Ebook Social Impact of the Korean Economic Crisis
Following the outbreak of the economic crisis, both Korean economy and society have gone through many transitions. On December 3, 1997, the Korean government and the International Monetary Fund (IMF) reached an agreement on a financial aid package, which totalled US$ 58.35 billion. Since then, the Korean government has succeeded in rescheduling US$ 21.8 billion of its outstanding external short-term debt to medium term debt.
Furthermore, the government implemented a wide range of restructuring measures. Korea’s prompt and decisive response to the call for reform was aimed at restoring stability to its financial market, and allowing the economy to enter a transitional period in 1999, and pursue normal economic growth in 2000 and thereafter.
After undergoing Korea’s most severe economic depression since the Korean civil war, signs of recovery began to emerge in 1999. The exchange rate stabilized around Korea Won (KRW) 1200 to the dollar; and interest rates fell into the single digits. Also, Korea’s foreign reserves were built up from US$3.9 billion to more than US$50 billion.
Nevertheless, many challenges and risks still lie ahead for Korean society. Korea’s per capita income, which was around US$ 10,000 prior to the crisis plunged to some US$ 5,000-6,000, a level equivalent to that of 10 years ago. Beyond its negative economic impact, the crisis also caused great social distress, particularly amongst the poor. The numbers of the unemployed and homeless continually increased, further causing ordinary Koreans to feel the drastic repercussion of the crisis in the social sphere. The Korean crisis had given event to the danger of a possible collapse of the middle class, disintegration of family networks, erosion of work ethics, and other various elements central to the identity of traditional Korean culture.
In view of the social dimensions of the crisis, an appropriate social safety net for the disadvantaged must be recognized as an integral part of a recovery programme. Social instability threatens the credibility of economic reform and may eventually undermine the nation’s long-term growth potential.
The purpose of this paper is to investigate and determine the extent of the Korean economic crisis, highlighting its social impact particularly in terms of the labour market and social stratification. The paper attempts to provide a comprehensive understanding of the social impact of the crisis, which would be conducive to a constructive development of efficient measures in pursuit of the economy’s successful reform and long-term progress.
The paper is organized as follows. In section 2, the causes of the crisis, the process of structural reform and the economic situation in 1999 are briefly reviewed. Section 3 explains the effects of the crisis on Korea’s labour markets and the importance of government measures, including social safety nets. Section 4 analyses the social impact of the Korean crisis focusing on poverty, the collapse of the middle class, social conflict, and family dissolution. Section 5 discusses some relevant policy issues. The last section summarizes and concludes.
Posted in :
