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The evolution of Korea's development paradigm old legacies and emerging trends in the post-crisis era

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Frame of Image  crisis. However, the transition from an established government-business risk partnership to a market-oriented paradigm has not proved easy. Although the government dealt with the nonperforming loans problem, the author contends that it has been less willing to take substantive measures to enable financial institutions to lead corporate restructuring based on market principles. As long as Korea continues to harbor structural problems in corporate governance and the allocation of financial resources, the investment efficiency of the economy is likely to suffer. Instead the reform program should concentrate on improving the autonomy of the financial sector and introducing private remedies to address the persistent problems of corporate governance.
ADB INSTITUTE TOKYO
ADB Institute Working Paper Series No. 21
July 2001
The Evolution of Korea’s Development Paradigm:
Old Legacies and Emerging Trends in the Post-Crisis Era
Phillip Wonhyuk Lim
ADB INSTITUTE WORKING PAPER
21
ABOUT THE AUTHOR
Phillip Wonhyuk Lim is a research fellow at the Korea Development Institute, a policy-oriented economic research institute in Seoul. An economic historian by training, he obtained his Ph.D. degree from Stanford University in 1993 and lectured at the Korea Military Academy until 1996. At KDI, he conducts research on the modern economic history of Korea and provides policy recommendations on issues related to the chaebol and state-owned enterprises.
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Title The evolution of Korea's development paradigm old legacies and emerging trends in the post-crisis era
Similar Titles
Material Type Reports
Author(English)

Lim, Phillip Wonhyuk Lim

Publisher

Asian Development Bank Institute

Date 2001
Series Title; No ADB Institute Working Paper Series / 21
Pages 42
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Economic System
Government and Law < Public Administration

Abstract

Focusing on corporate governance and financial resource allocation mechanisms under various regimes, this paper uses the concept of path dependence and comparative institutional analysis to trace the evolution of Korea’s development paradigm and to assess the extent of changes in the Korean economy since the 1997 economic crisis. In the early 1960’s, Korea addressed the policy challenges of economic development by essentially combining a state-led allocation of financial resources and an export market orientation. The government nationalized banks and restricted inward foreign direct investment while providing repayment guarantees to foreign financial institutions on loans extended to Korean firms, most of which lacked the standing in the international financial markets to raise capital on their own. Scrapping the import-substitution bias of the 1950’s, the government removed various market distortions that had made it difficult for firms to exploit profitable investment opportunities. (The rest omitted)