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Institutional Change and Economic Growth in East Asia after the Asian Financial Crisis, 1997-98

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Authors
Chung, Kee Hoon
Issue Date
2020-04
Publisher
Graduate School of Public Administration, Seoul National University
Citation
Korean Journal of Policy Studies, Vol.35 No.1, pp. 29-51
Keywords
Asian financial crisisinstitutional changeEast Asiaeconomic growth
Abstract
Theories on institutional change assert that exogenous shocks are critical in transforming path-dependent institutions. There is not much empiric research, however, that has investigated whether that is indeed the case. To fill this gap, this study investigates the effects of institutional quality on economic growth with a focus on East Asia before and after the 1997-98 Asian financial crisis, which delivered a critical shock in economic activities and institutions in East Asia. Using panel data analysis from 1981 and 2007, I investigate whether the effect of institutional quality on economic growth differed in East Asia compared to rest of the world before the crisis and whether such relationship changed after the crisis. Using two-way fixed effects model, the estimation shows that the effect of institutional quality on economic growth was positive on average for the rest of the world after the crisis but negative for East Asia. The negative coefficient was particularly strong for the three countries—South Korea, Indonesia, and Thailand—that suffered the most during the crisis. However, in the long term, there was no significant change of this negative effect.
ISSN
1225-5017
Language
English
URI
https://hdl.handle.net/10371/174265
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Graduate School of Public Administration (행정대학원)Dept. of Public Administration (행정학과)Korean Journal of Policy Studies (정책논총)Korean Journal of Policy Studies (정책논총) vol.35 no.1-3 (2020)
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