Stumbling Upon a Post-crisis Miracle
The lasting impact on South Korea of the 1997 financial crisis could be felt last fall when millions of people bought tickets for the new film “Default.” The movie tells the story of those painful events through the eyes of a factory owner, investment entrepreneur and central bank analyst, dramatizing the uneven impact and varied responses. One might think of this book as the scholarly sequel.
Deeply researched and ambitious in argument, the book explores the paradox of state-led neoliberalist reform in the decades after what Koreans call the “IMF crisis.” The authors find that after the shock of 1997, Korea stumbled into a hybrid model that combined vestiges of developmentalism — the strong state approach that enabled the “miracle on the Han” from the 1960s through the 1980s — with Anglo-us neo-liberal ideas about privatization and deregulation. As they point out, neo-liberal reforms actually began in early 1990s, but were accelerated due to internal and external forces thanks to the Asian financial crisis. Afterward, the Korean state continued to play the role of the visible hand, as it were, but found more “indirect and sophisticated” means to direct the national economy.
Rhyu and Lee lay out their case in a series of in-depth case studies, covering an impressive range of industries, including steel, telecommunications, aircraft and IT. A cross-cutting theme that emerges is the complex way in which “informal networks” interact on structural reforms such as corporate governance and shareholding regulation, something the authors describe as “the legalization trap.”