FROM ASIAN MIRACLE TO ASIAN CRISIS

Korean citizens will never forget November 21, 1997. People were dismayed by what they heard from media that day. There had been rumors of skyrocketing foreign exchange rates. Then the Minister of Finance and Economy resigned. Chang-ryol Lim, the succeeding Minister, immediately announced that he would request funds from the International Monetary Fund (IMF). Korean media kindly added commentaries that their country was about to go bankrupt and seeking a bailout by IMF. A few days later, Michel Camdessus, the IMF's managing director, visited Korea to announce that the IMF would assist Korea, provided that its government would restructure Korea's economy.

Koreans were proud of their economic achievements, and were shocked by this turn of events. The per capita income had increased from $82 in 1961 to $10,315 in 1997. The World Bank, a sister organization of the IMF, had published a book, Asian Miracle, that praised Korea as an exemplar of economic development. Yet something was wrong with the Korean economy. The Hanbo, Jinro, and Kia Groups, all members of Korea's top 30 business groups, termed chaebols, went bankrupt earlier in 1997. Bankruptcies of large chaebols were unprecedented in Korea because the government had traditionally rescued large chaebols from bankruptcy; most Koreans believed the bigger chaebols were, the less likely they were to fail.

Yet informed citizens knew that these bankruptcies augured a situation that was not “business as usual.” In fact, the “Tiger Economies” of Asia were all on edge.