Is financial liberalization good for developing nations? The case of South Korea in the 1990s

James Crotty and Kang-Kook Lee
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Kang-Kook Lee: Economics Department, University of Massachusetts, Amherst, MA 01003, USA kklee@econs.umass.edu

Review of Radical Political Economics, 2002, vol. 34, issue 3, 327-334

Abstract: Korea's state-led, bank-based, and closed financial system helped generate its impressive development record from 1961 until the 1997 crisis. However, an ill-conceived liberalization process in the early 1990s eventuated in an IMF takeover in late 1997. Post-crisis neoliberal restructuring, which moved Korea towards a globally open, capital market-based financial system, has thus far failed to generate a sustainable economic recovery. It threatens to significantly lower Korea's long-term rate of capital accumulation. Korea would be well advised to reject neoliberalism, and adopt a modernized and radically democratized version of the traditional model, incorporating a state-led bank-based financial system with capital controls.

Keywords: Financial system; Korean crisis; Korean model; Neoliberalism; Economic restructuring (search for similar items in EconPapers)
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:sae:reorpe:v:34:y:2002:i:3:p:327-334

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