Washington Post on A16

[Brad De Long]

>Brad DeLong wrote:
>>
>>The first thing to realize is that the IMF's money made Korea's ride
>>through the crisis a lot better than it would otherwise have been:
>>less unemployment, lower domestic interest rates (because the IMF has
>>provided you with more reserves and so you don't have to bid high
>>enough to attract private capital immediately), a faster recovery.
>>Even with the conditions, the fact that the Korean government went
>>for the deal the IMF offered suggests that it was a good deal for
>>Korea--a much better deal than no conditionality and no IMF loan
>>would have been.
>>
>The IMF bailout of S Korea was designed to dismantle the Korean Development
>Model, even at the cost of deepening its financial crisis.  The bailout was
>directed from the US Treasury by Rubin and Summers, who intended to break up
>the Chaebols into Western-style corporations oriented toward short-term
>profit and vulnerable to takeover by foreign investors.  Given its
>desperation for new loans, S Korea had no choice but to accept the
>IMF-imposed measures.

No.

Bob and Larry did not sit down in the Treasury's conference room and 
say "how can we destroy the Korean development model?" If you had 
time to regularly read, say, the _New Left Review_, you would 
remember that in Robert Wade's article about the World Bank's _East 
Asian Miracle_ Larry was the good guy, the one who believed in 
drawing lessons from East Asia's experience.

The IMF bailout of Korea was designed to keep Korea from having a 
depression. The IMF thought--thinks--that the Korean development 
model is about to run out of steam: that it worked fine (in Korea, 
before that in Japan, and before that in Germany) as long as the 
technology gap vis-a-vis the industrial core was large, but that as 
the technology gap closed it was no longer wise to rely on a few 
large semi-monopolies to plan your industrial development.

They may be right, though I don't think so. I don't think we know why 
keiretsu-led development has done so badly in Japan in the past 
decade, or why state-led development has done so badly outside East 
Asia and Northwest Europe.

Brad DeLong