The financial crisis of the Korean model.

Summary The financial crisis in Korea has had many repercussions on the economy of that country as well as on the world economy. The Korean state's domestic intervention in the financial market to expand the chaebols (Korean conglomerates), once praised and recently criticized as "crony capitalism," has created a myriad of problems in the country's economy that have led to the financial crisis. The international community, including the IMF and the World Bank, did not expect South Korea to be in financial turmoil because the economic fundamentals did not point to it. The financial crisis in South Korea cannot be explained by classical theories, but rather by sudden capital movements. Therefore, the need for capital control through increased intervention by the international community has been put on the agenda. However, the debate is far from over. My thesis, in two parts, addresses three questions: why the crisis broke out in Korea, what are its causes, and how Korea could emerge from it in order to return to its former position and thereby enter as a full member of the group of developed countries. The first part shows the link between the financial transformation and the crisis. The second part explains the Korean crisis on the basis of the theories exposed in the first part. As a conclusion, I suggest some policies that can pull the country out of the crisis, focusing on industrial restructuring (chaebols) and the financial system.