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8 - Crisis and Reform

Published online by Cambridge University Press:  07 December 2023

Jaymin Lee
Affiliation:
Yonsei University, Seoul
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Summary

In 1997, a domestic financial crisis broke out with mass chaebol bankruptcy, and then a currency crisis broke out as Japanese banks suddenly pulled short-term loans out with a liquidity crisis at home. Japan was willing to provide the liquidity to cope with the situation; however, the United States brought the case to the IMF to open up South Korea’s capital market and realize its broader national interests in East Asia after the Cold War. South Koreans yet accepted the IMF conditionality willingly to utilize it as a momentum for the reforms they thought desirable. The country carried out thoroughgoing reforms while failing to consider the complementarities between the new and existing institutions. The reforms improved corporate governance and purged the system producing non-performing loans, but they undermined the mechanism of the high economic growth. They also led to the massive layoff of workers and the sale of assets to foreigners.

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Publisher: Cambridge University Press
Print publication year: 2023

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  • Crisis and Reform
  • Jaymin Lee, Yonsei University, Seoul
  • Book: The Tortuous Path of South Korean Economic Development
  • Online publication: 07 December 2023
  • Chapter DOI: https://doi.org/10.1017/9781009419352.008
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  • Crisis and Reform
  • Jaymin Lee, Yonsei University, Seoul
  • Book: The Tortuous Path of South Korean Economic Development
  • Online publication: 07 December 2023
  • Chapter DOI: https://doi.org/10.1017/9781009419352.008
Available formats
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Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • Crisis and Reform
  • Jaymin Lee, Yonsei University, Seoul
  • Book: The Tortuous Path of South Korean Economic Development
  • Online publication: 07 December 2023
  • Chapter DOI: https://doi.org/10.1017/9781009419352.008
Available formats
×