In 1993, Steven Spielberg’s Jurassic Park, produced with a $63 million dollar budget, hit the big screens and entertained audiences worldwide. In fact, it entertained so many audiences in so many places, that the export revenue of the feature film matched that the foreign sales of the 1.5 million Hyundai automobiles that were exported that year. The anecdote goes that Kim Young-Sam, the South Korean president at the time, was forced to note the viability of culture as national income when he heard of these figures. In 1994, the Korean government started investing significant sums into the entertainment and cultural industries with plans to eventually profit off of the nation’s pop cultural exports.

Today, Gangnam Style is still the most watched video on Youtube, at over 2500 million views. In 2012, the country’s Ministry of culture, sport and tourism valued the Korean cultural exports to be $83.2 billion dollars as an economic asset. Increased tourism and investments from foreign countries is a side effect of this cultural investment. All around the world, countries continue to be fascinated by K-pop and K-dramas, and even in the West the fandom appears to be growing, especially with young females.

In 2016, Google’s AlphaGo beat out the Korean world champion Lee Sedol in a highly publicized tournament, by a convincing score of 4–1. The anecdote goes, the government has learned to accept their robot overlords, and has decided to invest $860 million over the next 4 years into the country’s artificial intelligence industry. What can we expect will come out of this investment? And what factors do Korean companies possess that makes us anticipate great progress in artificial intelligence with this investment?

A country run by big corporations

Korea has an interesting history that fostered the growth of big corporations, with LG and Samsung being notable companies that originated out of the nation’s unique history.

After the country suffered greatly during the Japanese rule that began in 1910, and the subsequent Korean war that ended in 1948, the South Korean economy was small and predominantly agricultural. In 1957, the West-African nation Ghana and South Korea had about the same annual per capita GDP.

The other ‘Supreme Leader’, Park Chung-hee

A government military official Park Chung-hee and his regime took over the short-lived provisional democratic government on May 16th 1961 through a military coup, and officially became the president in 1963. In 1972, he declared martial law and recast the constitution to give him power as a legal dictator over the country — a fervent topic that is still frequently discussed among Koreans today. While many agree that his policies are largely responsible for the blistering economic progress that was made, a large population of older Koreans are still bitter about the authoritarian rule.

Park Chung-hee spurred rapid industrialization of the whole country in the early 1960s by promoting large businesses called the chaebol — they were to be guaranteed loans from the banking sector by adhering to the government policies towards new investment. By pooling resources and creating big businesses using governmental power, the chaebol played a key role in developing new industries, markets, and export production.

Even after Park was assassinated in 1979 by the director of his own intelligence agency, the chaebol thrived with foreign loans and special favors facilitated by the government. Many of these chaebols have survived to this day and continue to dominate the Korean markets, although the number of the chaebol companies have diminished during the 1997 Asian Financial Crisis, the most well-known bankrupt chaebol being Daewoo.

The benefactors of the short South Korean Authoritarian Regime

Big companies are more productive, pay higher wages, enjoy higher benefits, and are more successful in international markets. Larger companies, generally speaking, are much more stable and have better benefits for their employees, especially in a Confucian society such as Korea. Because of this unique history of the chaebols, the country’s resources are highly focused into its major companies, and has extensive history in state-corporate alliance. Needless to say, Samsung and LG are two major companies in the high-tech industry, and they have both agreed to participate with independent funding to add to the government investiture into AI. Possibly the biggest benefit the chaebol is that they are able to collaborate with other companies and attract more investments, as an AI startup would clearly have much difficulty attracting partnerships and investments than an established company such as Samsung or LG.

Finally, a big characteristic of bigger companies over small ones is that they’re able to more liberally spend money into R&D (research and development), because for most chaebols, a large portion of their operational income can be met by using the massive consumer market of South Korea. In the case of Samsung, Samsung has the electronics division which we are familiar with, but it also has a huge Korean market share in housing (apartment complexes), in industry (especially shipbuilding), and even life insurance. A company that has so many subsidiaries in a wide range of industries has greater motivation to create general artificial intelligence that can be applied in its other ventures.