The Korean Financial Crisis: Is Bail-out a Solution?

There are few countries in history which have attained such a high level of development so rapidly as Korea. In a single generation this poor nation, consisting primarily of subsistence farmers in the 1950s and early-1960s, had been transformed into the world’s largest producer of home appliances, the second largest producer of semiconductor chips, the second largest shipbuilder, the fifth largest car-maker, and the eleventh largest economy1 by the mid-1990s. Koreans became accustomed to rapid economic growth and development and low unemployment. Living standards for ordinary Koreans have increased dramatically with life expectancy increasing from 47 in 1955 to 71 by the mid-1990s. Its model of economic development, state-directed capitalism, became the envy of other developing economies wishing to replicate such rapid development.