Stakeholder Interest Relations in Korea’s Services Trade Liberalization: A Political Economy Analysis

This paper seeks to analyze the major factors behind why each stakeholder in the legal, health, educational, and audio-visual service sectors in Korea opposes liberalization in a qualitative political economy context. Moreover, it provides alternative strategies for further liberalization. In legal services, the primary concerns are the foreign equity ceiling of JV law firms and the recruiting Korean lawyers. In health services, the primary issues are whether to allow for-profit or incorporated hospitals. In educational services, the most contentious issue is the deregulation of limitations placed on the disposal of remaining properties. In audio-visual services, the main issues are the adamant opposition by movies makers and NGOs against reducing the screen quota and the monitoring and implementation of intellectual property right as well as competition policy. It is found that those factors include general mindset towards uniform equity and control, cultural factors preventing discussion on rational alternatives, the insufficient government budget for universal services, lack of administrative capacity in policy implementation and monitoring, absence of a proper system to evaluate the quality of services, asymmetry of information, and persistence of acquired rents. To make rational alternatives for further liberalization, it is necessary to simultaneously address the problem of ‘mistrust’ and lack of free flow of information.