Institutional Diagnosis and Remedies of Government Procurement System in South Korea: In Search of Effective Governance

Abstract

This paper diagnoses and prescribes the institutional arrangements of government procurement system in South Korea through the transaction costs approach. The current South Korean institutional arrangements of government procurement system are weak in solving the transaction problems. The crucial remedies can be identified from governing the centralized Supply Administration of ROK (SAROK: Jodalchung) and its related-institutional arrangements. What is to be done about the problems the current Korean government procurement system confronts with? The basic principle is to increase dramatically the freedom (decentralization) of individual user agencies to use their judgment in the procurement process and to enhance the open and fair competition. In search of effective governance, this paper emphasizes the need to establish the governance culture to pursue effective government procurement system as follows: more delegation to user agencies, more independence and rational procedures to SAROK and user agencies, deregulation of legislative intervention, and professionalism of purchasing manpower.