Chapter 7: Social impact of the crisis
Joung-Woo Lee INTRODUCTION Without question, the social impact of Korea’s economic and ﬁnancial crisis was profound. ‘Restructuring,’ a concept unfamiliar to Koreans who for several decades had been accustomed to robust economic growth and full employment, became a household word. The shock of large-scale unemployment cast a pall over society. The greatest shock was probably the crumbling of the myth of sustained economic growth and heightened certainty about whether government-led growth would resume. Corporate bankruptcies, rising unemployment, and the widening gap between rich and poor were prominent features of the Korean landscape in the years following the crisis. Although the government announced at the end of 2000 that it would repay the IMF loan ahead of schedule, many citizens remain unconvinced that substantial economic improvement has taken place and regard the crisis as still underway. Korea was not the only country to experience profound economic changes after turning to the IMF. Income inequality became more severe and poverty became more widespread in many of the countries that have turned to the IMF for help (Chossudovsky, 1997; Pieper and Taylor, 1998; Pastor, 1987; Garuda, 2000; Vreeland, 2001). There is a question, of course, of whether the IMF program causes the poverty, or whether the shock to the economy that forces the government to turn to the IMF is in fact responsible for the deterioration in living standards and the rise in inequality. But there is no question about the existence of the correlation.1 Chen and Ravallion (2000) have estimated that...
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