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Managing the Asian Meltdown: The IMF & South Korea
Transcript of Managing the Asian Meltdown: The IMF & South Korea
1953 marked end of Korean War
more than a quarter of the nation's population left as refugees w/o homes or assets
North maintained most of peninsula's natural resources and industrial infrastructure faced severe economic problems in onset of rule
IMF supported austerity program - heavily borrowed international capital; 4th largest debt-burden amongst developing countries
export boom - Daewoo & Lucky-Goldstar TVs & VCRs, Hyundai automobiles
increased foreign & domestic pressure for economic liberalization -Seoul selected as host of 1988 Summer Olympics
-civilian governments of Roh Tae Woo (1988-93) & Kim Young Sam (1993-98)
oversaw gradual opening of political system
Dec 1997 election of Kim Dae Jung
-summer of '97 Thailand began to falter Recovering Economy aggressive government-led development policy
40 yrs of major growth rates
"Asian Tiger" - major manufacturer of ships, automobiles, and memory chips
7th largest trading partner of U.S.
world's 11th largest trading partner Park Chung Hee (1961) personal & highly centralized approach to economy, "East Asian Model"
nationalized banks - controlling access to credit
centralized planning, budgeting, and oversight
alliances w/ military & chaebol leaders Had S. Korea remained under militaristic control do you feel the "Asian crisis," would have impacted the country similarly?
Would the effects of the crisis be heightened or lessened in such a scenario? The impact of Thailand... What impact did the early IMF intervention (austerity program following 1979 oil shock), have on S. Korea? IMF intervention... Considering on several occasions IMF officials met w/ high level U.S. officials, do you feel that ulterior motives were behind the many stipulations placed on South Korea in its time of need? IMF stipulations... initial disbursement conditional upon adoption of contractionary macroeconomic policy
higher interest rates
reduced gov. spending
Author's Opinions South Korea needed a temporary bridge loan and restructuring of its debt
IMF made panic worse, convincing investors of imminent economic contraction
existence of IMF encourages high risk behavior In conclusion... Do you agree with the author's argument that the IMF furthers economic problems?
Can a country be democratic without open border free trade?
With whom does the fault of the Asian Crisis lie? Do you think such a situation could occur again in our lifetimes? Chaebols Structural Reforms allow foreign investors greater freedom in acquiring shares & majority stakes
open domestic markets to foreign banks & insurance companies
S. Korean banks must adopt western standards of credit evaluation
close insolvent S. Korean banks
reform labor laws - easier layoffs, more fluid labor market
lift restrictions & lower tariffs to open domestic market to foreign imports