UC Law SF International Law Review


Ellen J. Shin


Since emerging as a war torn country in 1953, Korea has become a major economic contender in the international market. By 1997, Korea had achieved success as the world's eleventh largest economy. That success was cut short by the "Asian financial crisis" of late 1997, which greatly affected the Korean economy. Caused by the unraveling of the diversified, family-owned conglomerates known as chaebol, which collapsed under billions of dollars in bank loans, Korea sought to restore its economic ascendancy with an IMF bailout. The resulting IMF austerity program has received much criticism, focused primarily on the fact that the traditional prescription of higher interest rates and government surpluses was inappropriate for the more financially prudent Asian countries.

This Note begins by looking at some of the underlying problems that led to the collapse of the Korean economy at the end of 1997. It then discusses the IMIEF's program for stability and solutions as well as the law and policy of Fund conditionality. Finally, the question of whether an international bailout was the correct prescription for the Korean financial crisis will be addressed.