The Prologue: Before the Crisis: Difference between revisions
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==Korea's Pre-Crisis Economy== | ==Korea's Pre-Crisis Economy== | ||
Before the crisis hit Korea in July, the East Asian economies were some of the fastest growing in the world, and as such they were drawing in a high proportion of international aid and investment capital. To fully understand how Korea and the other East Asian economies fell so hard, one must first look at their economic policies before the crisis hit. | |||
Korea's pre-Crisis economy had several important characteristics. The growth that occurred in the decades leading up to the Crisis was lead by policies of Export-oriented Industrialization (EOI). This concept is often employed by developing countries, to facilitate rapid economic growth. Essentially, lowering tariff barriers and deliberately depreciating local currencies help to increase international investment. This increase in capital should lead to a boom in exports, which are always products for which the country has a relative advantage at producing. Over the longer term, the idea is for the economic growth caused by EOI to help make the economy less dependent on external investment, which will make the economy more stable in general. In the case of Korea, they were in the middle stages of this process, where outside investment was very high, but the economy was not yet stable enough to survive any fluctuations in the capital inflow. | Korea's pre-Crisis economy had several important characteristics. The growth that occurred in the decades leading up to the Crisis was lead by policies of Export-oriented Industrialization (EOI). This concept is often employed by developing countries, to facilitate rapid economic growth. Essentially, lowering tariff barriers and deliberately depreciating local currencies help to increase international investment. This increase in capital should lead to a boom in exports, which are always products for which the country has a relative advantage at producing. Over the longer term, the idea is for the economic growth caused by EOI to help make the economy less dependent on external investment, which will make the economy more stable in general. In the case of Korea, they were in the middle stages of this process, where outside investment was very high, but the economy was not yet stable enough to survive any fluctuations in the capital inflow. | ||
Revision as of 19:26, 2 December 2006
The Korean Economic Crisis | The Prologue: Before the Crisis | During the Crisis | After the Crisis | Korean Crisis Works Cited
Korea's Pre-Crisis Economy
Before the crisis hit Korea in July, the East Asian economies were some of the fastest growing in the world, and as such they were drawing in a high proportion of international aid and investment capital. To fully understand how Korea and the other East Asian economies fell so hard, one must first look at their economic policies before the crisis hit.
Korea's pre-Crisis economy had several important characteristics. The growth that occurred in the decades leading up to the Crisis was lead by policies of Export-oriented Industrialization (EOI). This concept is often employed by developing countries, to facilitate rapid economic growth. Essentially, lowering tariff barriers and deliberately depreciating local currencies help to increase international investment. This increase in capital should lead to a boom in exports, which are always products for which the country has a relative advantage at producing. Over the longer term, the idea is for the economic growth caused by EOI to help make the economy less dependent on external investment, which will make the economy more stable in general. In the case of Korea, they were in the middle stages of this process, where outside investment was very high, but the economy was not yet stable enough to survive any fluctuations in the capital inflow.
