ABSTRACT
The simultaneous challenge of political and economic reform has prompted an intense debate over the future of South Korea’s political economy. Few crises in the turbulent recent history of Korea have generated such interest, energy and ideas among scholars, government leaders, labor officials and industry executives. The discussion promises a program for the future of state and society that will affect not only the lives of forty million Koreans, but also her trade partners across the world. President Y.S.Kim publicly embraced a path of political liberalization or ‘democratization’ in his presidential campaign in 1991, prompted by the labor unrest of 1987 and persisting discontent with authoritarian rule. The economic prosperity which brought South Korea closer to the ranks of leading industrialized nations also prompted new demands for market liberalization from her trading partners. Adding to the turmoil was the financial crisis of 1997 and the threat of economic default among Korea’s highly leveraged firms as the Korean currency suddenly lost half of its value in comparison to the US dollar, doubling the payments due on dollar-denominated loans. A backup rescue package of credits totalling $58 million from the International Monetary Fund (IMF) bolstered government reserves, but not without conditions. Korean state officials eventually accepted demands for ‘transparency’ in the rapid restructuring of the economy and won IMF support for adjustment efforts in finance and industrial relations.
