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Korean foreign exchange crisis and its consequences

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  • Korean foreign exchange crisis and its consequences
  • Lee, Jaymin
  • Association of Korean Economic Studies


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Title Korean foreign exchange crisis and its consequences
Similar Titles
Material Type Report
Author(English)

Lee, Jaymin

Publisher

[Seoul, South Korea] : Association of Korean Economic Studies

Date 2013
Pages 45
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Administration
Economy < Economic System
Holding Association of Korean Economic Studies
License

Abstract

The Korean foreign exchange crisis of 1997 could have been avoided had the US Treasury not intervened for the interests of the global finance capital. After the crisis, global finance capital gained tremendously from investment in Korea, while Korean capital gained much less from investment abroad. In addition, Korea had to pay a large opportunity cost of holding more reserve assets. The difference in the rate of return between foreign investment in Korea and Korean investment abroad also increased drastically. The cost Korea incurred through international investment amounted to at least about 3.6 percent of GDP on average annually in the 16 years after the crisis. This does not represent a fair exchange of risk and return for Koreans, as they engaged in an asset fire sale and came to face a higher chance of another foreign exchange crisis. (The rest omitted)