Chapter 1: Korea’s Economic Policy in Transition: Evolution, Assessment and Future Direction
1. Korea's economic policy in transition: evolution, assessment and future direction 1.1 INTRODUCTION Korea's economic policy has attracted international attention due to the country's well-documented economic transformation from one of the world's poorest countries to one of the richest between 1963 and 1996. Despite a lack of natural resources, a high population density, severe wartime devastation and heavy defence expenditures, economic growth averaged 8.7 per cent per annum over the 1963-96 period. Per capita GDP, just $100 in 1963, had increased to $12 197 by 1996. Nominal GDP increased from $2.3 billion in 1963 to $557 billion in 1996, establishing Korea as the world's 11th-largest economy (Tables 1.1 and 1.2). In 1996, Korea became the 29th member of the OECD. Korea's economic miracle ended abruptly in November 1997 during the Asian fmancial crisis. In 1998 negative growth reached 6.7 per cent while unemployment jumped to 6.8 per cent from 2.6 per cent in 1997. However, unlike other economies affected by the crisis, Korea recovered quickly with 10.7 per cent growth in 1999, followed by an 8.5 per cent growth rate in 2000 (Table 1.1). Once again, Korea's economic performance stimulated btoad international discussion, this time as a model for overcoming financial crisis. Over the following six year period, 2001-07, however, this spectacular growth slowed considerably with an average annual growth rate of 4.7 per cent (Table 1.1). Potential economic growth is estimated to be around 4-5 per cent per year over the next ten years (Park and Huh 2004; Bank...
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