The strongPolitical Economystrong of Institutional Reform in Korea.pdfVIP

* The Political Economy of Institutional Reform in Korea by Chung H. Lee, University of Hawaii-Manoa Working Paper No. 04-12 December 2, 2004 (revised) Abstract In the aftermath of the economic crisis of 1997-98 South Korea has undertaken a number of major institutional reforms. What are these reforms? Why were they undertaken? What is the outcome of the reforms? In answering these questions the paper examines the influence that the ideas of political leaders on political economy had in setting forth the reform agenda and the role that various interest groups have played in implementing the reform. It argues that there was a shift in the developmental paradigm in the early 1980s, that the new paradigm guided reforms in Korea during the 1980s and 1990s but with initial conditions and interest politics influencing the implementation and actual outcome of reform, and that the post-crisis reform was a culmination of the reform process that began in the early 1980s. JEL Classification: O5, P1, G1 Keywords: Korea, Institutional Reform, and Asian Financial Crisis. Corresponding Author: Chung H. Lee, Department of Economics, University of Hawaii-Manoa, 2424 Maile Way, Saunders Hall Room 542, Honolulu, Hawaii, U.S.A. 96822 [phone] (808) 956 8427 lchung@hawaii.edu * To be published in The Journal of the Asia Pacific Economy. 1. Introduction In the aftermath of the economic crisis of 1997-98 South Korea (henceforth Korea) has undertaken a number of major institutional reforms. What are these reforms? Why were they undertaken? What is the outcome of the reforms? In answering these questions for