James Crotty’s Advice to Koreans

Abstract

The Korean economy achieved rapid economic growth with equal income distribution for over three decades until the late 1990s when, in 1997, a financial crisis occurred. Mainstream economists and the International Monetary Fund (IMF) attributed this crisis to the problem of East Asian crony capitalism. The Korean government accepted this perspective and implemented neoliberal economic restructuring and financial opening after the crisis. However, James Crotty argued that the crisis in Korea was a result of haphazard financial opening and the withdrawal of state intervention. Most importantly, he extensively criticized the post-crisis economic reform in Korea imposed by the IMF. He believed that it would lead to lower economic growth and higher inequality, and he advised Koreans to oppose it. This article examines Crotty’s argument about the Korean economy and how the latter changed in the 21st century. JEL classification: F34, H12, O19, O53