Confronting South Korea’s Next Crisis: Rigidities, Polarization, and Fear of Japanification

Prof Jaejoon Woo (DePaul University, Chicago)

Abstract

South Korea’s economic miracle is a well-known story. However, today Korea is facing challenges on multiple fronts that are radically different from those seen in the early stages of industrialization. The Korean economy has been struggling with a faltering growth momentum and the rise of unprecedented socio-economic problems over the recent years well before the pandemic crisis. Koreans are grappling with slow income growth, all time-high household debt, high youth unemployment, inequality, and social polarization. Politics is in disarray and is incapable of directing social discourse for the common good. Rapid population aging along with the world’s lowest fertility rates stokes fears of Japanification. Such a dramatic shift in the perceived prospects of the Korean economy in a relatively short period has caught many by surprise and is little known to outsiders who are only familiar with Korea’s economic miracle and spectacular success stories of business conglomerates like such as Hyundai, LG, and Samsung. Motivated by these latest developments, this new book seeks to provide a timely and in-depth analysis of key current issues and foreseeable challenges of the economy in hopes of finding constructive ways forward.

Confronting South Korea’s Next Crisis: Rigidities, Polarization, and Fear of Japanification

Speaker Biography

Jaejoon Woo is a tenured economics professor at DePaul University, Chicago. Previously, he worked as Chief Korea Economist at Bank of America Merrill Lynch (2015-2017), Senior Economist at the IMF, Washington DC (2009-2014), and Economist at the OECD (2000-2002, 2009). Research areas are growth and productivity, public debt and fiscal policy, political economy, inequality, international integration, Korea and EM Asia. He has published 4 books and 33 articles (in addition to 145 market-oriented research notes published at BAML). His papers have been published in major economics journals such as Review of Economics and Statistics, European Economic Review, Economica, Journal of Public Economics, Journal of Development Economics, Economic Inquiry, and IMF Economic Review. Some were featured in The Economist (London-based weekly magazine) and Financial Times. He also taught at Harvard, Helsinki School of Economics (Finland), and Sciences Po (France). He was an associate editor of International Economic Journal (2010-2018) and is a topic editor of Journal of Risk and Financial Management. He received his B.A. in Economics from Yonsei University, Seoul, and Ph.D. in Economics from Harvard University.

Reviews

South Korea’s extraordinary economic transformation is well known and much acclaimed. Less familiar to outsiders is South Korea’s present malaise – the product of a faltering economy, rising inequality and social polarization, and divisive politics. This excellent book not only tells the story with great skill, but also points the way to a more hopeful, more vibrant economic future. Jaejoon Woo confronts the challenges facing South Korea with detailed empirical work and good policy sense. He shows that addressing these challenges will require a state that is no less active than in the past, but focused on new priorities such as social inclusion, labor market dynamism, and service-sector productivity.
Dani Rodrik at Harvard University

Within Korea, there have been vigorous debates over why economic growth has slowed markedly and there is growing fear that Korea could enter a period of stagnation comparable to what has occurred in Japan. Sorting out all the elements that have gone into this slowdown is a complex task. Jaejoon Woo in Confronting Korea’s Next Crisis has done a masterful and sophisticated job of analyzing why the economy has slowed and what it will take to sustain growth into the future. His analysis will be of interest to anyone wishing to understand the contemporary Korean economy. It should also be of interest to anyone concerned with similar challenges facing many other advanced economies at this time.
Dwight H. Perkins at Harvard University

Jaejoon Woo reviews the Korean economy with rigorous economic analysis and keen insight. His prescience then guides the readers on how the country can overcome the present obstacles of structural rigidity and social polarization to take off yet again without succumbing to the trap of Japanification. The book is the study of Korean experience and prospects; yet, the solution offered by the author can apply to all countries seeking to leap toward the new phase of economic development. I recommend this book to academics, policymakers, and anyone interested in economic growth and overcoming crises.
Seoung Hwan Suh, 19th President of Yonsei University

Organiser: SOAS Centre of Korean Studies

Contact email: centres@soas.ac.uk