Korean Development and Administrative Law John Ohnesorge University of Wisconsin Law School February 9, 2004

Readings Chapter II: Law and Bureaucracy, in Law and Political Authority in South Korea, by Professor Yoon, Dae-Kyu, 1990 Chapter III: The Enforcement of Law, Id. Administrative Law in the Institutionalized Administrative State, by Hong, Joon-Hyung, (Chapter 3 of Recent Transformations in Korean Law and Society, Yoon Dae-Kyu, editor, 2000) The Characteristics and Results of Korea’s Administrative Regulations Reform, by Oh, Jun-Gen, Id.

Major Themes (3) Economic governance and Korean administrative law The Rule of Law and Korean administrative law State-Society relations and Korean administrative law

I. Economic Governance and Administrative law A.Economic governance in the “developmental state” ( ) Controlled market economy –Executive branch strongly committed to industrialization and private capital, but under government control

Industrial Policy: Objectives Maintain national economic autonomy Move up ladder from light to heavy industry (shoes to shipbuilding) Decrease reliance on foreign technology (“localize”) National self-reliance (steel; chemicals) Build national wealth through exports (mercantilism)

Industrial Policy: Means Chaebol –scale –diversification –know-how, experience, capability –Ease of government control (?)

Tools of control: Finance Government control of banks (borrowing) Government control of access to capital markets (equity finance) Foreign exchange controls to control inward and outward capital flows (ensures savings pool; limits foreign borrowing) Foreign Investment controls (foreign equity investment severely limited)

Tools for control: Investment and Goods Government control over inward and outward foreign investment (sectors; terms) Government licenses entry into business lines Government control over access to foreign technology via licensing Government control over import business

Washington Consensus vs. Industrial Policy Highly skeptical of “infant industry” protection Highly skeptical of government’s ability to successfully “target” industries to support Country’s economic development best left to international market forces (“comparative advantage” Market forces will operate best in climate of private rights for business (property/contract; IPR; investment decisions; labor) Highly skeptical of bureaucratic discretion (rent-seeking; bureaucratic aggrandizement)

Administrative Law and Industrial Policy How was administrative law suppressed during heyday of industrial policy? Was such suppression necessary/intrinsic to the functioning of industrial policy? How did Korea’s trading partners feel about Korean administrative law? What has changed since 1987?

QUESTION What is the definition of an administrative act under Korean law?

QUESTION What is the role of the Korean Development Institute (KDI) in advising the government as sophisticated economists?

QUESTION What is the interplay of Democratization, Freedom of Information Act approaches (FOIA) and traditional Continental administrative law approaches during the past years?

II. The Rule of Law and Administrative Law “[The Rule of Law] means that government in all its actions is bound by rules fixed and announced beforehand – rules which make it possible to foresee with fair certainty how the authority will use its coercive powers in given circumstances and to plan one’s individual affairs on the basis of this knowledge.” Friedrich A. Hayek, The Road to Serfdom (1944).

Rule of Law functions of administrative law (Hayek): Minimize ultra vires bureaucratic action; Minimize bureaucratic discretion in rendering those decisions within agency’s jurisdiction; Maximize ability of private actors to know and plan in accordance with rules;

Other Rule of Law functions (beyond Hayek): Ensure “due process” to citizens whose rights are being adjudicated by the bureaucracy –Notice –Opportunity to be heard –Opportunity to present evidence, and to challenge contrary evidence –Right to decision by neutral decision maker; Ensure citizen sector participation in rulemaking by agencies (U.S. to Global);

Administrative Law and the Rule of Law in Korea What was administrative “rule of law” status pre-1987? What has changed? When did changes begin, and what drove them? Evaluations?

III. State-Society Relations and Administrative Law What is democratic function of administrative law in modern, regulatory state? How does administrative law regime affect civil society, and vice-versa? How would one describe “civil society” in traditional Korea? In the Developmental State? How have State-Society relations changed in Korea since 1987, and what has been role of administrative law?

QUESTION Are there people from other countries in Asia who find this kind of story of industrial policy, authoritarian government, and transition to democracy familiar?

QUESTION To what extent do Indonesians perceive administrative law in Indonesia existing for citizens to challenge the state vs the government to monitor the actions of lower and mid-level officials?