Political institutions determine economic rules in general, although the causality runs both ways. That is, property rights are determined and enforced by political institutions, but the structure of economic interests will also influence political structure. One of the most important political economic structures that has determined Korea's property rights in the past is the tightly knit relationship between the administrative branch of the government and the chaebol, the large family-owned industrial conglomerates. The organization of the Korean government endows the executive branch with special privileges that other democratic nations' governmental administrations usually do not enjoy; that is, ministries can change the rules and regulations governing commerce and other matters without the approval of the legislative branch. Using the dominant executive power, Korea's past presidents have developed personalized political exchanges to benefit specific groups. Since ministers are political appointees of the president, he has direct lines of command and authority over the ministries. Businesses and individuals with direct access to the president, therefore, have been able to get the rules and regulations changed in their favor or persuade the government to grant special privileges on their behalf. In return for extending the desired favors, the ruling party leader receives large political contributions from big businesses that he uses primarily to fund elections.

Past political economic exchanges in Korea are largely responsible for the present economic crisis that has collapsed the stock market/exchange rates and dictated the $US57 billion IMF bailout package.