A cultural analysis of South Korea's economic prospects

Abstract

This study analyses cultural effects on economic development in South Korea. It introduces the concept of transaction costs as an operational intermediary between culture and economic development. Using this approach, it is found that culture affects economic development through its impacts on transaction costs in the static case and in the dynamic case, through its impacts on the creative capacity of citizens. To assess the role of culture in future economic development, recent changes in Korean culture are examined. In view of recent changes identified, Korean culture will have a negative effect on the future economy, compared to its positive influence in earlier decades from the 1960s. Culture is not ceteris paribus. Even if all else remains the same, the prospects of the Korean economy will be tainted by the influence of culture.