The political economy of the Korean financial crisis

Much attention has been paid to the economics of the Asian financial crisis, but less to its politics. In this article we examine two clusters of domestic political factors that contributed to Korea's difficulties. First, a combination of selective liberalization with close government-bank-busi...

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Bibliographic Details
Published in:Review of international political economy : RIPE 2000-07, Vol.7 (2), p.197-218
Main Authors: Haggard, Stephan, Mo, Jongryn
Format: Article
Language:English
Subjects:
Asia
Bank loans
Business Society Relationship
Economic Crises
ECONOMICS
Financial crisis
Financial Crisis Asian Financial Crisis
Financial investments
FINANCIAL SERVICE, BANKS, INSURANCE SYSTEMS, SECURITIES, EXCHANGES
Government
Government corruption
Government crises
International Economic Organizations
International political economy
Investment policy
Korea
Liberalization policy
Party systems
Political conditions
POLITICAL ECONOMY
Political parties
Politics
Public investments
SOUTH KOREA
State Society Relationship
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Summary:Much attention has been paid to the economics of the Asian financial crisis, but less to its politics. In this article we examine two clusters of domestic political factors that contributed to Korea's difficulties. First, a combination of selective liberalization with close government-bank-business relations contributed to the investment boom and excessive leveraging that made the Korean economy vulnerable to external shocks. Second, we examine how politically generated uncertainty in an election year, compounded by features of the party system, resulted in a delayed response to problems in the financial sector and in dealing with the IMF. These delays, in turn, contributed to the length and depth of the crisis.
ISSN:0969-2290
1466-4526
DOI:10.1080/096922900346947