Interdependency in East Asia and the Post-Crisis Macroeconomic Adjustment in Korea

Abstract

The purpose of this paper is to reexamine the financial crisis in Korea and its post-crisis macroeconomic adjustment reviewing changing structure of interdependency in East Asia and to make a critical assessment on its post-crisis reform programs. The painful experience of Korea's post-crisis macroeconomic adjustment and structural reforms seem to have received both positive and mixed evaluations. The overall macro economic environment in the post-crisis period has been stabilized. The Korean economy seems to have recovered some of its growth potentials and competitiveness. The movement in the overall productivity indicators such as labor productivity and total factor productivity seem to validate this judgment even though there was a structural break in 1997-8. However, it has long way to go because both financial sector reforms and corporate restructuring are far from being completed.