By Yung Chul Park, Hugh Patrick and Larry Meissner
In what ways, and to what degree, has the financial system mattered, and what roles has it played, in the Japanese economy since about 1990, in the Korean economy since about 1980, and in the Chinese economy since its reform process began in 1978? These topics are taken up in this extract from How Finance is Shaping the Economies of China, Japan, and Korea. Ultimately, the fact of rapid catch-up growth in each country is the best evidence that financial intermediation has, somehow, been successful. Finance does matter.
Japan, Korea, and China provide outstanding examples of very successful catch-up economic development and growth, major financial development, and gradual financial liberalisation of initially highly repressed financial systems. Our book, How Finance is Shaping the Economies of China, Japan, and Korea, provides an analysis of that financial development process, and how it has intertwined with the process of real economic growth in complex and nuanced, as well as obvious, ways. This essay extracts some of the more important points of the book.
About the Authors
Yung Chul Park is distinguished professor in the Division of International Studies of Korea University. He served as president of the Korea Development Institute (1986-87), the chief economic advisor to the president of Korea (1987-88), and the president of the Korea Institute of Finance (1992-98).
Hugh Patrick is Robert D Calkins Professor of International Business Emeritus at Columbia Business School, where he also serves as Director of the Center on Japanese Economy and Business. He also is co-Director of Columbia University’s APEC Study Center.
Larry Meissner is an economist with a specialty in financial development.
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