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Was IMF-Imposed Economic Regime Change in Korea Justified? The Political Economy of IMF Intervention

Author

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  • James Crotty

    (Department of Economics, University of Massachusetts, Amherst, 34 Potwine Lane, Amherst, MA 01002, crotty@econs.umass.edu)

  • Kang-Kook Lee

    (College of Economics, Ritsumeikan University, Japan, kangkooklee@gmail.com)

Abstract

As late as October 1997 the IMF declared that the Korean economy was experiencing a temporary liquidity squeeze, not a solvency crisis. Yet in December 1997 Deputy Managing Director Stanley Fischer declared that Korea suffered from a systemic “breakdown of economic relations†so complete that only radical economic restructuring could restore prosperity. The IMF attached what it called “extreme structural conditionality†to its loan agreements with Korea, demanding a complete and rapid transition from Korea's traditional East Asian economic model to a globally integrated neoliberal model. We subject the IMF's assertion that the allocative efficiency of the Korean economy had collapsed by 1997 to a number of empirical tests. The evidence does not support the IMF's systemic breakdown claim. We conclude that the IMF's imposition of “extreme structural conditionality†on Korea is best understood as an illegitimate and antidemocratic exercise of power designed to meet the needs of the IMF's key constituents rather than those of the majority of Korea's people.

Suggested Citation

  • James Crotty & Kang-Kook Lee, 2009. "Was IMF-Imposed Economic Regime Change in Korea Justified? The Political Economy of IMF Intervention," Review of Radical Political Economics, Union for Radical Political Economics, vol. 41(2), pages 149-169, June.
    • Handle: RePEc:sae:reorpe:v:41:y:2009:i:2:p:149-169
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    Cited by:

    1. Simplice A. Asongu & Mohamed Jellal, 2014. "Foreign aid, investment and fiscal policy behavior: theory and empirical evidence," Research Africa Network Working Papers 14/030, Research Africa Network (RAN).
    2. Kang-Kook Lee, 2023. "James Crotty’s Advice to Koreans," Review of Radical Political Economics, Union for Radical Political Economics, vol. 55(4), pages 701-706, December.
    3. Simplice Asongu & Mohamed Jellal, 2016. "Foreign Aid Fiscal Policy: Theory and Evidence," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 58(2), pages 279-314, June.
    4. Asongu, Simplice A & Jellal, Mohamed, 2014. "International aid, corruption and fiscal policy behavior," MPRA Paper 58750, University Library of Munich, Germany.
    5. Simplice Asongu, 2014. "The Questionable Economics of Development Assistance in Africa: Hot-Fresh Evidence, 1996–2010," The Review of Black Political Economy, Springer;National Economic Association, vol. 41(4), pages 455-480, December.
    6. Asongu Simplice, 2013. "Consult your gods: the questionable economics of development assistance in Africa," Working Papers of the African Governance and Development Institute. 13/002, African Governance and Development Institute..
    7. Seongjin Jeong, 2018. "Globalisation and Economic Crises in the Korean Capitalism," Arthaniti: Journal of Economic Theory and Practice, , vol. 17(1), pages 31-49, June.
    8. ORASTEAN Ramona, 2014. "The Lending Arrangements Of The Imf In European Union In Times Of Crisis – Characteristics And Evolutions," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 9(1), pages 134-141, April.
    9. Park, Hansol & Park, Gum-Ryeong & Kim, Jinho, 2024. "Transitioning into and out of precarious employment and life satisfaction: Evidence from asymmetric fixed effects models," Social Science & Medicine, Elsevier, vol. 341(C).
    10. Asongu, Simplice & Jellal, Mohamed, 2014. "International aid corruption and fiscal behavior policy," MPRA Paper 57192, University Library of Munich, Germany.
    11. Hyeng-Joon Park, 2016. "Korea’s Post-1997 Restructuring," Review of Radical Political Economics, Union for Radical Political Economics, vol. 48(2), pages 287-309, May.
    12. Dev Prasad & Yash R. Puri & Ravi Jain, 2015. "Return to Profitabiolity after a Financial Crisis," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 9(1), pages 89-101.
    13. Park, Hyeng-Joon, 2016. "Korea’s Post-1997 Restructuring: An Analysis of Capital as Power (Postprint)," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 287-309.

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