Prior to the 1997 financial crisis, the Korean economy had based its growth policies on East Asia's economic catch-up model which was based mainly on the Japanese development experience. However, the events that lead to the 1997 crisis and the changes instituted in the Korean economy after the crisis have put to question whether the traditional East Asian growth model will continue to be viable. This paper examines two alternative models of development, namely the "Anglo-Saxon” and the "Continental European” models, and evaluates their relevance for Korea's future development challenges. Despite many common features these models share, they are also quite distinctive with regard to their treatment of the labor market system and the role of government. By focusing on the model's capacity to expand employment and to provide sustainable growth as the most important criteria, it is suggested that Korea should follow the "Anglo-Saxon model”, at least in the short- to medium-term. In comparing Korea's economy with other advanced economies when they were at the similar stage of development, it is found that Korea's growth potential lags behind that of countries such as Japan, Germany, Finland, and Ireland. The efficiency of Korea's investment is found to be only slightly better than Japan while it is inferior to all other advanced economies. Despite these challenges, Korea is apparently moving toward the "Continental European model”, with the Korean government increasing its own size and plans for further expenditures on social security and welfare. However, in order to ensure sustainable development with significant job creation, this paper argues that Korea should switch its direction and adopt the "Anglo-Saxon model” as soon as possible.
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Volume (Year): 35 (2006) Issue (Month): 2 (June) Pages: 207-230 Download reference. The following formats are available: HTML
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Yung Chul Park & Jong-Wha Lee, 2003.
"Recovery and Sustainability in East Asia,"
NBER Chapters,
in: Managing Currency Crises in Emerging Markets, pages 275-320
National Bureau of Economic Research, Inc.
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