South Korea's Economic Growth Model

At issue in the proposed study is the question of whether or not South Korea, at the time of the 1997 financial crisis, was illiquid or insolvent (terms which will be defined below). The research hypothesis to be tested is stated as follows: South Korea was illiquid but not insolvent at the time of its 1997 financial crisis. A related issue is the effectiveness of the International Monetary Fund (IMF) "bailout" and "austerity" policies with respect to the South Korean financial crisis.

Debate over the increasingly aggressive role of the IMF and, by extension, the World Bank, in financial crises such as those occurring in South Korea is frequently described in the literature (Min, 1999). Dean (1999) notes that since the 1980s, several waves of international debt crises beginning in Mexico and spreading quickly throughout Latin America to parts of Asia a

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tting the banks down. The problems were, therefore, quite extensive. Hassink (1999) believes that the crisis was the result of a debt-dependent financial structure that was the product of 36 years of South Korean government policy. This policy encouraged private companies and financial markets to depend on foreign loans as a means of achieving artificially high growth in the absence of sufficient domestic capital. The IMF rescue loan of $57 billion accounted for only 37 percent of the $153 billion that South Korean companies owed to international banks. This researcher believes that as early as the late 1980s, there were abundant indicators supporting a less interventionist role of the central government in the economy. Finally, the chaebol was allowed by government to take large risks, leading to an inefficient allocation of resources disguised by cross-subsidizing between divisions within chaebol concerns. Smaller businesses were neglected and the effects of the crisis on these businesses and South Korean citizens were widespread. Yoo and Moon (1999) states that the IMF formula attached to the bailout called for retrenchment in state finance and low economic growth. High interest rates were instituted, leading to the f
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Some common words found in the essay are:
South Korea, South Korean, World Bank, South Korea's, Gwartney Stroup, Yoo Moon, Critics IMF, Korean War, Lowell Paisley, Research Strategy, south korea, south korean, financial crisis, dean 1999, south korea's, economic indicators, korean financial crisis, korean financial, 1997 financial, illiquid insolvent, research hypothesis, 1997 financial crisis, financial crisis 1997, imf world bank, south korean financial,
Approximate Word count = 2351
Approximate Pages = 9 (250 words per page)

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