The Korean Economy in Transition

The Korean Economy in Transition

An Institutional Perspective

O. Yul Kwon

This informative book provides a comprehensive examination of the dynamics of institutional reform and the transition of the South Korean economy. The analysis, based on an institutional approach, stretches over three decades of remarkable economic success under a state-led system, through the 1997 financial crisis, to the current market-oriented system.

Preface

O. Yul Kwon

Subjects: asian studies, asian economics, economics and finance, asian economics

Extract

This book investigates the transition in the economy of South Korea (hereafter Korea) from a state-led system over the three decades of unprecedented economic success preceding the financial crisis of 1997 to a market-oriented system of the post-crisis period with sluggish economic development. From the early 1960s through to the 1997 fmancial crisis, the Korean economy continued to surge. After a serious economic setback over one year in 1998, it recovered quickly, unlike other crisis-afflicted economies in East Asia, and became the world's lIth-largest economy in 2003. Korea thus stands as proof that one country can leap from being one of the poorest in the world to joining the ranks of the richest in just one generation. In the immediate aftermath of the 1997 crisis, outdated economic policies and institutions were regarded as the primary culprit. The Korean government therefore vigorously pursued profound reforms of the nation's economic institutions, in response to both the crisis and the transition under way in its geopolitical and global economic environments as well as domestic political and social changes. These sweeping institutional reforms have in tum been the main drivers of the transition in the Korean economy from being heavily controlled and state-led to a liberalized, knowledge-based economy anchored in market principles. Consequently, Korea presents a fascinating case for enquiry into the evolution of a national economy with its distinctive experiences of apparently miraculous success over three decades since the early 1960s, tumultuous financial crisis in 1997, swift recovery through sweeping institutional reforms, and...