The Prologue: Before the Crisis

The Korean Economic Crisis | The Prologue: Before the Crisis | During the Crisis | After the Crisis | Korean Crisis Works Cited

Korea's Pre-Crisis Economy

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.