Economic Reform in South Korea had been adopted in 1998 to combat the economic crisis of 1997 and to achieve a sustained economic growth. In 1998, Kim Dae-jung, who won the Nobel Prize for Peace in 2000, had been elected as a president and, he started the reform program in this country.
Reasons Behind the reform:
In 1997, South Korea witnessed a serious economic crisis mainly because of the unstable political conditions.
South Korea's economic growth was lagging because of a weak corporate governance, indigent labor relations and inefficient financial system.
Many non viable financial corporations had to be stopped and some commercial banks were unable to run.
The rate of employment in South Korea decreased significantly.
The South Korean government had to provide 155 trillion Won, which is almost 30% of the national income, for the banks and some financial institutions.
Reform Steps:
The government started reform process through various other reform programs, namely, Financial Sector Reform, Banking Sector Reform, Electricity Sector Reform, and Structural Reform.
Effects of Reform:
Through economic reform, the South Korean government was able to increase the prices of chips and decrease the oil prices.
The firms in South Korea made a good profit by increasing their export business with the United States of America.
The unemployment problem had been solved to some extent.
Resource management, that is, resource allocation and mobilization, improved a lot and the government was able to ensure financial transparency.
