Korea’s Economic Miracle: Fading or Reviving?

252 Pages·2003·0.935 MB·English

by  Charles Harvie, Hyun-Hoon Lee (auth.)

Korea’s Economic Miracle: Fading or Reviving?
Also by Charles Harvie
VIETNAM’S ECONOMIC REFORMS (with Tran Van Hoa)
CONTEMPORARY DEVELOPMENTS AND ISSUES IN CHINA’S ECONOMIC
TRANSITION (editor)
ASIAN FINANCIAL CRISIS (editor with Tran Van Hoa)
Also by Hyun-Hoon Lee
FRONTIERS OF RESEARCH IN INTRA-INDUSTRY TRADE (editor with P. J. Lloyd)
Korea’s Economic Miracle
Fading or Reviving?
Charles Harvie
Associate Professor of Economics
University of Wollongong
Australia
and
Hyun-Hoon Lee
Professor of Economics
Kangwon National University
South Korea
© Charles Harvie and Hyun-Hoon Lee 2003
Softcover reprint of the hardcover 1st edition 2003 978-0-333-92499-0
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First published 2003 by
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PALGRAVE MACMILLAN is the global academic imprint of the Palgrave
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ISBN 978-1-349-42516-7 ISBN 978-1-4039-2019-5 (eBook)
DOI 10.1057/9781403920195
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Library of Congress Cataloging-in-Publication Data
Harvie, Charles, 1954–
Korea’s economic miracle: fading or reviving?/Charles Harvie, Hyun-Hoon Lee.
p. cm.
Includes bibliographical references and index.
1. Korea (South)–Economic conditions–1960– 2. Korea (South)–Economic
policy–1960– I. Yi, Hyon-hun, 1959– II. Title.
HC467 .H3675 2002
330.95195’043–dc21 2002022418
10 9 8 7 6 5 4 3 2 1
12 11 10 09 08 07 06 05 04 03
To Sonya,
Myung-Hee, Suejin and Joonkyu

Contents
List of Figures ix
List of Tables x
Acknowledgements xiii
1 Introduction 1
1.1 Background 1
1.2 Structure of the book 5
PART I
2 Korea’s Economic Miracle, 1962–89 9
2.1 Introduction 9
2.2 Overview of economic performance, 1962–89 9
2.3 Korea’s development strategy 19
2.4 Industrial structure and policy 25
2.5 Economic planning and policy formulation 31
2.6 Summary 40
3 The Fading Miracle, 1990–97 41
3.1 Introduction 41
3.2 Korea’s macroeconomic performance during the 1990s 41
3.3 External developments 46
3.4 Structural weaknesses 55
3.5 Other deficiencies 64
3.6 Policy mistakes 68
3.7 Korea and the East Asian economic miracle 71
3.8 Summary and conclusions 75
PART II
4 Financial Crisis and the IMF Bailout 79
4.1 Introduction 79
4.2 Financial crisis 80
4.3 Financial crisis framework – a stroke analogy 87
4.4 The IMF aid package 91
4.5 Economic developments in the aftermath of the crisis,
1998–2001 100
4.6 Summary and conclusions 117
vii
viii Contents
PART III
5 The Post-Crisis Macroeconomic Policy Framework and
Structural Reform: Reviving the Old Economy 121
5.1 Introduction 121
5.2 The macroeconomic policy framework 121
5.3 Structural reforms 126
5.4 Reforms, economic progress and future challenges 155
5.5 Summary and conclusions 158
6 The Boom in Information and Communication
Technology: A New Economy Emerging? 159
6.1 Introduction 159
6.2 The ICT boom 159
6.3 Is a new economy emerging? 163
6.4 Government policy and beyond 171
6.5 Summary and conclusions 178
7 Economic Integration with North Korea: A New Economic
Territory 180
7.1 Introduction 180
7.2 Overview of the North Korean economy 180
7.3 The future direction of North Korea 188
7.4 The current state of relations between the two Koreas 192
7.5 Inter-Korean economic integration 197
7.6 Summary and conclusions 201
PART IV
8 Future Challenges and Prospects 205
8.1 Introduction 205
8.2 Education 205
8.3 Welfare reform 212
8.4 Promoting competition 215
8.5 Recent trends and future prospects 218
Notes 222
References 231
Index 239
List of Figures
3.1 Nominal exchange rate, January 1988 to December 1997 69
3.2 Investment flows, direct and portfolio (net), 1988–98 70
4.1 The stroke framework 88
4.2 The financial crisis framework 90
4.3 Exchange rate and interest rate movements, January 1997
to January 2001 95
4.4 Stock price index, 1997–2001 95
4.5 Quarterly GDP growth rate, 1997–2000 100
5.1 Inflation targets and inflation rates, January 1997
to January 2002 124
5.2 Movement of KOSPI and Dow Jones indices 154
5.3 Movement of KOSDAQ and NASDAQ indices 155
ix