OECD economic surveys : Korea 1998 / Organisation for Economic Co-operation and Development.

Format:

Book

Author/Creator:

Organisation for Economic Co-operation and Development, issuing body.

Series:

OECD economic surveys.

OECD Economic Surveys

Language:

English

Subjects (All):

Economic history.

Korea--Economic conditions.

Korea.

Korea--Economic policy.

Physical Description:

1 online resource (213 pages).

Edition:

1st ed.

Place of Publication:

Paris, France : OECD Publishing, [1998]

Language Note:

English

Summary:

Assessment and recommendations I. The Korean economy in crisis -The macroeconomy prior to the crisis -The financial crisis -The policy response -The economy after the currency crisis and short-term prospects -The new policy paradigm and the medium-term outlook II. Rehabilitating the financial system -Underdeveloped governance structures and weak credit cultures -The situation of banks before and after the financial crisis -Financial system reform -The outlook for reform III. Corporate governance reforms -The role of the chaebols -Government policies towards the chaebols prior to the crisis -Corporate governance practices in Korea -The response to the economic crisis -IV. Implementing the OECD Jobs Strategy -Labour market and employment performance -Policy requirements -Recent policy initiatives -Assessment and scope for further action Bibliography Annexes -I. Corporate sector profitability -II. Calendar of main economic events Statistical annex and structural indicators.

Contents:

Intro

Table of contents

Assessment and recommendations

I. The Korean economy in crisis

The macroeconomy prior to the crisis

Sustained economic growth and falling inflation in 1996 and 1997

Figure 1. THE PATH TO THE CRISIS

Table 1. Expenditure components of GDP

Table 2. Prices and wages

Table 3. Labour market

Table 4. Current account

But benign macroeconomic conditions masked a host of structural problems

Figure 2. BREAK-EVEN POINTS AND INSOLVENCIES

Highly-leveraged firms with weak balance sheets...

Figure 3. FINANCE OF CORPORATIONS

Table 5. Corporate profits and financing

Figure 4. KOREA'S CORPORATE SECTOR AT A GLANCE

... were hit by falling export prices, exacerbating weak balance sheets,...

... leading to a wave of insolvencies...

... hitting a shaky financial system already undermined by poor lending...

Figure 5. SOVEREIGN RISK AND RATIO OF DISHONOURED BILLS

The financial crisis

Contagion from Southeast Asia...

... and inappropriate monetary policy...

Figure 6. MONETARY INDICATORS

Figure 7. INTEREST AND EXCHANGE RATES

... leading to capital flight and crisis

Figure 8. CAPITAL BALANCE

The policy response

Economic policy under the IMF agreement

Box 1. Policy measures since the crisis

Tight monetary policy

Fiscal restraint

Figure 9. FISCAL INDICATORS

Table 6. Government budgets

The economy after the currency crisis and short-term prospects

Domestic demand collapses under the weight of high interest rates

Figure 10. RECENT ECONOMIC INDICATORS

Collapse of imports leads to massive current account surplus

Economic prospects in the short term

The corporate sector faces major restructuring to survive

The response of households to the new economic paradigm

Korea courts foreign investment.

... but foreign investors may be wary

The economic outlook to 1999

Table 7. Projections for 1998-99

The new policy paradigm and the medium-term outlook

A medium-term reference scenario to 2003

Table 8. Medium-term reference scenario

II. Rehabilitating the financial system

Underdeveloped governance structures and weak credit cultures

Prudential supervision was neglected

Competition from non-bank financial institutions led to diminished profitability

Table 9. Korean financial institutions' loan and deposit market shares

The process of liberalisation was not well considered

The situation of banks before and after the financial crisis

The banks are characterised by low profitability and vulnerability

Table 10. Profitability of the banking system

Financing strains in the industrial sector lead to declines in the balance-sheet quality of banks

Financial system reform

The legal and institutional framework was radically modernised

Governance of banks will be strengthened with increased...

The deposit insurance system will be reformed

Financial supervision will be brought into line with...

Loan classification, disclosure and provisioning...

Stronger in-house risk management systems will be required

The central bank will gain enhanced independence and...

The capital account will be fully liberalised

Bank restructuring

Losses in 1997 left the banks badly under-capitalised

Table 11. Balance-sheet position of commercial banks

The Korean Asset Management Corporation has been given...

Tougher policies to deal with unsound banks have emerged

Rehabilitation plans have been provided

Table 12. Government plan to rehabilitate financial institutions

Measures to deal with insolvent merchant banks

The outlook for reform

The framework for reform is in place.

Rationalisation will play a key role

Re-capitalisation remains an issue

The use of public funds should be limited...

... and conditional on performance

Deepening capital markets is also essential

III. Corporate governance reforms

The role of the chaebols

Their structure and importance in the economy

Table 13. Share of chaebols in mining and manufacturing

Table 14. The share of the 100-largest manufacturing firms

Table 15. Chaebols' market share by size of industry

The ownership and control of chaebols

Table 16. Internal ownership of chaebols

Table 17. Internal ownership of top thirty chaebols

Figure 11. STOCK MARKET CAPITALISATION

Government policies towards the chaebols prior to the crisis

Corporate governance practices in Korea

The role of financial institutions

Table 18. Share ownership by type of investor

Table 19. Financing of corporations

Table 20. Share of non-bank financial institutions owned by chaebols

The role of other governance agents

The response to the economic crisis

The reforms introduced by the government

Enhancing shareholder protection

Promoting the restructuring of business groups

Increasing the transparency of corporate accounts

Improving exit mechanisms

The market for corporate control

Insolvency

Box 2. The Korean framework for insolvency

Asset disposal

Restructuring in the corporate sector

IV. Implementing the OECD Jobs Strategy

Figure 12. KEY DEVELOPMENTS IN THE LABOUR MARKET

Labour market and employment performance

The expansion of the labour force...

Figure 13. GROWTH OF POPULATION, LABOUR FORCE AND WORKING HOURS

Figure 14. LABOUR FORCE PARTICIPATION RATES

Figure 15. THE FEMALE LABOUR FORCE PARTICIPATION RATE

Figure 16. ANNUAL WORKING HOURS

Figure 17. EDUCATION ATTAINMENT OF THE POPULATION.

Figure 18. SCHOOL ENROLMENT RATES

... has allowed a sharp expansion of employment...

Figure 19. SECTORAL COMPOSITION OF EMPLOYMENT

Figure 20. SELF-EMPLOYED AND FAMILY WORKERS

Table 21. Part-time employment

... keeping the unemployment rate low

Figure 21. UNEMPLOYMENT RATE BY AGE GROUP

Figure 22. UNEMPLOYMENT RATE BY LEVEL OF EDUCATION

Table 22. Long-term unemployment

Labour union issues

Figure 23. UNIONISATION AND LABOUR DISPUTES

Income and wage equality

Figure 24. WAGE DIFFERENTIALS

Policy requirements

Box 3. The OECD Jobs Strategy: synopsis of recommendations for Korea

Enhancing the ability to adjust and adapt

Flexibility of employment and working time

Table 23. Tenure by firm size and educational attainment

Figure 25. LABOUR TURNOVER RATES BY AGE AND GENDER

The wage formation system

Table 24. Criteria for determining salaries of individual workers

Figure 26. THE AGE-EARNING PROFILE

Table 25. Minimum wages

Table 26. Criteria for determining overall wage increases

Table 27. Flexibility of employee compensation

Figure 27. COMPONENTS OF EMPLOYEE COMPENSATION

Taxes and transfers

Figure 28. AVERAGE AND MARGINAL TAX WEDGES

Table 28. Unemployment insurance

Active labour market policies (ALMPs)

Table 29. Public and private employment offices in Korea

Increasing efficiency, innovative activity and the knowledge base

Product market competition

International competition

Figure 29. THE PRICES OF AGRICULTURAL PRODUCTS IN KOREA

Competition policy

Table 30. Actions taken by the Fair Trade Commission

Deregulation

Technology and innovation

Table 31. Korea's R&amp

D expenditures

Fostering entrepreneurship

Upgrading skills and competencies

Recent policy initiatives

Assessment and scope for further action

Notes

Bibliography.

Annex I - Corporate sector profitability

Table A1. Manufacturing sector sales, costs and profits

Annex II - Calendar of main economic events

STATISTICAL ANNEX AND STRUCTURAL INDICATORS

Table A. Selected background statistics

Table B. Expenditure on gross domestic product

Table C. Gross domestic product by industry

Table D. Gross domestic product in manufacturing by industry

Table E. Cost components of gross domestic product

Table F. Cost components of gross domestic product by industry

Table G. Gross fixed capital formation

Table H. Household appropriation account

Table I. Non-financial corporate enterprises appropriation account

Table J. General government appropriation account

Table K. Central government appropriation account

Table L. Balance of payments

Table M. Imports by principal commodities

Table N. Exports by principal commodities

Table O. Money and credit

BASIC STATISTICS: INTERNATIONAL COMPARISONS

BASIC STATISTICS: INTERNATIONAL COMPARISONS (cont'd)

BOXES

TABLES

Table 12. Government plan to rehabilitate financial institutions.

Table 13. Share of chaebols in mining and manufacturing.

Notes:

Bibliographic Level Mode of Issuance: Monograph

Description based on print version record.

Description based on publisher supplied metadata and other sources.

ISBN:

92-64-15148-6

OCLC:

1225548246