Economic performance in post-crisis Korea: A critical perspective on neoliberal restructuring

This paper evaluates the neoliberal economic restructuring process implemented in Korea following the 1997 Asian financial crisis. The austerity of macroeconomic policy of late 1997 and early 1998 was the main cause of the economic collapse, and that the decision of the IMF and president Kim Dae Jung to impose a radical neoliberal transformation of financial markets and large industrial firms in the depressed conditions of 1998 made the failure of these reforms virtually inevitable. A detailed analysis of the macro economy, labor markets, financial markets, and nonfinancial firms in Korea in the past 3 years shows that neoliberal restructuring has created a vicious cycle in which a perpetually weak financial sector fails to provide the capital needed for real sector growth, investment and financial robustness, while real sector financial fragility weakens financial firms.