By Edward M. Graham, The Institute for International Economics; January 2003

When the Asian financial crisis began in the summer of 1997, almost no one thought that South Korea would be caught up in it. After all, the South Korean economy had been for more than 30 years one of the highest performers in the world. Indeed, this nation, in the early 1960s amongst the world’s poorest and most technologically backward, had by 1997 become one of the 20 richest nations on a per capita basis and one of the technologically most advanced. But the Asian financial crisis did affect Korea—the South Korean government had to seek a bailout from the IMF in December 1997, and, during the year that followed, the economy went into deep recession. Moreover, when Koreans sought the reasons for the sudden downturn in their economic fortunes, they found that many of the problems centered on the large industrial conglomerates (the chaebol) that had been at the heart of Korean economic progress. These groups proved to be riddled with excessive debt, low rates of return on investment, and in many cases, bankrupt operations.

This book examines the history of the chaebol and their role in creating the "economic miracle" as well as the role that they played in bringing about the 1997 crisis in Korea. Author Edward M. Graham argues that, while substantial reform has been accomplished both within the chaebol and in the Korean economy as a whole, the process is far from complete. Indeed, weaknesses within the industrial groups of Korea persist that could cloud Korea's economic future, despite the impressive rebound that the Korean economy has experienced since 1998. Graham explores the uncorrected weaknesses in depth and lays out the steps that should be now taken.

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Book Contents (PDFs):

Preface

Acknowledgments

1. Introduction 446.5KB

2. The Miracle with a Dark Side: Korean Economic Development Under Park Chung-hee 170.8KB

3. The Miracle with a Dark Side: The Chun and Roh Years, 1980-92 558.3KB

4. From Full-Blown Democracy to Disaster: The Kim Young-sam Years, 1993-97 477.6KB

5. The 1997-98 Crisis and Its Aftermath 573.1KB

6. Conclusions 520.0KB

References

Index

About the Author:

Edward M. Graham, is a Senior Fellow at the Institute for International Economics. He was Associate Professor in the Fuqua School of Business at Duke University (1988–90), Associate Professor at the University of North Carolina (1983–88); Principal Administrator of the Planning and Evaluation Unit at the OECD (1981–82); International Economist in the Office of International Investment Affairs at the US Treasury (1979–80) and Assistant Professor at the Massachusetts Institute of Technology (1974–78). He is author or coauthor of numerous studies on international investment and technology transfer, including Fighting the Wrong Enemy: Antiglobal Activists and Multinational Enterprises (2000), Global Competition Policy (1997) and Competition Policies for a Global Economy (1997) with J. David Richardson, Global Corporations and National Governments (1996), and Foreign Direct Investment in the United States (3d edition 1995).

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