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Kicking the Dog: Korea's Bureaucratic Resistance to Globalization in Reaction to Democratization
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Seven years have passed since the Korean economy was engulfed by the 1997
Asian Financial Crisis. Numerous books and papers have paid attention to the
extraordinarily sharp downturn of the once highly-performing economy, providing
various diagnoses on its origins, developments, and effects.
1
Nevertheless, few theories
have yet offered a comprehensive view of the crisis that could delineate the
unprecedented event in the full spectrum of Korea’s economic history. Instead, most
theories have narrowly focused on the crisis, sometimes adding post-crisis prescriptions
to their analyses at best. As a result, most theories have failed to demonstrate what
actually happened, despite their claims of providing an answer as to why the crisis
occurred.
After years of observing the process of post-crisis restructuring, including early
actions that were undertaken to settle down the liquidity crisis, the time has come to shift
our attention away from what happened to why and wherefore about the economic crisis.
We might well drop some short-sighted (thus improper) views on the crisis and instead
review the others to better see what really happened in Korea during the 1990s.
2
The question should be organized in such a way as to address the primary issue of
contention: whether the crisis was a mishap that broke out in the midst of economic
1
Debates on Korea’s financial crisis focused on the combined effects of external and internal causes. If the unstable movement of international capital beyond state boundaries after globalization was the main external cause, Korea’s declining productivity and weak financial system was the domestic cause. Some stories took either side of the story and deepened the logic, focusing on the demand (internal) or supply (external) of the crisis, respectively. For a good summary of the debate, see, among others, Gregory W. Nobel and John Ravenhill, “Causes and Consequences of the Asian Financial Crisis” in their edited book, The Asian Financial Crisis and the Architecture of Global Finance (New York: Cambridge University Press, 2000).
2
Many economic explanations, either international or domestic versions, fall into these short-sighted views. Financial theories were well argued in Steven Radelet and Jeffrey D. Sachs, “The East Asian Financial Crisis: Diagnosis, Remedies, Prospects” Brookings Papers on Economic Activity, 1: 1-90; Paul Krugman, “A Model of Balance-of-payment Crises” Journal of Money, Credit, and Banking Vol. 11, No. 3 (August 1979) and his mimeo version in 1999 on the Asian Crisis, “Balance Sheets, the Transfer Problem, and Financial Crisis.” There are also some industrial theories such as, Jeanne Gobat, “Corporate Restructuring and Corporate Governance,” Republic of Korea – Selected Issues, IMF Staff Reports No. 98/74 (1999); Peter M. Beck, “Revitalizing Korea’s Chaebol” Asian Survey Vol. 38, No. 11 (November 1998).
2
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Seven years have passed since the Korean economy was engulfed by the 1997
Asian Financial Crisis. Numerous books and papers have paid attention to the
extraordinarily sharp downturn of the once highly-performing economy, providing
various diagnoses on its origins, developments, and effects.
Nevertheless, few theories
have yet offered a comprehensive view of the crisis that could delineate the
unprecedented event in the full spectrum of Korea’s economic history. Instead, most
theories have narrowly focused on the crisis, sometimes adding post-crisis prescriptions
to their analyses at best. As a result, most theories have failed to demonstrate what
actually happened, despite their claims of providing an answer as to why the crisis
occurred.
After years of observing the process of post-crisis restructuring, including early
actions that were undertaken to settle down the liquidity crisis, the time has come to shift
our attention away from what happened to why and wherefore about the economic crisis.
We might well drop some short-sighted (thus improper) views on the crisis and instead
review the others to better see what really happened in Korea during the 1990s.
The question should be organized in such a way as to address the primary issue of
contention: whether the crisis was a mishap that broke out in the midst of economic
1
Debates on Korea’s financial crisis focused on the combined effects of external and internal causes.
If the unstable movement of international capital beyond state boundaries after globalization was the
main external cause, Korea’s declining productivity and weak financial system was the domestic
cause. Some stories took either side of the story and deepened the logic, focusing on the demand
(internal) or supply (external) of the crisis, respectively. For a good summary of the debate, see,
among others, Gregory W. Nobel and John Ravenhill, “Causes and Consequences of the Asian
Financial Crisis” in their edited book, The Asian Financial Crisis and the Architecture of Global
Finance (New York: Cambridge University Press, 2000).
2
Many economic explanations, either international or domestic versions, fall into these short-sighted
views. Financial theories were well argued in Steven Radelet and Jeffrey D. Sachs, “The East Asian
Financial Crisis: Diagnosis, Remedies, Prospects” Brookings Papers on Economic Activity, 1: 1-90; Paul
Krugman, “A Model of Balance-of-payment Crises” Journal of Money, Credit, and Banking Vol. 11,
No. 3 (August 1979) and his mimeo version in 1999 on the Asian Crisis, “Balance Sheets, the Transfer
Problem, and Financial Crisis.” There are also some industrial theories such as, Jeanne Gobat,
“Corporate Restructuring and Corporate Governance,” Republic of Korea – Selected Issues, IMF Staff
Reports No. 98/74 (1999); Peter M. Beck, “Revitalizing Korea’s Chaebol” Asian Survey Vol. 38, No. 11
(November 1998).
2
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