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51. Excess Credit and the South Korean Crisis

Author:
Bassam A. Fattouh and Panicos O. Demetriades
Publication Date:
08-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
We provide a novel empirical analysis of the South Korean credit market that reveals large volumes of excess credit since the late 1970s, indicating that a sizeable proportion of total credit was being used to refinance unprofitable projects. Our findings are consistent with theoretical literature that suggests that soft budget constraints and overborrowing were significant factors behind the Korean financial crisis of 1997-98.
Topic:
Economics, International Trade and Finance, and Markets
Political Geography:
Asia, South Korea, and Korea

52. Pro-Poor Growth: The Asian Experience

Author:
Hyun H. Son and Nanak Kakwani
Publication Date:
06-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper looks into the interrelation between economic growth, inequality, and poverty. Using the notion of pro-poor growth, this study examines to what extent the poor benefit from economic growth. First, various approaches to defining and measuring pro-poor growth are scrutinized using a variety of criteria. It is argued that the satisfaction of a monotonicity axiom is a key criterion for measuring pro-poor growth. The monotonicity axiom sets out a condition that the proportional reduction in poverty is monotonically an increasing function of the pro-poor growth measure. This paper proposes a pro-poor growth measure that satisfies the monotonicity criterion. This measure is called the 'poverty equivalent growth rate', which takes into account both the magnitude of growth and how the benefits of the growth are distributed to the poor and the non-poor. As the new measure satisfies the criterion of monotonicity, it is indicative that to achieve a rapid poverty reduction, the poverty equivalent growth rate ought to be maximized rather than the actual growth rate. The methodology developed in the paper is then applied to Asian countries, including the Republic of Korea, Thailand, and Vietnam.
Topic:
Development, Economics, and Poverty
Political Geography:
Asia, Vietnam, Korea, and Thailand

53. Disorderly adjustments to exchange rate misalignments: The experience of Korea'

Author:
Takuji Kinkyo
Publication Date:
08-2004
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
This paper analyzes Korea's exchange rate dynamics before and during the crisis of 1997-98 by estimating the long-run fundamental exchange rate and the associated error correction model. The analysis suggests that although Korea's exchange rate was substantially overvalued before the crisis, the subsequent exchange rate dynamics could not fully be accounted by the need to correct misalignments. It was found that there was a large deviation from the short-run fundamental value of exchange rates, indicating the presence of “overshooting of the overshooting equilibrium” during the crisis. The findings have important policy implications for crisis management in emerging market economies.
Topic:
International Relations, Development, Economics, and International Political Economy
Political Geography:
Korea

54. Transmission channels of capital flow shocks: why Korean crisis was so severe'

Author:
Takuji Kinkyo
Publication Date:
08-2004
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
The Asian crisis highlighted the vulnerability of emerging market economies faced by sudden capital flow reversals. An important question that has critical implications for crisis management is how negative shocks in capital inflows were transmitted to economic activities, transforming financial instability into fully-fledged crises. Using VARs, this paper analyzes the transmission mechanism of capital flow shocks during the Korean crisis of 1997-98. Although it is commonly believed that severe economic contractions were caused by credit crunch, the analysis suggests that the major constraint for production was a steep rise in prices of imported inputs due to sharp exchange rate depreciations.
Topic:
International Relations, Development, Economics, and International Political Economy
Political Geography:
Asia and Korea

55. Economic survey of Korea, 2004

Publication Date:
06-2004
Content Type:
Policy Brief
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
Korea has been one of the fastest growing economies in the OECD area over the past five years, with an annual growth rate of about 6 per cent. Such rapid growth, which has lifted per capita income to two-thirds of the OECD average, reflects Korea's underlying dynamism and its progress in implementing a wide-ranging reform programme in the wake of the 1997 crisis. However, the recession in 2003 – which was due in part to structural problems in the labour market and in the corporate and financial sectors – indicates that the reform agenda is unfinished. Sustaining rapid growth over the medium term as the contribution from inputs of labour and capital slows requires further progress in structural reform, particularly in the labour market and in the corporate and financial sectors, accompanied by appropriate macroeconomic policies.
Topic:
Development, Economics, and Government
Political Geography:
Asia and Korea

56. Selective Intervention and Growth: The Case of Korea

Author:
Marcus Noland
Publication Date:
08-2004
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper attempts to determine whether conditions amenable to successful selective interventions to capture cross-industry externalities are likely to be fulfilled in practice. Three criteria are proposed for good candidates for industrial promotion: that they have strong interindustry links to the rest of the economy, that they lead the rest of the economy in a causal sense, and that they be characterized by a high s hare of industry-specific innovations in output growth. According to these criteria, likely candidates for successful intervention are identified in the Korean data. It is found that, with one exception, none of the sectors promoted by the heavy and chemical industry (HCI) policy fulfills all three criteria.
Topic:
Development and Economics
Political Geography:
Israel, East Asia, and Korea

57. Crisis on the Korean Peninsula

Author:
Richard Bush, Dean Nowowiejski, and Tomatsu Nakano
Publication Date:
04-2003
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Most signs during the late summer and early fall of 2002 pointed to progress on the Korean peninsula. North Korean leader Kim Jong Il had finally grasped, it appeared, the need for international moderation and domestic reform. The United States seemed ready to respond in kind. But with the visit to Pyongyang in October of U.S. Assistant Secretary of State James Kelly – the first high-level contact since the Bush Administration came into office – the situation quickly unraveled. Instead of offering the “bold initiative” that was reportedly in the works, Kelly confronted his interlocutors with evidence that their government had mounted a new, clandestine uranium-based nuclear program. The North Koreans refused to disavow the program and insisted on their right to nuclear weapons. Kelly responded that the United States would not engage the DPRK unless and until it abandoned the program. The status of the 1994 U.S.-DPRK Agreed Framework, which had capped North Korea's plutonium-based program in return for international assistance in meeting its civilian energy needs, was uncertain at best. The Korean Peninsula Energy Development Organization (KEDO), the mechanism for providing that aid, stopped heavy fuel oil shipments to North Korea at the end of 2002 at American insistence.
Topic:
Economics, International Political Economy, and International Trade and Finance
Political Geography:
United States, Asia, Korea, and Sinai Peninsula

58. The Paradox of Korean Globalization

Author:
Gi-Wook Shin
Publication Date:
01-2003
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
Some months ago a Stanford freshman came to ask for help on his project on Korea. At the time, I thought he was a Korean American, given that his command of both English and Korean is excellent. To my surprise, I learned that he was educated until high school in Korea and had never been to the United States before coming to Stanford. He surprised me further when he told me about his high school, the Korean Minjok Leadership Academy (KMLA). Located in a remote area of Kwangwon province—arguably the more underdeveloped region in South Korea—KMLA aspires to be Korea's version of Eton. The school's goal is to produce Korea's future leaders, and to instill in them a strong national identity (see its website at http://www.minjok.hs.kr). Fascinated by what he told me, I made a visit to his high school in fall 2002.
Topic:
Economics, Globalization, and Nationalism
Political Geography:
United States, America, Asia, and Korea

59. Transmission of Information Across International Equity Markets

Author:
Jon Wongswan
Publication Date:
02-2003
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper provides evidence of transmission of information from the U.S. and Japan to Korean and Thai equity markets during the period from 1995 through 2000. Information is defined as important macroeconomic announcements in the U.S., Japan, Korea, and Thailand. Using high-frequency intraday data, I focus the study on return volatility and trading volume because the implications of new information are much clearer than for returns. I find a large and significant association between emerging-economy equity volatility and trading volume and developed-economy macroeconomic announcements at short-time horizons. This is the first strong evidence of this sort of international information transmission. Previous studies' findings of at most weak evidence may be due to their use of lower frequency data and their focus on developed-economy financial market innovations as the measure of information.
Topic:
Economics and International Trade and Finance
Political Geography:
United States, Japan, Asia, Korea, and Thailand

60. The Growth of Broadband Internet Connections in South Korea: Contributing Factors

Author:
Kyounglim Yun, Heejin Lee, and So-Hye Lim
Publication Date:
09-2002
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
In recent years, Korea has seen a remarkable diffusion in broadband Internet connections. This paper explores the actions and factors contributing to this diffusion from three viewpoints: public sector, private sector, and social. We suggest that the matching of demand and supply is the most important factor in the fast diffusion of broadband in Korea. In particular, fierce infrastructure competition has led to quality services at a low fixed price. We also consider two challenges that lie ahead: take-up of retail e-commerce applications, and the need to bridge the digital divide.
Topic:
Economics, International Trade and Finance, and Science and Technology
Political Geography:
Asia, South Korea, and Korea