Financial Liberalization : South Korea And Taiwan Essay

1578 WordsAug 21, 20167 Pages
Two Paths to financial liberalization: South Korea and Taiwan, Elizabeth Thurbon Is it insufficient financial liberalization and the legacies of economic model in which the state plays an active role in the allocation of economic resources to strategically designated ends that caused the rise of financial crises or is it excessive financial liberalization and increased exposure to volatile capital flows for the primary cause of financial crises? What kind of liberalization could deliver of the benefits of access to the opportunities of the global marketplace whilst maintaining the domestic foundations for economic growth and stability? (main proposition of the author) Acceleration of liberalization and deregulation and a fuller exposure to the market mechanism as the only variable solution to East Asia’s economic woes (IMF 1998; Frankel, 1998b; Wolf1998). On the other hand, calls for the re-imposition of capital controls Mahathir-style to counter to perceived ill-effects of excessive financial freedom (Rodrik 1998; Krugman 1999; Wade and Veneroso 1998a). There is more than one path to financial liberalization and the path chosen bearing critically upon outcomes of liberalization process. Throughout the post-second world war era, Korea and Taiwan shared similar developmental strategies following the ‘developmental state’ model of industrial development. In the 1990’s both Korea and Taiwan had embarked the process of financial liberalization and maintained the momentum up
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