Corruption and Economic Development

Most of recent statistical studies show corruption is incompatible with rapid economic development. In South Korea, however, the miraculous economic growth was attained despite the existence of ample corruption. This paper tries to explain this riddle through deductive exploration of the rational behavior of bureaucrats in the Korean institutional framework. The model assumes that there were various types of bureaucrats, yet all of them were basically rational utility maximizers, competing with each other for promotion regardless of their official or personal purposes and propensities. The rule was clearly defined within the newly-established merit-based civil service system, and all they had to do there, in fact, was to make greater contribution to the leadership's ultimate target of economic development. Under the extremely goal-oriented public administration of the developmental state, the performance of the economy was always closely monitored and regularly reported, by which the performance of the relevant bureaucratic agencies as well as that of the persons in charge was revealed. In other words, bureaucrats, regardless of their individual interests, always needed to achieve good performance in order to be promoted. Even if they were corrupt, their corruption should not gravely hinder the good performance.