ABSTRACT
In 1980 the Korean economic miracle appeared to be over. Inflation was running at over 25 per cent, the economy was set to contract by 5.2 per cent over the course of the year and the country was facing an acute foreign exchange crisis (Woo-Cumings, 1991: 177-97). The Korean economy was, however, fundamentally stronger than other semi-peripheral economies in Latin America and Asia that were facing a similar set of difficulties at the time. The heavy and chemical industrialisation drive had bankrupted the Korean state. Critically, however, the heavy and chemical industrialisation drive had basically been a success and created billions of dollars of new export capacity. This newly created export capacity provided the basis upon which a strong economic recovery could be constructed. Following sizeable loans by the Japanese government and the international financial institutions to ease foreign exchange problems inflation was once again brought under control, the state organised a comprehensive programme of corporate rationalisation and the economy resumed its rapid growth trajectory (ibid.).1
