Financially, South Korea is more integrated into the world economy now than
it was in 1994. Foreigners are major players in the capital markets, accounting
for nearly 40 percent of stock market transactions, and South Korean residents
have greater opportunities to move their funds abroad. The use by South Korean
financial firms of off-balance sheet transactions and financial derivatives,
which did not exist in 1994, is expanding rapidly. While it is true that the
South Korean stock market actually rose during the last crisis, the expanded
role of foreign participants and the increased complexity of the financial
transactions mean that the market today is far less susceptible to political
intervention than it was a decade ago.
