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Working Paper 08-5

Korean Institutional Reform in Comparative Perspective

by Marcus Noland, Peterson Institute for International Economics
and Erik Weeks, Peterson Institute for International Economics

June 2008


John WilliamsonSouth Korea is arguably the premier development success story of the last half-century. Despite this success, there has been a nagging sense among many observers that the development of Korea's economic and political institutions has not kept pace with the breakneck tempo of economic growth. During the decade since the 1997–98 financial crisis, center-left governments have placed considerable emphasis on institutional reform. This paper examines 52 institutional indicators covering 44 countries to analyze Korea's relative institutional performance over the past decade.

The authors conclude that improvements in Korea's political and economic institutions over the past decade have outstripped the country's "First World economy, Third World politics" image. While Korea generally underperforms modestly relative to its level of per capita income, it is not an outlier, and on most indicators it is converging on global norms. However, it would be difficult to argue on the basis of this analysis that institutional development led economic growth. Institutions do not appear to rule, at least in Korea.

The patterns on specific indicators suggest that global institutions play some role as an external policy anchor: The existence of international norms gives policymakers a goal, and the existence of international institutions (and other avenues of international diplomatic pressure) helps in overcoming the historical weakness and parochialism of Korean public institutions.

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RELATED LINKS

Book: Witness to Transformation: Refugee Insights into North Korea January 2011

Peterson Perspective: North Korea's Immunity to Outside Pressure: Part I December 12, 2012

Policy Brief 10-1: The Winter of Their Discontent: Pyongyang Attacks the Market January 2010

Working Paper 10-2: Economic Crime and Punishment in North Korea March 2010

Paper: FTAs and the Future of US-Korean Trade Relations November 2009

Paper: Implementing the KORUS FTA: Key Challenges and Policy Proposals February 2008

Policy Brief 08-6: North Korea on the Precipice of Famine May 2008

Policy Brief 07-7: The Korea-US Free Trade Agreement: A Summary Assessment August 2007

Policy Brief 06-4: Negotiating the Korea–United States Free Trade Agreement June 2006

Working Paper 07-7: North Korea’s External Economic Relations August 2007

Book: Avoiding the Apocalypse: The Future of the Two Koreas June 2000

Book: Free Trade Between Korea and the United States? April 2001

Working Paper 08-4: Migration Experiences of North Korean Refugees: Survey Evidence from China March 2008