In July 2003, the government announced a medium to long-term target of doubling per capita income from around $10 000 to $20 000.1 Thirty years of extraordinary growth had boosted per capita income from about $100 in 1965 to the $10 000 level by the mid-1990s (Figure 1.1). However, weaknesses in Korea’s economic structure, which lacked many of the basic elements of a market economy, left the country vulnerable to the financial crisis that swept through Asia in 1997, reducing per capita income by a third in US dollar terms, primarily due to the sharp fall in the exchange rate. In particular, close government-business links had created moral hazard problems, resulting in excessive risk-taking and insufficient attention to credit and exchange-rate risks. The government responded ...