Sung-Hee Jwa offers analyses of a wide range of past and current reform efforts in Korea. The policy lessons are designed to understand Korea's transformation from the government-led development model to a market system. Jwa argues that Korea's economic future depends entirely upon the successful integration of market-oriented systems.

Sung-Hee Jwa is President of the Korea Economic Research Institute.

Series Editor's Preface

x

List of Tables

xi

List of Figures

xiv

Acknowledgements

xv

Overview of the Korean Economy over the Past Thirty Years

1

(32)

Overview of Korea's economic growth

1

(4)

Experiences of macroeconomic management

5

(3)

Korea's experiences of microeconomic management: industrial policies and the Chaebol

8

(4)

Summary of main points

12

(1)

Aims of this volume

13

(20)

Appendix 1.1: Korea's experience of industrial policies

17

(16)

The Role of Government versus the Market for Sustainable Development

33

(15)

Introduction

33

(1)

The debate over the role of the government

34

(3)

Korea's experiences

37

(4)

The natural market order and the role of government in economic management

41

(5)

Summary and lessons

46

(2)

Legacies and Lessons of Korea's Macroeconomic Management

48

(35)

Introduction

48

(1)

Some features of macroeconomic developments

49

(3)

Existing patterns of macroeconomic management

52

(3)

Changing prospects in macroeconomic policy environments

55

(3)

Reforms in the macroeconomic policy regime

58

(9)

Macroeconomic policy issues in a small open economy setting

67

(14)

Summary and lessons

81

(2)

The Evolution of the Chaebols: The Property Rights System and Economic Organization in Korea

83

(31)

Introduction

83

(1)

Some testable hypotheses of new-institutional economics

84

(6)

Empirical evidence of the impact of transaction costs on economic behavior

90

(8)

Empirical evidence of the impact of the individual property rights system on economic behavior

98

(3)

Property rights and the evolution of large business firms in Korea

101

(10)

Summary and lessons

111

(3)

Globalization and the Diversification Behavior of the Chaebols

114

(18)

Introduction

114

(3)

New industrial organization under globalized markets

117

(2)

Globalization and Korea's industrial organization

119

(7)

Lessons for industrial policy

126

(6)

Appendix 5.1: An integrated theory of endogenous economic organization

127

(5)

Reform Prospects for Korea's Financial System

132

(22)

Introduction

132

(1)

Risk and returns of Financial-Industrial interaction: the Korean Experience

133

(10)

The endogenous financial system and the prospects for Korea's financial structure

143

(11)

Experiences of Economic Reforms in Korea and Future Challenges

154

(20)

Introduction

154

(1)

Neoclassical interpretation of economic institutional reforms

155

(6)

A brief evaluation of institutional reform

161

(2)

Political economy of economic reform

163

(4)

Lessons for future economic reforms

167

(5)

Concluding remarks

172

(2)

Korea's 1997 Currency Crisis: Causes and Post-Crisis Macroeconomic Developments

174

(46)

Introduction

174

(4)

A quick look at the crisis itself

178

(2)

A deeper look: structural and long-term factors

180

(8)

A deepr look: cyclical and short-term macroeconomic and external factors

188

(5)

Post-crisis macroeconomic developments

193

(15)

Some reflections on the IMF prescriptions in hindsight

208

(2)

Concluding remarks

210

(10)

Appendix 8.1: Quantitative examination of the role of a strong exchange rate

211

(3)

Appendix 8.2:

Letter to the Managing Director of IMF from leaders of Korean industry (drafted by the author)

214

(4)

Letter of reply from Michel Camdessus, Managing Director of IMF

218

(2)

Kim Dae-Jung's Structural Reforms and Some Evaluations

220

(29)

Introduction

220

(1)

Structural reforms in four major sectors of the economy

221

(15)

A brief evaluation of the Kim Dae-Jung reforms

236

(9)

Concluding remarks: some suggestions for future reforms

245

(4)

A Final Word: The Future of the Korean Economy

249

(15)

Challenges and opportunities for the twenty-first century

249

(3)

Changes in twenty-first century economic environment and implications for Korea's development strategy

252

(7)

Long-term growth prospects

259

(5)

Notes

264

(12)

Select Bibliography

276

(7)

Index of Names

283

(2)

Index of Subjects

285

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