Public Finance in Korea since Economic Crisis

Public Finance in Korea since Economic Crisis
Yoo, Ilho
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Series/Report no.
KDI Working Paper Series;07-19
Ten years have passed since the economic crisis hit Korea in 1997. To overcome the crisis, Korean government adopted many drastic reform measures mostly recommended by IMF. Since most of its reform measures were recommended by IMF, this policy stance to “escape” from the economic crisis is regarded as “neo-liberal”. Particularly, in the area of public finance, the principle of the “small government” was actively pursued. After two years, however, the policy stance began to be changed. Number of civil servants has increased. The size of the government increased as well, largely due to the increase in the welfare expenditure. Many new welfare programs, most important among them is NBLSS, has been introduced. Size of the government debt has increased. Do all these movements indicate that Korean government in last seven years has tried to be a big government? Although it is too early to tell, there is the strong evidence that the idea of European welfare state has prevailed.
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