SEOUL -- Corruption allegations related to Choi Soon-sil, a long-time confidante of President Park Geun-hye, have raised questions about the future of South Korea's burgeoning technology sector, as well as leading to the president's impeachment.
Choi, who appeared to have enormous sway over Park, is accused of influencing the administration's "creative economy" drive, designed to revitalize economic activity by fostering startups and reducing the dominance of the country's big conglomerates.
"Choi Soon-sil is crazy for startups," blared one newspaper headline, while another proclaimed: "Rooted in Choi Soon-sil-gate -- the creative economy," referring to the name that South Koreans have given the political scandal.
"It is clear that the creative economy brand is hurt. The brand itself is totally damaged, so people regard it as a failed policy," said Lim Jung-wook, managing director of Startup Alliance, a privately funded startup support agency.
The creative economy drive, a hallmark program of the administration, has been dogged by controversy from its inception after Park became president in 2013.
The centerpiece was the establishment of 17 innovation centers around the country, each paired with a major business group that was supposed to provide support. Samsung, for example, assumed responsibility for an innovation center in Daegu, a southeastern city where the group was founded.
Park also created a ministry of science, information and communications technology and future planning, which spent millions of dollars building the innovation centers, dispatching aspiring entrepreneurs overseas for networking and training, and creating job opportunities for university graduates struggling with high youth unemployment.
From the start the government's reliance on public-private partnerships to drive the creative economy raised concerns that successful startups would be swallowed up by their big business mentors instead of competing against them.
The program has also been criticized as hastily planned, badly executed and excessively funded, with few results so far. At a dinner in 2013 with university students in Seoul, Nobel prize-winning economist Thomas J. Sargent dismissed the creative economy concept as vague, according to local media.
There is no doubt that the program promoted interest in the startup sector. Private venture funding, a barometer of optimism, reached a record high of 2.2 trillion won ($1.85 billion) in 2015 as foreign investors spotted opportunities in e-commerce, food delivery and other online-related services.
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