ABSTRACT
ThepresscalledNovember21,1997,a"dayofnationalhumiliation," whenKorealosteconomicsovereignty.'Aneraof"IMFtrusteeship" hadcome,lamentednewspapersinunison.2The"bubblehadburst"3
andKoreahadenteredalong"tunnelofmisery."4Afterseveralfutile attemptsatpleasandresistance,andunderpressurefromWashington andTokyo,PresidentKimYoung-Samacceptedtheharshconditions fromtheInternationalMonetaryFund(IMF)forafinancialbailout. Therescuepackageof$57billionannouncedonDecember3didnot boostmarketconfidence,however.Theforeign-exchangeratehit1,960 wonperdollarbyDecember23(an85.6percentdevaluationsince November21),whileinternationalratingagenciesdramaticallycut Korea'screditstandingbysixnotchestothelevelofjunkbonds.With thespecterofdefaultonforeign-debtpaymentsdescendingupon Korea,KimYoung-SammadeadditionalconcessionsonDecember24 tosecureearlydeliveryoftheIMF-pledgedloans.Thepresidentpromisedtostrengthentheemployers'righttolayoffworkers,accelerate
mergers and acquisitions of insolvent financial institutions through a massive infusion of public funds, lift protectionist barriers and regulatory controls in financial markets, and implement an austere fiscal policy. These measures constituted a direct negation of Korea's model of modernization instituted by President Park Chung-Hee (1961-1979) decades earlier. They replaced company unionism with a flexible labor market in which employers enjoyed a virtually free hand over decisions on hiring and layoffs of workers as well as transforming Korea's bureaucratic, oligarchic banking community into an open financial system disciplined by international market forces.
