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The effects of neoliberal "reforms" on the post-crisis Korean economy

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  • The effects of neoliberal "reforms" on the post-crisis Korean economy
  • Crotty, James; Lee, Kang-Kook
  • PERI


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Title The effects of neoliberal "reforms" on the post-crisis Korean economy
Similar Titles
Material Type Articles
Author(English)

Crotty, James; Lee, Kang-Kook

Publisher

[Amherst]:PERI

Date 2005-09
Series Title; No Working paper series / 111
Pages 22
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Macroeconomics
Economy < Financial Policy
Economy < Economic Conditions
Holding UMassAmherst

Abstract

In December 1997 the IMF offered Korea loans to help alleviate its financial crisis. These loans were accompanied by what the IMF called “extreme structural conditionality.” Korea was required to replace its traditional East Asian economic system with a neoliberal model. We review economic performance in the neoliberal era. Growth has slowed, poverty and inequality have risen, and investment spending has stagnated, while foreign ownership of Korean firms and banks has skyrocketed. We argue that foreign investment has not helped Korea. For example, by leading a shift from corporate to consumer lending, foreign control of Korea’s financial markets has constrained capital accumulation and helped create an excessively indebted household sector, while making it harder for the government to adopt progressive economic policies. We conclude that the eight year experiment with radical neoliberal restructuring has turned out well for foreign capital and wealthy Koreans, but has been a failure for the majority of Korea’s people.