Write a essay that South Korea should be banned in world.
Justify.
word limit :- 200
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Answer:
International strategic management | South Korea, financial crisis | Melissa MactavieJodie MackayTeboho LentoSifiso MashishiKarushka naidoo |
South Korea’s current account balance started to deteriorate in 1990, due to the rising inflation, appreciation of the Korean won and the recession of the world economy. In 1991 the current account recorded a deficit of $8.7 billion, which was more than four times the level of the preceding year. The Korean government encouraged capital inflows in order to finance the growing current account deficit. To achieve this objective, capital account liberalisation was accelerated in 1991by altering the Foreign Exchange Management Act.
The limited capital account liberalisation implemented resulted…show more content…
The asset value declined further.
Many businesses failed to guarantee returns and profitability. Due to the high rates of economic growth and the booming economy, private firms and corporations looked to finance speculative investment projects. However, firms overstretched themselves and a combination of factors caused depreciation in the exchange rate as they struggled to meet the payments.
The South Korean corporate governance structure was known for its technical and ethical inefficiency well before the crisis. The existence of a small number of large business conglomerates, chaebols, is widely considered to be one of the biggest problems in South Korean society. This governance system was fertile ground for inefficiency and corruption. A study shows that only 27percent of the 570 non-financial firms created shareholder value during the five years before the crises.
The South Korean conglomerates were more or less completely controlled by the government and simply absorbed growing capital investment. Eventually, excess debt led to key failures and takeovers