Fashioning a New Korean Model out of the Crisis: The Rebuilding of Institutional Capabilities

Abstract

The financial meltdown in East Asia in 1997–8 had dramatic effects not only on the countries of the region itself, but on the scholarly debates over the sources and limits of the ‘East Asian Miracle’ model of development as well.¹ The achievements of the fast-growing East Asian economies are not in question: as Joseph Stiglitz put it, the East Asian Miracle was real.² But the methods used by the East Asians in constructing this miracle were cast in a pitiless spotlight through the financial chain-reactions of 1997, and, in many cases, were found wanting. Positions adopted before the crisis have thus had to be revised.

This article is adapted from the author’s longer working paper, ‘Fashioning a New Korean Model out of the Crisis’, Working Paper No. 46, Japan Policy Research Institute, May 1998. The paper was written when the author was ACT Government Visiting Professor in the Australia-Asia Management Centre at the Australian National University, Canberra. The paper was prepared partly under the auspices of the ‘Building Institutional Capacity in Asia’ project of the Research Institute for Asia and the Pacific of the University of Sydney. The assistance of Ms Hye-Jin Lee, in Seoul, and of Ms Elizabeth Thurbon, in Sydney, is gratefully acknowledged. The comments of many policy-makers in Seoul served as the foundation for the arguments developed in the paper, buttressed by helpful discussions with Professor Chalmers Johnson and Associate Professor Linda Weiss and the comments of an anonymous referee.