This paper examines South Korea's macroeconomic performance and experience with external debt during 1960-1986. Most of Korea's debt was accumulated during three periods: 1966-69, 1974-75 and 1979-81. Each involved an initial phase of economic difficulty and an slow-down in growth, followed by an impressive recovery. The paper reviews the economic and political developments during each cycle in some detail, Of particular interest are the shifts in economic policy as domestic authorities respondedto external and internal developments. The paper is part of a larger studyof the Korean experience.
This paper is chapter 3 in S. 14. Collins and W. A. Park, "External Debt and Macroeconomic Adjustment in South Korea" in J. Sachs (ed.) Developing Country Debt; The Country Studies, submitted to the University of Chicago Press for publication consideration. The author would like to thank Won Am Park, Vittorio Corbo and Anne Krueger for their comments. Financial support from an NBER Olin Fellowship is gratefully acknowleged. This research was supported by the National Science Foundation and is part of NEER's research program in International Studies. Any opinions expressed are those of the authors and not those of the National Bureau of Economic Research.