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From East Asian “Miracle” to Neo-liberal “Mediocrity”: The Effects of Liberalization and Financial Opening on the Post-crisis Korean Economy

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Author Info

  • James Crotty
  • Kang-Kook Lee

Abstract

In December 1997 the International Monetary Fund (IMF) offered Korea loans to help alleviate its financial crisis. These loans were accompanied by what the IMF called “extreme structural conditionality.” Korea was required to replace its traditional East Asian economic system with a neo-liberal model. We review economic performance in the neo-liberal era. Growth has slowed, poverty and inequality have risen, and investment spending has stagnated, while foreign ownership of Korean firms and banks has skyrocketed. We argue that foreign investment has not helped Korea. For example, by leading a shift from corporate to consumer lending, foreign control of Korea's financial markets has constrained capital accumulation and helped create an excessively indebted household sector, while making it harder for the government to adopt progressive economic policies. We conclude that the 8 year experiment with radical neo-liberal restructuring has turned out well for foreign capital and wealthy Koreans, but has been a failure for the majority of Korea's people.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/12265080500441388
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Global Economic Review.

Volume (Year): 34 (2005)
Issue (Month): 4 ()
Pages: 415-434

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Handle: RePEc:taf:glecrv:v:34:y:2005:i:4:p:415-434

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Related research

Keywords: Korean economy; neo-liberal; liberalization; financial opening;

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Cited by:
  1. Gerald Epstein & Ilene Grabel, 2007. "Financial Policy," Publications 3, International Policy Centre for Inclusive Growth.
  2. Fiorio, Carlo V & Saget, Catherine, 2010. "Reducing or aggravating inequality? : Preliminary findings from the 2008 financial crisis," ILO Working Papers 456487, International Labour Organization.
  3. Ilene Grabel, 2008. "The Political Economy of Remittances: What Do We Know? What Do We Need to Know?," Working Papers wp184, Political Economy Research Institute, University of Massachusetts at Amherst.

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