The Impact of the Asian Financial Crisis on Budget Politics in South Korea.

The Impact of the Asian Financial Crisis on Budget Politics in South Korea.
KOREA (South) ASIA budget deficits East Asian Financial Crisis government spending public funds special accounts taxes BUDGET FISCAL policy PUBLIC finance PUBLIC spending FINANCIAL crises PUBLIC debts
Issue Date
Asian Affairs: An American Review
The Republic of Korea was one of the major victims of the Asian Financial Crisis of 1997-98, but it recovered its economic dynamism quite quickly. In the short term, its budgetary response to near economic collapse was immediate and quite significant. The government increased spending and, once the peak of the crisis was over, taxes and expanded its previously very limited support of needy Koreans by substantially increasing funds for social development and for aiding local government. Thus, despite its being forced to accept a large International Monetary Fund (IMF) loan in late 1997, Korea clearly rejected the IMF model of fiscal austerity and governmental downsizing, giving a much higher priority to the welfare of its citizens. However, this short-term response to the devastating fallout from the crisis seems to have exacerbated several long-term challenges facing Korea. The liberal fiscal policy clearly contributed to the country's burgeoning debt problem, and there have been only limited attempts to improve the problems associated with public funds and special accounts. Unfortunately, political inertia makes a serious response to these long-term challenges unlikely in the near future.
Appears in Collections:
College of Social Science (사회과학대학) > Public Administration (행정학) > Journal Papers, Reports(행정학 논문, 보고서)

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