Key Factors of Successful Joint Ventures in Korea - Two Different Case Scenarios

Chapter 13

Key Factors of Successful Joint Ventures in Korea

- Two Different Case Scenarios

Myungsik Do, Hanbat National University

Sang Hyuk Lee, Hanbat National University

Introduction

PPP (Public Private Partnership) has become a common way to implement SOC (Social Overhead Capital) investments in infrastructure in developed countries like the U.S., the U.K., etc., since the 1970s, due to an increase in government budget deficits. Since the 1990s, as industrialization and the capacity of the Korean economy has dramatically increased, infrastructure works such as roads, railways, schools, amenities, and environmental facilities have needed to be enlarged.

However, the government budget deficit has been deemed an impediment to carrying out SOC. PPP was recognized as a way to solve the government's budget constraints regarding economic and social infrastructure. A law supporting PPP for infrastructure works was passed in 1994 as "The Enactment of the Promotion of Private Capital into Social Overhead Capital Investment Act." In 1997, with the Korean economy in the midst of the Asian Financial Crisis, the Korean government decided to expand and improve SOC. For this reason, it needed foreign capital and foreign companies' advanced management systems, and sought to acquire these by means of joint ventures.