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Restructuring and its economic effects in Korea

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Title Restructuring and its economic effects in Korea
Similar Titles
Material Type Reports
Author(English)

Kim, Won-Kyu

Publisher

[Seoul]:Korea Institute for Industrial Economics & Trade

Date 1998-10
Pages 37
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Financial Policy
Economy < Economic Conditions
Holding Korea Institute for Industrial Economics & Trade

Abstract

Korea has been implementing comprehensive restructuring of its financial and corporate sectors since the outbreak of the economic crisis. However, restructuring has not relieved the suffering of the economy and the economic recession that hit the country, though the foreign exchange market has stabilized since the crisis. Nevertheless, to get out of the current crisis as fast as possible, the first priority of economic policy will have to be put to the restructuring of financial and corporate sectors, with more importance placed on financial sector restructuring. To implement the financial sector restructuring successfully, obstacles such as the crowing-out effect of government bond issuance and the severe asset deflation should be removed. This view is supported by two analyses of this paper, of which one is to emphasize the role of total factor productivity(TFP) in the economic growth and the other is to focus on the relationship of profit to financial expenses and TFP. The conclusion states what is most important at present is to strengthen the fundamentals of the Korean economy through the restructuring with mid- and long-run perspectives. However, it is difficult for only one country to implement the restructuring successfully. International cooperation is also necessary and it can best be manifested by establishing a Fund for emergency loans and restructuring.