Political Choices and Economic Outcomes

Abstract

South Korea and Taiwan have gone through similar experience of political and economic development in the past several decades. Both countries have achieved miraculous economic developments under the government-led development paradigm and have gone through democratization process in the 1990s. Despite the similarity in developing history, the 1997 financial crisis experiences are quite different between the two countries. South Korea was hit hard by the crisis, whereas the crisis barely touched Taiwan. What caused the difference? The authors argue that the difference in the impacts of the crisis and the resulting outcomes on South Korea and Taiwan is a result of existing political and economic institutions and structures and the choices that were made within those institutions. They support this argument by using institutional explanation, such as growth strategy, market liberalization, and political development.