Change and Continuity in Social Policy Responses to Economic Crises in South Korea: 1979–81 versus 1997–98

Abstract

Successful industrialization since the early 1960s has changed South Korea from an agrarian economy to a highly industrialized one. As a result, in 2010, South Korea was ranked the 15th-largest economy in the world with a per capita income of $29,997, surpassing Italy and New Zealand (IMF 2011). Moreover, since it entered democratic transition in the mid-1980s, South Korea has become a ‘fully functioning modern democracy’ (CIA 2008). Based on these economic and political resources, South Korea is now regarded as entering the club of advanced countries and has been touted as a model case of successful economic development. But contrary to the popular image of sustained rapid economic growth, South Korea has suffered economic crises, not to mention cyclical downturns. Among others, the 1979-81 and the 1997-98 economic crises were the most acute. Gross domestic product (GDP) shrank, while inflation and unemployment soared. Income distribution deteriorated and poverty increased, but South Korea has successfully overcome them through a combination of swift economic reforms and social protection measures.