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Path dependence in action : The rise and fall of the Korean model of economic development

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Frame of Image its risks. [Rodrik(1999)] In the early 1960s, the Republic of Korea (South Korea) addressed these developmental challenges by combining state-led financial resource allocation with export market orientation. The government nationalized banks and assumed a
dominant role in financial resource allocation, providing implicit guarantees for loans extended to private firms on a selective basis. Replacing the import substitution bias of the 1950s with outward orientation, the government, for the most part, used the performance of firms in competitive export markets as a selection criterion. As for conflict management, successive authoritarian governments used both the carrot of improving living standards and the stick of ruthless suppression— before Korea was democratized in the late 1980s. Since the outbreak of an economic crisis in 1997, this Korean model of economic development has come under heavy criticism. In fact, many critics have argued that the “risk partnership” between the government and big business had resulted in an inefficient financial sector and a highly leveraged corporate sector fraught with moral hazard. Some, predominantly Western, commentators have even contended that the Korean system was nothing more than a hotbed of corruption and cronyism. What is conspicuously missing in this barrage of criticism, however, is the recognition that the same system served as the backbone of “rapid, shared growth” which catapulted Korea from one of the poorest countries in th


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Title Path dependence in action
Similar Titles
Sub Title

The rise and fall of the Korean model of economic development

Material Type Proceedings
Author(English)

Lim, Phillip Wonhyuk

Publisher

[Seoul]:Korea Development Institute

Date 2000-05
Pages 36
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Economic Conditions
Economy < Economic Administration
Holding The Penssylvania State University