Korea’s Post-Industrial Consolidation under Global Financial Uncertainty, 2008–14

Abstract

Korea’s post-1997 financial crisis led to the emergence of ‘neoliberal developmental statism’ (Kyung-Sup Chang, 2007) that is carefully guiding the nation’s ‘post-industrial consolidation.’ There seems to be a new consensus among scholars that IMF-dictated and Kim Dae-Jung administration-supported neoliberal restructuring could not fully move Korea out of its strong ‘statist developmental’ legacy. Indeed, time-tested, elaborate institutions as well as policy infrastructure — such as interventionist ‘developmental state,’ export-oriented ‘strategic industrial policy’ — repressed finance and other monitoring structures, including the economic planning board (EPB), monthly meetings and so forth, could not vanish overnight. Their remnants still hold sway in various government bodies and influence policy initiatives, and they survive as the representatives of glorious old days, talking endlessly about the nation’s ‘second take-off.’ Hence, an inevitable delicate balance between neoliberal and statist traditions came to rescue the Korean government and provided it with the relevant policy tools to deploy large sums of public funds to save the nation’s famed export-oriented companies. Korea’s timely response to salvage the crisis-ridden economy facilitated an early rebound with booming exports leading to a current-account surplus. As the new trend indicates that, while in the period between 1980 and 1996, the current account in Korea had an average deficit amounting to 0.32 percent of GDP, with a standard deviation of 1.82.