1. Remarks to the US-Korean Twenty-First Century Council Joseph E. Stiglitz Senior Vice President and Chief Economist, Development Economics The World Bank May 15, 1998

2. Outline of the Talk 1. What happened in Korea? 2. Why did it happen? 3. What are the most important issues looking forward?

3. Forecasts for 1998 GDP Growth SOURCE: IMF Reports and Consensus Forecasts

4. Unemployment Rate SOURCE: Bank of Korea: AAG2 and AAG3; Bloomberg (March 1998)

5. Key Aspects of the East Asian Crisis 1. Not public sector profligacy, but private sector borrowing. 2. Not overall indebtedness, but the type of borrowing and use of funds. 3.International investors share responsibility.

6. Public Sector Balances: Latin America versus East Asia

7. Inflation: Latin America versus East Asia

8. Total External Debt-Exports Ratio in 1996 Percent

9. Short-term Debt-Exports Ratio in 1996 Percent

10. Office Vacancy Rates, 1996 (% of space vacant) SOURCE: JP Morgan Data and Estimates 1996 1997-99 (projected)

11. Non-Performing Loans (as a % of total loans) Percent

12. Spreads on Brady Bonds & U.S. High-Yield Bonds

13. Foreign Currency Debt Ratings Country June 1996 June 1997 March 1998 IndonesiaBBB B KoreaAA- BB+ MalaysiaA+ PhilippinesBBBB+ ThailandAA BBB- Source: Standard and Poor’s

14. Usable Reserves SOURCE: Bank of Korea NOTE: Data refers to "official usable foreign reserves", which includes forward contracts.

15. Bankruptcies SOURCE: Bank of Korea

16. Stock Market and Exchange Rate SOURCE: Bloomberg

17. Exports SOURCES: Bank of Korea, Bloomberg (April 1998), IMF International Financial Statistics

18. Monthly Earnings of Regular Employees SOURCE: Bank of Korea

19. Overnight Interest Rates SOURCE: Bloomberg