Korean Enterprise-scale Expansion Of Research

The year of 1997 is a watershed of the glorious history of the economic development type called "east-Asian model". Many economists begin to question the problems lie beneath the reckless expansionism of Korean enterprises that used to contribute greatly to the speedy development of Korea's economy. Literature concerning this issue abounds. Yet few of which study the scale of enterprise from both the school of new inslitulionnlisni and the traditional classicalism. (many researches are from the perspective of linn's theory of Marxism though) The paper is supposed to use this combination as theory basis as well as analyzing tool to build up a general equilibrium model of production cost and transaction cost together with firm's scale. The paper means to study the past, the status quo and future functions of Korean conglomerates and look closely to the reason, the characteristics, the way of Korean enterprises' expansion. Meanwhile the writer tries to probe into the complicated relationship among Korean's conglomerates, the finance sector and Korean government, which originate the expansionism of Korean Chaebols.Korean government has taken up measures to readjust the staicture and the scale of the Korean Chaebols ever since that turning point. The effect of these actions however does not seems to be satisfactory. The conclusion drawn at the end of the paper includes a): the degree of government intervention into the nation's economy should be contingent on the external economic climate and internal situation or else government-led style will introduce disastrous result, b): the obstacle divergence between government and enterprises lead to higher transaction cost ,therefore, change the latter's optimal scale. c):the motivation or rather, the inspiritment of enterprises' expansion that government provides should be based on the decrease of the production cost and how far they can go to internalize the transaction cost, which can also act as the yardstick of the optimal size of the firm and the degree of participation of both the market and the government.