combat the
nity. The business sector, both Korean and ongoing recession.
29
30
Earlier regulatory reform attempts in Korea To counter these tendencies, the Basic Act on
featured a “tug of war” waged between civilian Administrative Regulations set a framework for
representatives and bureaucrats on advisory reform that gave an independent agency, the
committees for deregulation or regulatory reform. Regulatory Reform Committee, authority to
Bureaucrats had the advantage—in part because control the quality of regulations. The commit-
civilian representatives had only honorary posi- tee maintained a consistent set of principles to
tions and inadequate information—and mostly control regulatory quality. Reinforcing its
won the “war.” function were tools to control regulatory quality,
such as regulatory impact analysis.
While public agencies tend to resist change, their
conservatism and inertia can work in favor of ■ Along with efficiency disciplines, transparency
reform if it can be normalized in their operations. and predictability were built into the regulatory
Establishing the Regulatory Reform Committee as structures.
a dedicated full-time reform office—along with a
support structure within the bureaucracy, to create Among the costliest problems in Korean regula-
a “pro-reform” faction—began to change incen- tion are the lack of clarity and room for interpre-
tives in internal policy processes. A group of tation in many regulatory rules and procedures.
government officials formed their careers around Regulators tend to have much discretionary
regulatory reform. As a result, regulatory reform power as a result, creating uncertainty for
31
Korea substantially accepted the OECD recom- The regulatory reform mechanism established
mendations and guidelines on regulatory impact by the Kim Dae Jung administration, while
analysis (1997b) in shaping and introducing its broader than any previous effort, did not create
own process. In addition, Korean reformers sufficient cooperation between ministries and
exploited the OECD peer review of regulatory the central agencies responsible for regulatory
reform as an outside pressure on the government. reform. Nor could the “pro-reform” forces
created in the bureaucracy overcome the existing
“antireform” forces. More attention to creating
Shortcomings incentives for performance, such as by involving
While the Korean efforts highlight the advan- the budget authorities, would have been helpful
tages of a strategy of rapid and massive reform, in inserting regulatory reform into the daily
they also showcase its disadvantages. routines of governing.
■ The regulatory reforms in Korea focused unduly For regulatory reform to be effective and to
on top-down legal changes and not enough on achieve permanent results, government struc-
actual implementation. In particular, the tures need to be reorganized to reflect changes in
system lacks a detailed strategy for improving regulatory power between ministries and agen-
practices at the local level, undermining visible cies. In some cases that may mean abolishing an
benefits for citizens and businesses. agency or an entire bureau in a ministry. Simi-
larly, as ministries and offices have fewer regula-
For regulatory reform to be effective, it is not tory functions, their budget allowances should
enough to review legal texts. Authorities need be reduced accordingly.
to inspect the administration of regulatory
changes to ensure that they are being enforced The Korean regulatory reforms were not linked
in implementation—because regulators can with reorganization of the government structure.
easily dilute the effectiveness of regulatory Coordination between the Regulatory Reform
changes through administrative guidance and Committee and the Ministry of Planning and
informal interventions. Budget was insufficient to reflect the changes in
regulatory roles. As a result, the regulatory
Korean regulatory authorities did not suffi- reforms were not translated into organizational
ciently carry out such inspections. As a result, and budget reform.
32
33
34
Choi, Byung-sun. 2002. “Mechanism for Regula- KDI (Korea Development Institute). 1997.
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Shin, eds., Market Economy and Regulatory Reform ture” [in Korean]. Seoul.
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Kim, Il-Sub, Byung-sun Choi, and Tae-Yun Kim.
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tion and the Operational Principles of Regula- Reform by Kim Dae Jung Administration.” In
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