Abstract
The Asian Economic Crisis of 1997 escalated from Southeast Asia and landed in Northeast Asia. However, in the process of recovery form the crisis, two countries took the opposite approaches. The Korean Government adopted the plans from the IMF and received a rescue fund, but the Malaysian Government adopted the independent recovery plans. With strong fundamentals, a generally liberal and continued integration approach into the global market - Mahathir's limited capital controls notwithstanding - Malaysia would probably see its economic recovery in relative good health again, even if with the 2-digit growth of the last decade. Therefore, this Malaysian Government's approach shows the importance of the self-supporting economy when confronting with the WTO's economic system and financial crisis. This study aims to evaluate after the financial crisis of the Korean economy with a special emphasis on the Korean government's structural reform efforts under the IMF program and Malaysia's capital control policy, it points out many issues to the Korean economy.
Highlights
The 1997 Asian economic crisis started in Southeast Asian countries and swept over Northeast ones only after several months
While each country had a different economic structure and as a result, took different economic measures to cope with the crisis, one of the common factors it experienced was the depreciation of the currency and the depressed stock market
Following a harsh stock market collapse, interest rate increased to about 30%
Summary
The 1997 Asian economic crisis started in Southeast Asian countries and swept over Northeast ones only after several months. While each country had a different economic structure and as a result, took different economic measures to cope with the crisis, one of the common factors it experienced was the depreciation of the currency and the depressed stock market. Korea and Malaysia showed similarities in the process of financial crisis but clear differences in counter economic measures to overcome the crisis. Like other South Asian countries, Malaysia experienced stagnant economic growth, unstable prices, shrinking local spending and exports and a decline in capital and public investments. Countries like Korea and Thailand received IMF rescue financing and accepted a so-called global standard, with which capital and financial markets are open. Countries like Malaysia refused to liberalize and open its capital and financial markets and took capital control measures as they believed that the abrupt movement of short-term money caused the crisis. Corresponding Author: Seok Yoon, Research Fellow, Korea National Assembly Library, 1 Yoido dong, Young deung po-ku, Seoul, 150-703, Korea, Tel: +82-2-788-4353, Fax: +82-788-4430 1315
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