ABSTRACT
The process of market liberalisation in Korea and Thailand took a dramatic twist during late 1997, when the two countries, like many of their neighbours, were stricken hard by the worst-ever economic crisis in the post-war history of East Asian economic development. In the thick of the crisis, Korea and Thailand were both caught in a spiral of massive capital fl ight, plunging stock prices and collapsing local currencies. The fi nancial market turmoil was quickly transmuted into a crisis of the real economy that manifested itself in soaring interest rates, repressed industrial investments and outright recession. In connection with these economic woes, unemployment rose to an unprecedented high and the income of the non-agricultural labour force decreased sharply, leading to social instability and even political unrest.
