The crisis that has hit emerging-market economies around the world may not yet be over, but the "policy courage" that the South Korean people and the Seoul government have shown in reaction to it is already bearing fruit. South Korea has impressed its OECD partners by turning the crisis into an opportunity for fundamental reforms that touch nearly every aspect of the economy. The range of these reforms, and the speed with which they have been introduced over the past 14 months, are virtually unparalleled in the recent experience of any other OECD country.

Reforms are not yet complete, however, and the transition to a market-based economy is still in progress. Forecasts of positive growth this year, after a 5 percent contraction of the Korean economy last year, should not be allowed to weaken the commitment or the sense of urgency. Here, too, other OECD countries are watching the Korean experience with close attention.

Perhaps the greatest challenge is to reduce the still-high levels of excess capacity and debt in the corporate sector. How should policymakers reconcile the need for quick restructuring of the corporate sector with the objective of reducing government involvement in business decision-making? From an OECD perspective, it is important that the South Korean government create a framework that will encourage market-driven restructuring while limiting the direct involvement of the state.