ABSTRACT
The early years of the 1990s saw the increasing integration of Korea into the global economy through trade, finance, and investment; while this brought benefits for domestic firms in terms of market access and opportunities to enhance their international competitiveness, it also increased the nation’s vulnerability to instability in global capital markets and shifts in investor sentiment and confidence. In early 1997, Korea moved into the second phase of Asian globalization described by Dittmer (2002: 34-6): ‘capital flight crash globalization’, as a string of corporate failures, including some of Korea’s largest conglomerates, sent shockwaves through the domestic economy. In July of that year, the Southeast Asian currency crisis began with the fall of the Thai baht and, as the financial crisis spread within the region, foreign analysts and investors became uneasy about the health of the Korean economy and the soundness of its financial institutions.
