THE KOREAN FINANCIAL CRISIS OF 1997: CAUSES AND POLICY RESPONSES

For three decades, Korea was held up as an economic icon. The country's typical blend of high savings and investment rates, autocratic political systems, export-oriented businesses, restricted domestic markets, government capital allocation, and controlled financial systems were hailed as ideal ingredients for the strong economic growth of developing countries (Shapiro, 1999). However, in July 1997, a currency turmoil erupted in Thailand, spreading to Korea and other countries. This article investigates a number of practical issues about the Korean crisis of 1997-interlinked economies, the causes of the crisis, and policy responses.