The Political Economy of South Korea

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The Political Economy of South Korea:

A Necessary Transformation

I. Introduction:

In this paper, I will discuss the measures that the Republic of Korea’s (addressed as South Korea from here on out) government took in trying accomplishing economic development despite its several economic and political upheavals. I will, specifically, review the economic growth and institutions established in South Korea beginning in the 1950s, the process of democratization in South Korea, and the effects that the Asian Financial Crisis of 1997 had on South Korea. With the background information of these factors, I will then delve into the importance of South Korea becoming an economic power and the impact it has had on the United States of
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During the transition of forming a democratic nation, South Korea was not immediately successful in creating economic growth. In order to achieve positive changes in the economy, democratization must be institutionalized. It was difficult for the economy to stabilize since mature institutions that could guarantee growth were not created. Rather, the government tried to characterize the economy through fast changes and rapid economic growth, when the government should have taken the time to institutionalize political and economic systems. It is the building of mature institutions that have proven to be crucial in policy making and implementing a strong government that can maintain a consistent economic growth rate. IV. The effects of the Asian Financial Crisis of 1997 on South Korea:

The era of economic growth in South Korea came to a halt in 1997 due to the Asian Financial Crisis that started in Thailand. By 1997, South Korean banks reached 24 percent of the gross national product (GNP) in foreign debt; 58.1 percent of the total debt was short-term debt. A number of the chaebol conglomerates were not only bankrupt, but also collected an average debt-equity ratio of almost 400 percent.
There were several reasons to why the financial crisis hit South Korea so hard causing its worst economic fall since the Korean War.
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