Korean Economic Crisis Essay - 2330 Words

Korean Economic Crisis problems with format The Korean economy did an important role in the remarkable economic growth, which was so called  ¡Ã‚ °East Asia ¡Ã‚ ¯s miracle ¡Ã‚ ±. At the end of 1997, however, the Korean economy fell into a crisis of default and finally received IMF ¡Ã‚ ¯s relief aid. After that, Korea has been struggling not only to reform its monetary system but also to promote drastic reforms in its economic structure in order to improve the productivity of the Korean industry. Given this context, understanding what truly caused the Korean economic crisis is very important. Without identifying and remedying the fundamental problems, nobody can be sure that Korea will not have the similar kind of†¦show more content†¦The domestic financial institutions overexposed themselves to the junk bonds issued by Southeast Asian countries, Latin America and Russia, rather than supplying scarce credit to the domestic economy. Third, corporate business strategy focused on increasing market share and d iversification rather than profitability and specialization. Business practices were based on excessive borrowing of foreign capital and poor management of that debt. This created debt-laden bloated business empires with little competitiveness. However, Woo Jin Yang (2002), professor of Hanshin University in Korea, contended that roots of the Korea ¡Ã‚ ¯s economic crisis were in post-democratization. He pointed out that the introduction of political democracy after years of military rule was a concession to the student movement, labor movement, and other resistances that fought to! gether against the previous government regime. Therefore economic reforms lagged far behind the political ones. In Yangs view the real key issues that needed to be addressed were the deepening conflicts of capital-labor relations, the aftermath of rapid economic development like environmental disaster, and challenges from outside like globalization. The government bureaucrats became more and more hel pless and the chaebol were mesmerized by the prospect of unlimited growth in the old pattern. Most of these aimed at cutting Korea off from the outside world. Under their slogan of anShow MoreRelatedSouth Korea s Economic Crisis1534 Words   |  7 PagesBetween 1990 and 1996, South Korea experienced strong economic growth ever since South Korea was separated from North Korea. As the data of South Korea economy from World Bank web provides, Average growth rate was around 8 percent and inflation rate averaged 5 percent. Moreover, unemployment rate was stable below 3 percent (citation use footnote or endnote). 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