Abstract
This paper analyzes how financial crises were managed by the governments of two countries: the United States and South Korea. The financial crises in the United States triggered by sub-prime mortgage lending and a series of bankruptcies of large financial firms have been disastrous for the global economy. Given that global trade and financial markets are highly interdependent with the U.S. economy, every decision by the incumbent Obama administration has influenced the future of the global economy. The U.S. government’s stalwart support and intervention in its market, as reflected in the $787 billion stimulus legislation, is in direct contrast to what obtained during the post-financial crisis in South Korea. Under the structural adjustment program of the IMF and the guideline of neo-liberalism, the Kim Dae Jung government took drastic steps to market reform which overhauled a fragile financial system in order to resuscitate the economy. Using a comparative political economic analysis of post-crisis reforms of these states, we are in a position to reevaluate the promise and result of neo-liberalism, and explore the relationship between states and markets. We can trace the origins and development of the two financial crises and compare and contrast the role of government in financial restructuring.
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