Monash Publications No.56/GES
Monash Publications in Geography & Environmental Science: Number 56
The Politics and Economics of Capital Liberalisation: The IMF's South Korean Rescue Package
by Andrew VanHulten
In late-1997, South Korea requested extensive financial assistance from the IMF to prevent the collapse of its financial sector. Tied to the provision of assistance were a host of conditions requiring South Korea to open its capital account and its financial services sector to foreign competition. This monograph seeks to question the economic legitimacy of arguments suggesting that capital account liberalisation can foster economic growth, particularly in the developing world. Secondly, it seeks to offer some insight into the political forces involved in the process of financial services and capital account liberalisation in South Korea, focussing especially on the formulation and justification of the IMF 's rescue package. It concludes that capital account liberalisation is a poorly understood process with a myriad of economic and social outcomes, particularly for small developing economies. As such, it concludes that the IMF can best serve its role of ensuring international financial stability by not interfering in this aspect of sovereign nations' economic policy making.