South Korea's economic miracle is a well-known story. However, today Korea is confronting a new set of internal and external risks, which may foreshadow the next crisis. The Korean economy has been struggling with the faltering growth momentum and the rise of unprecedented socio-economic problems over recent years well before the pandemic crisis. After abrupt downshifts to markedly slower growth in the early 2000s, economic growth has continued to decelerate. Koreans are grappling with slow income growth, all time-high household debt, high youth unemployment, inequality, and social polarization. Politics is in disarray and is incapable of directing social discourse for the common good. Rapid population aging along with the world's lowest fertility rates stokes fears of Japanification. Simultaneously, disruptive technologies and fast-changing business environment such as the rise of China clash with a range of long-standing structural problems. The contemporary challenges are radically different from those seen in the early stages of industrialization. There are multiple risks that threaten to self-perpetuate low or stagnant growth over the next decade or so, if not an outright financial crisis. Motivated by these latest developments, this book seeks to provide a timely and in-depth analysis of key current issues and foreseeable challenges of the economy, with a provocative reassessment of its future. Based on extensive new empirical works, it examines the underlying causes of the socio-economic problems. In a constructive spirit, it puts in perspective what would constitute critical elements of ideal policy solutions and the direction of the future government's role.

"Jaejoon Woo has done a masterful and sophisticated job of analyzing why the economy has slowed and what it will take to sustain growth into the future. His analysis will be of interest to anyone wishing to understand the contemporary Korean economy. It should also be of interest to anyone concerned with similar challenges facing many other advanced economies at this time." - Dwight H. Perkins, Harvard University

"South Korea's extraordinary economic transformation in a matter of a few decades is well known and much acclaimed. Less familiar to outsiders is South Korea's present malaise - the product of a faltering economy, rising inequality and social polarization, and divisive politics. This excellent book not only tells the story with great skill, but also points the way to a more hopeful, more vibrant economic future. Jaejoon Woo confronts the challenges facing South Korea with detailed empirical work and good policy sense. He shows that addressing these challenges will require a state that is no less active than in the past, but focused on new priorities such as social inclusion, labor market dynamism, and service-sector productivity." - Dani Rodrik, Harvard University

"Jaejoon Woo reviews the East Asian 'miracle' of Korean economic growth with rigorous economic analysis and keen insight. His prescience then guides the readers on how the country can overcome the present obstacles of structural rigidity and social polarization to take off yet again without succumbing to the trap of Japanification. The book is the study of Korean experience and prospects; yet, the solution offered by the author can apply to all countries seeking to leap toward the new phase of economic development. I recommend this book to academics, policymakers, and anyone interested in economic growth and overcoming crises." - Seoung Hwan Suh, 19th President of Yonsei University

"This book presents almost an encyclopedia-like account of recent developments as well as policy challenges of the Korean economy. Based on a large set of data and an in-depth knowledge of the inner workings of the system, Jaejoon Woo presents his own rigorous analysis and work experience in plain language, thereby making them accessible to a wide range of audience. I would strongly recommend this book to anyone who is more than casually interested in the Korean economy." - Il-Houng Lee, Former Member of Monetary Policy Board at the Bank of Korea and Former President of Korea Institute for International Economic Policy

"The economic miracle is well known, how South Korea transformed its economy within three decades to emerge as a leading innovation and technology hub. South Korea's influence and production sphere has expanded into culture, with K-pop group "BTS", Oscar winner "Parasite" and Netflix hit "Squid Games" capturing the world's imagination. But the Asian financial crisis continues to cast a long shadow over the Korean miracle and remains a constant reminder of what can go wrong. Jaejoon Woo goes beneath the shiny surface and confronts the widening fractures - rising income inequality, an aging population, mounting household debt and populist politics. Jaejoon argues that active government policies, structural reforms and a stronger social safety net is needed to avoid the next crisis. Policymakers and investors should take heed to the undercurrents and flashing amber lights." - Hak Bin Chua, Regional Co-Head Macro Research, Maybank