Is the Management Evaluation System of State-Owned Enterprises in the Republic of Korea a Good Tool for Better Performance?

State-owned enterprises (SOEs) in the Republic of Korea played a leading role in the post-war economic development process, but their role has been gradually reduced as the role of the government in the economic development process is replaced by the private sector (Park 2009). In the early 1960s, government-led development resulted in the government directly substituting the private sector to manage SOEs and organize private enterprises by effectively directing large-scale labor and capital. From the 1980s to the 1997 pre-International Monetary Fund (IMF) period, this method of government intervention in economic development became more indirect. As the industry and the private sector grew, various businesses were created outside government control, and the role of the government in economic development was gradually diminished as concerns over excessive government intervention and government failures were raised. From 1999 to 2017, after the economic crisis, restructuring and reforms took place throughout the entire government structure and the economy due to the global trend of neoliberalism and growing concerns about government failure. During the period from 1998 to 2003, large-scale privatization of public enterprises led to significant development of the market economy. In 2007, the law on the operation of public institutions was introduced to organize the governance structure for public institutions. As a result, the government’s role in the economy as a whole has become smaller, and various private sectors, including financial and network businesses, have grown significantly. In the process, the role of public enterprises in the Republic of Korea has also changed. In the early stage of economic development, the government did not have sufficient resources for the private sector, and it operated a public corporation to carry out large-scale social overhead capital (SOC) and investment projects centered on public corporations and to prevent monopolization of electricity, gas, communications, and networks. However, as the economy grew and matured, most of these public enterprises were privatized, and the role of public corporations as a major policy tool for economic development was reduced.