Amongst the economies that were worst hit by the Asian crisis, the South Korean experience is probably the best example of the interdependence between the real and financial sectors. South Korea's high economic growth levels could not last too long because the real economy lacked a strong financial base. The Korean experience demonstrated that failure of the financial system could be devastating on the real sector. This was like a strong body but a weak heart. You ignore the fragility of the financial sector at your peril.

MIRACLE IN THE LAND OF THE MORNING CALM

South Korea is the best example of the Asian Miracle. In the early 1950s, it was a poor farming nation with no natural resources. The country was devastated by a bitter Korean civil war that was fought between 1950 and 1953. Not many observers then were optimistic about South Korea's poverty-stricken economy. In 1962, when the Park Chung Hee Government launched the first Five-Year Economic Development Plan, South Korea was an economy with a GDP of about US$2.3 billion and a per capita income of around US$87.